Brits are fighting against the credit squeeze and trying to control their money by going back to old-fashioned budgeting, according to PayPal.

Almost four in five Brits now set a budget to manage their money, but 15.9 million Brits regularly go over by an average of £123 each month.

Over half of people say that they now budget more strictly and more frequently compared to 12 months ago, and while 62% set or review their budgets on at least a monthly basis, a diligent 8% do this every single day, to ensure their finances balance.

As well as tightening up their budgeting habits, 15% say that they are not making long-term spending plans at present, another indicator of the impact that the economic downturn has had on Brits over the last year.

The research also found that while 42% of us claim to come in ‘on budget’ each month, 20% still have to rely on credit cards or long-term savings to meet basic living costs at least once a quarter.

Carl Scheible, managing director of PayPal UK, said: “British households have seen their financial commitments change significantly over the last 12 months and with energy prices soaring, mortgage payments still high and the cost of food increasing at a record pace it is encouraging to see people reacting to this by trying to keep their ‘financial house’ in better order.

“However, as our research shows, setting a budget and then sticking to it are two very different things. It’s concerning that so many people claim to keep to their budget, yet still rely on credit cards or savings for basic living costs. The consequences of this kind of strategy are soaring credit card bills and no savings to fall back on, which is dangerous territory.”