Protection for Your Credit Rating

PROTECT YOUR CREDIT SCORE

Protect your credit history and credit score by the simple use of a family budget. Governments use then to run countries so why should you not use one to run your family finances. All the experts agree that the road to financial freedom and freedom from money worries is by using a budget to plan and control your finances.

WHAT EXACTLY IS A BUDGET

A budget is simply a financial plan that takes into account your incomings, outgoing and planned expenditure. It will show at a glance if you can afford to sustain the level of financial expenditure you are used to, it will show instantly where savings can be made and where they must be made. It will allow you to save for planned expenditure such as holidays and also to put a little aside for emergencies if possible.

On a very basic level you input your incomings and record your outgoings and the remainder is savings. Of course life is not that simple and a budget needs to flexible enough to allow you to plan for holidays or other major purchases. Equally monthly expenditure is not the whole story as some expenses can be annual or quarterly or indeed weekly, all of these things should be taken into account.

If you have money left over each month it allows you to put that money to good use and where to keep it in terms of getting the best balance of interest against accessibility.

So a budget is a simple but extremely powerful tool in helping us manage our finances.

HOW TO CREATE A BUDGET

Firstly Maintain a logbook of income and expenditure, the income is usually easy enough but make sure you include everything from all sources. Keep track of all the family expenses however small including little treats etc for a weekly or monthly schedule.

Once you know your expenditure on food items and daily living you can create an expenses list, Go through all your automatic bank payments and list them, if a payment such as a utility bill fluctuates then take an average over 12 months or use the highest figure of the preceding 12 months. All your phone and cell phone bills should be included, every regular and irregular outlay you have should be included. Any debt payments should be highlighted.

Plug these figures into your budget and balance against your income. Whatever is left over is yours to save or spend as you wish.

WHAT IF YOUR OUTGOINGS ARE MORE THAN YOUR INCOME

This is not as unusual as you may think, if this is the case we need to look at ways of increasing our income and reducing our outgoings. Some simple ways to reduce outgoings are:

* Debt Payments - contact the creditor and arrange a reduction in the monthly payment, explain you have done a budget and realise that you cannot sustain this level of payment, they should accept your proposal

* Do you need all those cell phones? If you do could you rely on them less and move to a cheaper service saving considerable monthly payments.

* Study your shopping habits, one thing about your budget may surprise you is the amount you spend on shopping every month, by studying what you are spending you will be amazed at how much you can cut out and save without even noticing, we do as a species have a propensity to squander money.

Create your budget and stick to it and you will be free of financial worries whilst protecting your credit history and credit score.

Trust me i know, i have been there

KEN