Budgeting `is a skill with long-term benefits`

Recent research from moneysupermarket.com found that 2.1 million Britons are permanently overdrawn, while a separate study from Experian indicated that 80 per cent of the UK population regularly overspends.

Jim Hodgkins, managing director of CreditExpert.co.uk, said that such findings reveal "a lack of understanding of the long-term consequences of these actions" and added that "it`s imperative that people fully realise the implications of not managing their finances properly".

Amidst these financial hurdles, one of the most effective ways to keep track of spending and repaying is by creating a budget to monitor how much is spent each month on household bills, debt repayments and other expenditures.

Not only can following a budget help prevent debt problems, but it can also facilitate the success of debt management plans such as individual voluntary arrangements (IVAs), as keeping to a regular payment schedule is essential.

And with figures from the Insolvency Service indicating that 13,233 IVAs were taken out during the first quarter of 2007, the importance of learning how to effectively budget could mean the difference between getting out of debt and staying in the red.