Why household budgeting is a vital part of financial planning

POSTED: 19th March 2013
IN: Personal Guides

The eve of the 2013 Budget seems like an appropriate time to consider why it is vital British households set out their own spending objectives for the course of a year.

undefinedIt is paramount families stay on top of their budget to ensure they do not go into the red and pay out more than their bank balances can handle.

In fact, new research from Gocompare.com has revealed how people who fail to budget often run into debt, which is an undesirable spending pattern for the future. 

The survey of 2,019 adults revealed 45 per cent of people do not currently have a household budget, with 48 per cent not even realising how much they pay on bills and outgoings each month.

More interesting, however, was the level and type of debt people ran into by not keeping abreast of their monthly finances.

Indeed, 17 per cent ended up with an outstanding balance on their credit cards most months, while 14 per cent used their overdrafts.

A further 11 per cent admitted to using their credit cards and three per cent even applied for a pay day or short-term loan in the last 12 months to tide them over.

So, as it is clear to see, a lack of financial upkeeping can leave families out of pocket and reliant on debt to see them through the month.

Head of product development at Gocompare.com Jeremy Cryer explained that many people who don't budget believe it is a tactic for those short of cash or in financial distress.

However, he added: "But budgeting is simply about knowing how much money you have, where it goes and planning how best to allocate it to achieve the things you want - helping to put you in control of your money, whatever your income."

So whether your household is at the upper or the lower end of average British household incomes, it remains crucial that budgeting is put at the heart of your family's financial planning.

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