When you put your household budget together, think about three key things: what you spent monthly last year, what you plan to spend this year, and, finally, what actually you spend.

Here are some tips:

1. Work it out Work out how much you think you’ll spend on each category (food, housing, etc) for each month, based on last year. (Don't forget special occasions, holidays and allow a little more for Christmas shopping). To get started, use our budget worksheet as a guide.
2. Incoming! List your income for each month.
3. Go for goal Knowing what you want will help you get there. Do you want to save for your retirement? Have a nicer car? Improve your skills by taking a course? Make sure these kinds of expenses are part of your plan.
4. Begin debt reduction You can save a packet by paying off instalment debt like credit cards. Just cut back on the amount you spend, but continue to make the same payments each month – or increase your regular payments. Even a modest increase is better than paying the minimum.
5. Paying it off Always pay back the things with the highest interest rates first - you'll save more.

6. Save. Save. Save. Having a savings plan is a great way to change your habits for the better – so plan to save every month, even if it’s just a couple of quid here and there. Before you know it, you'll have some spare cash for life’s little emergencies.

   Try these savings tips:
   • If your company offers a pension plan, think about whether you should join it. Because you’ll get tax relief on your pension contributions, it’s like getting money back from the government.
   • Save your change at the end of each day, then bring it to the bank at the end of each month.
   • Saving just £1 a day will build up to £365 by the end of the year and £1,825 in five years... and that doesn't even count the interest you’ll earn.
7. Getting and keeping good credit It’s important to stay in good financial standing, especially where credit is concerned, otherwise it could be difficult to get a mortgage, loans or credit cards in the future.
   • To a build a good credit rating, you can apply for a small loan at the bank where you have checking and saving accounts. If you keep your payments up, it could help boost your rating.
   • Always pay your bills on time. This will help to build a better credit history. Setting up direct debits or standing orders is a good way of doing this.
   • Ask lenders to review your history of making rent, mortgage and utility payments to demonstrate your ability to pay.
   • See your credit rating (there are several places where you can do this) to ensure that there are no errors or omissions. If there are, you have a chance to put them right.

Good luck with budgeting - with a little thought and effort, you'll find that financial management and debt repayment is easier than you think.