Get married by all means, but please don't have children

Do you have a spending problem? Before you answer, consider whether you pay off your credit cards in full every month, or whether you are one of the 19 million whose bank account has slipped into the red.

Britons believe they need to double their incomes over the next 10 years to an average of ?45,729 to support themselves and pay for the things that are important to them, according to recent research for investment group Insight.

But if the current borrowing statistics are anything to go by, most of us need to earn quite a bit more right now.

We borrowed ?16.5 billion last year on credit cards, hire purchase, personal loans and other forms of unsecured lending. That's on top of a staggering ?42bn equity we have withdrawn from our homes through remortgaging, taking out further loans and trading down in property size.

This figure excludes any money withdrawn to be spent on home improvements. It means we have overspent our income by nearly ?1,300 per adult.

At first, that doesn't sound too bad - after all, ?1,300 would just about buy you two weeks in the Caribbean, a new sofa or a decent computer. The problem becomes more serious if you are overspending by this kind of amount year after year on everyday living costs.

'Most people haven't got a clue what they're spending their money on. They spend up to the limit on a credit card, and then get another one without really working out where it's going,' says Keith Tondeur, director of Credit Action, a charity that educates people on how to handle their money better.

Tondeur says there are lots of trigger points that cause people to lose control of their money, including failing to claim full benefit entitlements if circumstances change, sickness, first-time credit cards not paid off in full or the increases in limits on them, death of a relative, interest-rate changes, addiction, repayment of student loans, and buying things they can't afford in an effort to 'keep up with the Joneses'.

Spending a few minutes now thinking about your finances could save you and your family thousands of pounds in the future - money that you could instead spend on holidays or some other good cause.

Below Cash and Credit Action outline the main areas in which you can fairly easily gain more control over your finances and improve your quality of life as a result.

1. Budget
It will make your money go further, impose control over your spending and help you to stop running up substantial debts and paying unnecessary interest. Work out exactly how much you are spending on every aspect of your life. Don't forget to allow for one-off costs, such as getting your car through its MOT, holidays and Christmas. Prioritise the list - not paying the mortgage, or council tax could land you in court or without a home. Pay these first.

2. Work out what you could cut back on
Cigarettes, alcohol, cafe lattes, satellite TV, membership of that gym... Make small economies like taking your own lunch to work. Home-made sandwiches cost a fraction of those bought in supermarkets and cafes, and often taste better. If Gwyneth Paltrow and Coldplay's Chris Martin can do it, so can you!

3. Ask questions
Do I need this or is it an impulse spend? Avoid reading unsolicited mail. It is sent to tempt you to spend on something you wouldn't otherwise consider.

4. Mortgages
Get a cheaper loan - or move to a fixed-rate deal if you could not cope if interest rates rose. Try London & Country Mortgages, which does not charge fees and will pay ?50 if it can't save you money by remortgaging (provided you haven't got redemption policies and haven't arranged your mortgage in the last three years).

5. Credit cards
Avoid paying interest at top rates. If you can't pay off your bills in full each month, transfer to zero-rate deals. Check Databank on page 12 or visit www.moneysupermarket.com.

6. Bank accounts
Move to a bank that pays interest on current account balances if you keep your account in credit. Cahoot pays 3.3 per cent on balances from ?1. If your account spends more time in the red than the black, switch to an account with the lowest overdraft charges. Alliance & Leicester Premier Current Account (0500 959595) charges no interest on authorised overdrafts in the first year. Whichever bank you use, make sure you do not go over any agreed overdraft limit or you will be paying punitive charges.

7. Savings
Build up enough emergency money to cater for calamities and to keep you going two or three months. Look for the best savings rates - usually on internet accounts and cash Isas - in Databank on page 12. Currently, the Safeway cash mini Isa offers the best rate - 4.2 per cent gross on deposits of ?10 or more with no notice needed for withdrawals. Intelligent Finance's savings account pays 3.7 per cent gross on deposits from ?1.

8. Investments
Diversify between different types of assets and providers to spread your risk. Don't let advisers talk you into riskier investments than you want. Review your investments regularly.

9. Insurance
Make sure you have enough cover (on the rebuild value of your home, for instance) and the right kinds of cover (travel insurance if you go abroad and pet insurance, including public liability, if you have a dog). Read the fine print of policies. Don't assume that brokers always get the cheapest deals - search on the internet. Try www.find.co.uk for links to insurers and internet brokers.

10. Life cover
Check to see if you can get a cheaper deal - especially if you have not done this since rates started to fall in the last three years. Decide exactly how much you need and do not be talked into having more. Discount brokers rebate commission - call TQDirect on 0800 072 3186.

11. Pensions
If your employer offers an occupational pension scheme to which it contributes on your behalf, join as soon as you can. If not, consider starting your own personal scheme. Small contributions started early have more growth potential than bigger contributions started later. Ensure that your pension provider or scheme trustees have up-to-date addresses for the people you would want to benefit if you died before drawing your pension.

12. Utilities
Consider switching your gas, electricity, telephone and mobile phone providers. You could save ?50 a year on the basic utilities - and more on mobile phones. Agreeing to pay by direct debit can also shave a little off your bills. Visit www.uswitch.com to check out gas, electricity and landline telephone suppliers. Consider scrapping your mobile altogether. Save energy - lag your hot water tank and pipes as appropriate, use energy saving light bulbs and take a shower rather than a bath as it only uses 20 per cent of the water.

13. Shopping
Restrict your impulsive spending by taking shopping lists to the supermarket. Cook from scratch and avoid expensive pre-cooked meals. Going late in the day can lead to you finding significant markdowns. Remember most own-label brands are much cheaper but often just as good as the well-known labels. Never go shopping when hungry and avoid taking the kids! Try to buy clothes that don't need dry cleaning - it will save an awful lot of money.

14. Car
Think secondhand. If you buy a new car it can depreciate by up to 20 per cent when you drive it from the showroom.

15. Debt
Pay off your debts while you can rather than finding yourself squeezed if interest rates rise. Play safe by paying down your mortgage rather than making investments. Pay off the debts that have the highest interest rates first - credit cards before mortgage loans before students loans.

16. Tax
If you are married, try to hold investments in the name of the spouse who earns less and is taxed at a lower rate. If you are a home-owner and cohabitee, check that you will not be hit by Inheritance Tax (threshold ?255,000), and make plans to avoid the survivor having to sell up if one of you dies. You could buy insurance or even get married. Start collecting information for your tax return now, if you get one, and send it in early

17. Work benefits
Check what your employer offers. Some people waste money on life cover, medical expenses and borrowing when they can get this cover and season ticket loans through work.

18. Children
They are very expensive. Either keep using the condoms or start saving as soon as possible. Early financial planning for school and university fees and extra coaching can reduce the pain later. Teach your children - by modelling good financial management you will not only save money now, you will prevent your kids from facing the pain of debt in the future.

19. Benefits
Check that you're not missing out on benefits, such as Child Tax Credit (payable to 90 per cent of families) and Pension Credit (due in October for pensioners). Citizens Advice Bureaux and charities such as Age Concern and Gingerbread do free 'benefit checks'.

20. Other useful hints to help you stay out of debt
Send off for Credit Action's Guide to Money Saving Ideas, which includes tips on everything from home improvements to hairdressers. Send a cheque for ?2 to Credit Action, 6 Regent Terrace, Cambridge, CB2 1AA.