Sensible budgeting ‘can help avoid debt’

Many consumers have tight budgets and need to be careful how they spend, but some can get into debt because they fail to get their priorities right.

This point has been made by Phil Perry, advisor and director at Ark Financial Planning, who noted that many consumers are "in tune with the concerns of today" and make sure they focus on paying for the most important things first, while they also seek to save when they can and have been taught from an early age not to "fritter money away".

However, Mr Perry noted, there is another group who can easily get into debt. He observed: "It is too easy to buy things on credit. But a lot of people, if they have been taught correctly, they won't get themselves into debt or not to the same degree as an average credit situation."

The problem is that some for people "the priorities are completely wrong," as they can be struggling to make ends meet but have luxury goods like wide-screen televisions.

Whether or not they have been brought up to budget well, avoid debt and save when they can, people can take steps to educate themselves now on how to handle money better.

One measure those who have accumulated borrowing can undertake is debt consolidation, ensuring monthly repayments are lower than before, so more money can be saved or spent on the things that matter most.

Another step people can take is to find out ways of managing their money on a budget better, particularly when it comes to essentials like food.

The steps some consumers may be taking to keep a lid on their spending might help account for Tesco's slower profit growth in the second quarter of this year, which the retailer reported this week.

Its like-for-like UK sales (excluding petrol and VAT) declined by 1.5 per cent in the 13 weeks to May 26th.

Posted by Paul Thacker