Most of us find ourselves having to part with our hard-earned cash almost on a daily basis to just keep ourselves going. Have you ever thought about exactly what you're spending though? A great deal of people never bother to budget ? yet they could find themselves a lot better off by keeping an eye on their income and outgoings. If your finances are starting to get the better of you and you want to know how to manage your money more effectively, read on.



Work out your income and outgoings

First, decide whether you'll do a monthly or weekly budget, whichever suits you best. Then write down all your income. (e.g. salary, benefits, pension). Now list your outgoings (home loans, remortgages). Don't forget those that you only pay on an annual or quarterly basis ? which you'll need to break down to a weekly or monthly amount. Here are some common household expenditures:

mortgage or rent

home insurance

council tax

utilities (gas, electricity, water, phone)

TV licence

car tax

car insurance

petrol

car parking charges

travel to work (public transport)

credit cards

overdrafts

loan repayments

groceries

childcare

pocket money for kids

vet bills

luxuries (going out, clothes, presents)

holidays

Tally up your total outgoings and subtract them from your income, and what's left over is yours to spend ? or save if you're wise. If your outgoings are more than your income, alarm bells should be ringing. You won't be able to sustain this on a long-term basis and you'll quickly find yourself in more and more debt. Now is the time to sort it out. You know where you stand with your income and outgoings, so you can now make changes and improvements to the way you manage your money. Below are some tips to help you cut down your spending and increase your savings.

Save, not spend

There are lots of ways in which you can live more efficiently, and a little goes a long way ? if you save just ?1 a day, you'll have ?365 in a year! So everything counts:

Cook at home rather than buying ready meals and takeaways or eating out.

Cut down on your treats ? CDs, clothing, make-up etc. The best way in which to do this is to give yourself a budget and stick to it.

Don't buy designer labels or expensive brands ? cut down by purchasing high street clothes or the supermarket's own brand of groceries.

Just make your own lunch, or don't buy coffee at work, and you'll easily save it.

Give up smoking ? it's an expensive habit.

Switch off unneeded lights in your house.

Find out whether you're entitled to any benefits. The government has various tax credits and allowances for individuals and families on low incomes.

Open a savings account if you don't have one and set up a standing order to ensure that some of your income goes there every week or month.

Tax-free savings accounts such as ISAs (Individual Savings Accounts) allow you to save a certain amount each year without paying tax.

Leave your savings alone ? once they're in your savings account, they're untouchable. The more you have, the more you'll make in interest.

Check regularly how your savings are performing and move to a bank account with a better interest rate if necessary.

If you get a bonus or extra cash, put it in your savings before you're tempted to spend it.

Don't buy anything on credit unless you really have to ? and only then if you know you will have the means to pay it back. It's a much more expensive way to shop, as you'll pay back more in interest.

Most people start to have problems with debt when there's a major change in their life circumstances, such as getting married, changing job, moving house or starting a family. If any of your circumstances change, revise your budget and make any necessary adjustments.

If you're still struggling ?

? don't sweep the issue under the carpet. The longer you ignore your money problems, the bigger your debts will get. We live in an expensive world nowadays and many people struggle to get by ? so there's nothing to be ashamed of. There are lots of organisations who can provide specialist help on debt management ? for example the government Insolvency Service, Consumer Credit Counselling Service and the Citizen's Advice Bureau. They'll give you free practical advice to help you get your finances back on track.

The first thing to do is to make a list of everyone to whom you own money, and sort the list into priority and non-priority debts. Priority debts are those that are secured against your home or could have serious consequences such as you being evicted or taken to court, and these must be tackled first.

Then speak to your creditors, for your priority debts first. They'll be a lot more understanding if you explain your situation to them than they would if you tried to ignore their payment demands. Run through your budget and try to negotiate a repayment plan that's manageable for you.

Once you've managed to repay all your debts, don't let yourself get caught in the same vicious circle again. Live within your means, don't be tempted by credit or ?buy now, pay later?, and keep a close eye on your budget and expenditure.