A number of people who are now experiencing debt problems will tell you that for months or even years, they had no idea of their true financial situation, instead preferring to bury their heads in the sand. This is a common situation; with so many outgoing payments to keep track of, coupled with some impulsive spending, it can be difficult to know where your finances are.

It is really important, if you want to avoid future debt problems, to get a true handle on your money. The following debt management tips should help:

1.       Go through all of your finances (transactions, receipts, bank statements) to get a clearer picture of how much you are spending, compared to how much money is coming in each month. Organise what you find in the way that is clearest for you (i.e. in a table or a chart), so that you understand exactly how much income after tax (wages, pension, benefits, tax credits etc) you have each month and how much you spend on essential items (like mortgage/rent, council tax, utility bills, travel to work, food etc) and non-essential items (such as eating out, cigarettes, gym memberships, magazines, alcohol etc).

2.       Assess your attitude to money. Once you’ve laid out your financial predicament in front of you, you can then start to identify patterns in your spending behaviour. This is all affected by your attitude to money (or a lack of it) and how this affects your life and the decisions you make. This can be shaped by how your parents dealt with money and how you grew up, but bad habits can be changed if you are able to recognise them.

3.       Face up to debt. A major part of this whole process is recognising debt problems before they get to the point of seriousness, and taking useful steps to deal with them before they escalate out of hand.

4.       Make a plan. Creating a budget includes cutting unnecessary spending and balancing your finances. This may include shopping around to find the cheapest insurances or utility providers, or it may mean cutting back on your grocery shopping by buying own-label products instead of recognisable brand names. You’ll then know exactly what money is going out each month and how much you have left over to spend on non-essential treats.