I want money - that's what I want

Your bank statements are unopened, your tax returns a mystery and your wardrobe stuffed with unworn 'bargains'. Time to say goodbye to finance phobia. Continuing our series on dejunking your life, Eleanor Bailey calls in the money doctors

Since the media is the modern confessional, let me confess. Three weeks ago I saw a financial advisor and I could not tell him what my mortgage repayments were. There, I've come clean. I didn't know what a current account balance was, either. Nor did I know when or how much I was paying out each month by direct debit. All I knew was that I was spending too much on taxis, and not enough preparing for the bleak void of my pensionless future.

When it comes to dejunking your life, there is the fun stuff - like sorting out your wardrobe and sadistically scrubbing friends off your Christmas card list - and then there are finances. Finances are not fun. Partly because they involve figures and remembering how to use a calculator, but mainly because of the universal law of money, which says that you always have less than you think. So, dealing with problems is inevitably painful. But dejunk you must if you are living in minimalism only because you can no longer afford furniture.

Most of us have a leaky bucket attitude to money. We think "oh, it's only pounds 10," after incurring another needless overdraft charge after being accidentally in the red for three hours one afternoon and Aunty Nellie's pounds 5 birthday cheque has gone yellow with age on the kitchen sideboard. Yet, significantly, it never works the other way around. The bank never thinks, "Sod it, she was only overdrawn for three hours." Which is why your bank is a whopping financial success and you are but one broken boiler away from financial disaster.

"It doesn't have to be such a chore if you do it regularly," insists accountant Danny Jones (not his real name) whose clients include a man who leaves his financial documents scattered around the house for Jones to retrieve. "The worst thing is leaving things to the last minute. It gets put off and off until it's screaming at you and, of course, is then the total nightmare that you always imagined it to be. I tell people to get a little box to put everything in. You don't have to summarise everything immediately. Just set up a system. Give yourself a once-a-month meeting so that you know how much is coming in and going out."

Many of us have simply never budgeted. It's an alien concept. Budgeting somehow implies a make-do-and-mend loser mentality. However, just as if you sort out your wardrobe you end up with a lot more to wear, so if you know where your finances are, you end up with more money. You don't even necessarily have to save, just plug the holes.

We are the disposable income generation. We have income and we dispose of it. Thirty years ago, most people did not eat out as often in a year as we expect to eat out in a fortnight. "A lot of people make the mistake of thinking that because they earn well, they don't need to think about money," says Philip Telford of the Consumers Association's Money Group, " But if they did think more, then earning so much wouldn't be so essential." "I just don't think about spending 20 quid," admits Mark, 31. "It seems like nothing. I know logically that they all add up, but I can't be bothered to keep track of them. Then suddenly my bank statement is pounds 500 down."

"There are two ways to improve your financial position," says John Foden, director of the Money Management Council, a charity which trains people in planning their personal finances. "Spend less or earn more. Spending less is often an easier option than you think. A lot of people simply waste money." Downshifting has indeed become a fashionable concept in the Nineties, but you don't have to live in a tent in Ayrshire, just take a long hard look at money outgoings and stop spending unnecessarily. It's like all those dull but worthy bits of advice about getting off the bus at an earlier stop to get fitter. Small steps are more boring but ultimately more effective. Some of us are addicted to the drama of the all-or-nothing approach to saving. I once restricted my food bill to pounds 2 a week, and for a week and a half I existed on jacket potatoes and Kwik Save baked beans. But it didn't work. Yo-yo saving is like yo-yo dieting - afterwards you are worse off than ever.

Suspecting my incompetence to be deeply ingrained, I went to see a hypnotherapist to discover why I, like so many others, felt this compulsive need to toss bank statements carelessly over my shoulder and fritter money away on shoes I never wear.

Hypnotherapist Charles Montagu concluded that my disorganisation stemmed from a very organised background, against which I was still rebelling. My subconscious has to learn, he explained, that dealing with practical things such as finances will not restrict you, it will free your mind, release you from worry."

Montagu's prescription was small steps to recovery. "What small thing can you do this afternoon to sort out your finances? Don't try to do everything at once." Correctly, he identified that I was not sorting anything out because I was bogged down by the enormity of the whole thing. What was the point of becoming organised for this tax year when I knew last year was such a mess? For my first homework, I agreed to locate my council tax bill and put my expenses in an envelope.

But, more than simple organisational techniques, financial dejunking means having sensible investment and savings that are affordable. Financial advisors say that we should be thinking first of the short term, then long term and then medium term. Vincent Duggleby, presenter of Radio 4's Money Box Live, says, "In an ideal world, everyone over the age of 25 would save a quarter of their income for the next 30 years. Of course this doesn't happen. The problem is that people can't be bothered to look into it. If a car salesman asks you what kind of car you want, you don't say, "One with an engine and four wheels." You have an opinion. It's the same with financial advice. You need to spend a bit of time getting to know the system."

For the issues surrounding investments, according to Duggleby, think "clarity". "Any decision you make needs to satisfy you on all counts. C is for the cost to you now, L is for liquidity - how easily can it be turned into cash, A is for access, R is for risk - the danger of losing it, I inflation, T tax liability and Y the yield. You need to be making decisions now. It's no good putting pounds 50 into a pension scheme and thinking that your future is sorted." Go forth and multiply.

The saver and the spendthrift

Fiona, 28, earns pounds 25,000 pa and takes care to stay in control of her finances

"I worked out exactly how much I could afford to save in great detail, and now I save pounds 150 a month in a Pep and a Tessa and put pounds 95 into a company pension. I know exactly where I am at all times because I get a mini-statement three times a week to check. When I'm saving up for something - like right now I'm saving to go to New Zealand - I'll withdraw a certain amount of cash each week and put it in my knicker drawer and hide my cashpoint card away so I know I can't spend any more. Otherwise, I'll be in the pub and get tempted. When I'm really skint I can survive on pounds 25 a week, and that's including food. I always save rather than get into debt because I like the security. I don't want to waste money on things that I don't really want. I like knowing that I can take off at any time."

GEORGIE, 29, earns pounds 30,000 pa and admits that her financial affairs are a mess

"My most stupid thing is parking tickets. I was getting about two a month at one time because I was always late for things. Also, I belong to two gyms - I joined the new one because I thought it was better, but then it turned out not to be. I've never had a budget, I suppose, because it would make me think about how disastrous things were. Just recently, I thought I was in credit but it turned out I was pounds 1,000 overdrawn. That made me feel quite sick. I never save, I always buy now and pay later. I always eat out for Saturday and Sunday lunch and in the evening. But I've never had more than pounds 300 on my credit card, that's where I draw the line. I always think that one day, somehow, I'll be really well off. My parents always spent and they always did all right."

Tips to tame your wallet

Don't incur charges unnecessarily. Even a bank overdraft is cheaper than credit-card debt.

Treat your financial concerns like a business. Don't get emotional. Too many people associate money with panic.

Have clear goals, budgets and cash flow.

Meet problems head on, not head-in-the-sand. "Reply to the Revenue," says accountant Danny Jones, "consult an advisor. Contact the people you owe money to. Most of them are reasonable human beings if they're treated nicely."

If you possibly can, save yourself a cushion of a couple of months' salary in case you lose your job.

Have regular reviews.

Read up around the subject - boring, perhaps, but lucrative, certainly.

Keep proper records and keep track. Millions of pounds are lost each year to people who fail to claim insurance, keep their savings in a low- interest account or pay too much tax and never bother to claim it back.