Featured in ICAEW Vital magazine, August 2011
More and more trainee accountants are calling Chartered Accountants’ Benevolent Association (CABA) for help and advice about debt and other money worries. From our experience, it appears to be a growing problem, so now seems like a good time to be talking about money management.
Undoubtedly, it must be acknowledged that times are tough for many trainee accountants. The costs of simply living, from food to heating, are rising quickly. Depending on your circumstances – and you may be living on anything from a reasonable training contract salary to earning your way through university with little financial support - this trend may be hitting you hard.
However, there are some simple steps you can take that could help you to avoid money problems. Bringing some structure to your finances is an important first measure. Carefully list your incomes and outgoings. Look at both – is there any additional income such as benefits to which you might be entitled? CABA can offer advice in this area. Also, can any items in your expenditure column be reduced or removed altogether?
If you simply cannot get by without taking on some debt, make sure that it is absolutely necessary and ensure you can afford the repayments - preferably more than the minimum payment if using a credit card.
If you find your debt getting out of hand, then try to get help as soon as possible. The most common mistake we see is when individuals fail to acknowledge that there is a problem and try to survive by building up balances on different credit cards, passing debt from one credit card to another, or repaying debts by increasing balances on other debts. If you find your debt increasing month by month, then this is usually a sign that you need to take action.
In this situation, take a thorough look at your debt and work out the best way of reducing it. Start to pay off credit card bills with higher interest rates first and, if at all possible, pay a little more each month in order to decrease your balance. If you have a £1,000 balance on a card with an 18.9% APR and pay off £25 per month, it will take you five years and one month to clear the debt; increase that by just £5 to £30 per month and it will take only three years and 10 months.
You can also contact an expert source for help – CABA has an experienced team which has helped many trainee accountants but you could also turn to the Citizen’s Advice Bureau, Consumer Credit Counselling Service, National Debtline and Payplan which all offer free debt advice. A useful source of information is the government’s new financial health check tool which can be found at www.moneyadviceservice.org.uk.
© CABA 2011