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So what can we do to relieve the pressure and reduce the impact on our lives?

The first step is to take stock of the situation. According to Credit Action, many people regularly fail to budget effectively each month – as a result, 64% of us run out of cash about five days before the next pay cheque. Is it any wonder that the banks collected £2.6 billion in charges levied on customers who ran out of cash?

So just where is the money going?

You may think you already know the answer – but take the time to write down everything you and your family spend for a month, and you could be in for a big surprise. Most of us underestimate our incidental spending – sometimes by a long way.

If we are going to be in control of our money, we need to plan and that means counting the cost of that coffee and newspaper in the budget.

One way of recording spending (other than with pen and paper) is to download the Spendometer. It’s free and enables peopleÌýto record spending on their mobile phone.

After all, we can only make informed decisions about spending when we know where the money is going.

Sorting out priorities – need and wants

Very few of us are lucky enough not to have to make decisions about how we spend our money. We all have to decide on priorities. That means sorting out what is really essential to each of us – and other members of our family – ie what really must be paid for, and what, if necessary, could be cut from the budget?

Try writing down your family's wants and needs

One practical way of establishing the priorities for your family is to cut out small squares of paper with one item of spending (gas, water, holiday, TV licence, entertainment, etc) written on each square. Involve all members of the family in this to make sure you cover everything.ÌýThat’s going to be a lot of squares!

Then put the squares of paper into two columns - needs and wants - in descending order of priority. If you do this as a family, there are likely to be some interesting discussions, but if cuts do have to be made, then at least everyone will have a chance to state his or her case.

Every family will have their own priorities, but because some things, like the mortgage or rent, just have to be met. Here is a general guide:-

• First, pay the bills

That means rent or mortgage, utility bills (gas, water and electricity) and any car payment.ÌýIf you are paid more or less the same amount every week or month, it makes sense to try to pay a regular amount towards your bills.

• Meet day-to-day costs

This will include things like food and travel.ÌýTry paying for day-to-day stuff using only cash.Ìý

• Put aside money to meet occasional costs...

Ìý..like birthdays, Christmas, holidays and possible emergencies. Although it can seem very hard when money is tight, an emergency fund will prevent you from having to get a loan or incur a bank charge for an unauthorised overdraft.

• Plan for the long term

This could be buying a house, education, starting a family, pension, etc.

Preparing a budget

On the face of it, preparing a budget is a straightforward process of writing down what money is coming in and what money is going out, and hopefully discovering that income exceeds expenditure. If only it were that simple all the time!

Preparing a budget can save you money

When most of us try this, we usually discover that we should have money left over, so why is the wallet empty? The budget has to reflect what we actually spend, rather than what we think we spend.

Money issues are involved in some 70% of relationship breakdowns, according to Relate.ÌýBut many of the problems can be eased by the simple act of sitting down together, as a couple or as a family, in order to create a clear picture of the financial situation and to agree on changes that might have to be made.ÌýIt is important that everyone understands why certain cuts have to be made.

You can draw up your own budget form, but it is a lot easier to download a free one from the internet.ÌýTake a look at:-

Is the budget reasonable?Ìý

It isn’t possible to draw up a ‘one–size fits all’ budget as a template for every family.ÌýBut it is important that the budget reflects the spending accurately and is not an estimate.

The Joseph Rowntree Foundation defines a minimum standard of living in Britain as more than just food, clothes and shelter - it is about having what you need in order to have the opportunities and choices necessary to participate in society.

If you want to compare how you spend your money with the findings, the budgets for four different family units can be downloaded free. The details of what is included in these budgets can help you to make sure that you have everything covered.

Every penny counts!

Even if the budget looks good

Remember, it’s only a plan, and spending should still be monitored.ÌýBank statements need to be read, as do gas and electricity bills.ÌýIf you find the bills difficult to understand, go to:

Always check the meter against the bill, and contact the supplier if there is a significant difference. If you pay monthly by direct debit, you need to be building up your credit in the summer months to help with the bigger winter bills.

Balancing the budget

If the budget doesn’t balance, either income has to be increased or spending reduced.

The following websites offer ideas to reduce spending:-

It is always worthwhile shopping around, especially for things like car insurance. Find a website that offers a like-for-like comparison.

If you think that you might be entitled to some benefits, try:ÌýÌýÌýÌý

If you are not very confident about financial products and services, the Financial Services Authority website is very easy to use and understand.

Don’t give up!

It can seem very daunting to try and put together a realistic budget, but the consequences of not doing so can be devastating. A free budget coaching service is available in the York area. Call Money Matters on 07518 029698.Ìý

You can also contact one of the free debt advice agencies – but don’t wait until the situation is desperate!

Consumer Credit Counselling Service 0800 138 1111 (CCCS) or see:

National Debtline 0808 808 4000. Go to:

Mel Griggs FCIB

Mel coordinates the Money Matters arm of Family Matters York - a charityÌýproviding courses, seminars and workshops on personal finance, as well as a free personal budget coaching scheme (07518 029698). FMY also offers courses etc in parenting and relationships. To contact FMY, call (01904 639767).