Do you keep a close eye on your money or are you one of the 80% who overspends regularly?
When was the last time you made a mistake with your finances? This morning? Over the weekend? Last week? Well, this is the week when you're supposed to think seriously about your financial errors with the launch of the first ever Credit Awareness Week.
Personally, I think a more realistic title would have been 'Debt Awareness Week' since that's what it's really all about. A survey accompanying the launch underscores the point with more than 80% of us admitting that we overspend on a regular basis, mostly to cheer ourselves up. They don't call it retail therapy for nothing!
The result, of course, is spiralling debts at which point we make a bad situation worse by missing repayments on credit cards and loans, getting a new credit card in order to pay off debts on another or taking out expensive consolidation loans that take an age to pay back.
I've always thought that the first step towards managing money efficiently is to find out exactly what you spend it on. It's one of the reasons we recommend keeping a spending diary for a month because it enables you to see where you can make improvements whether it's finding better deals for your household bills or cutting back on the beer and takeaways.
It's also a good idea to check your credit report to see what your financial reputation looks like. This details the history of your borrowings and your repayment record so you'll be able to see how frequently you are late with payments or even if you never miss a payment, how many credit cards you've forgotten you had. A long list of credit cards that you don't use any more doesn't look good when a bank is considering lending you money so if nothing else it serves as a reminder to close such accounts down.
According to the credit awareness survey nearly a quarter of people find it hard to control their spending and say that financial matters are hard to understand. It's true that the jargon used by the industry doesn't help but ultimately, money management isn't rocket science. Learn to distinguish between needs and wants and don't spend more than you have.
More: Read Your Credit Report | Money Talk: The Myths About Your Credit Report