One of the great things about being individuals is that we're all different! Some are meticulous with finances - they can account for every penny spent and are always in control. Whereas others.... well, we're not so good. However even the hyper-organised can run into financial difficulties due to unexpected circumstances. One of the key elements of effective budgeting is prioritising our expenditure.
Somewhere near the top of the list comes rent or mortgage repayments. Most would agree that our home has to be protected at all costs, and whilst coping with arrears may not be impossible, the only way to safeguard our home is to maintain repayments.
Although some are exempt, most have to pay towards council tax. And arrears can quickly lead to court action and bailiffs can follow soon after. Similarly income tax for the self-employed (and VAT if appropriate) can again to legal proceedings before long. It is much better to prioritise the payments and if in financial trouble, alert the appropriate authorities as soon as possible.
Similarly they come high on the list. Gas, electricity and water suppliers will take further action if we are not maintaining payments. If we feel we're paying too much - there is no harm in shopping around for the best deal. If we have brought arrears from a previous property with us, it may be possible to include such debts in a debt solution such as an IVA or a Debt Management Plan.
It may be stating the obvious but we do need food to survive. Such provision for ourselves and, if appropriate, our family, is not an optional extra. However even under the housekeeping umbrella there are priorities to be made - the essentials without which we will struggle to live properly.
If we depend on travel costs to get to work in order to generate an income, then travel costs become a priority. It may be that we need to evaluate whether a car is a necessity or a luxury. Certainly if we need a car we need to ensure it can be taxed, insured and serviced. Maybe public transport can save us money. But whatever it costs us to get to work is a priority.
Anything not mentioned above may be classified as a non-priority however important they may be to us. These include mobile contracts, clothing, and socialising and unsecured debt repayments. These are all important but still come in the second tier of outgoings.
The above is provided as information only. Iva.co.uk does not provide debt advice. You must always seek professional advice before taking any action to resolve your debts.