WORKING out an annual household budget should be every family's goal for 1997.

As any financial adviser will admit, the most difficult part of any financial exercise is gathering together all the relevant information. Most of us keep inadequate filing systems and it may take some time to get together all the necessary income slips, mortgage and bank statements, cancelled bills, etc., in order to do proper justice to a new family budget.

No budget can be devised without knowing how much you have spent over the previous year so the first step is to create two piles - a small one that shows what income you have earned (and expect to earn in the coming year) as well as the income of other members of the family. Older children, who earn regular pocket money or work during the summer should be included in this exercise, especially since most of them are net recipients of the household income.

The second pile should include an accurate representation of outgoings such as:

. Mortgage or rent;

. Utilities;

. Food and clothing;

. Personal borrowings, including car repayments, hire purchase, overdrafts, credit cards;

. All insurances;

. All medical costs;

. Any savings or pension contributions not deducted at income source;

. Entertainment and holidays including Christmas.

You may have to estimate some of these outgoings.

Once you have entered both sides of your ledger, the next step is to try and balance the result by asking the following questions:

. Are you claiming all your tax deductions and reliefs? Do you have unclaimed medical bills? Is your mortgage interest relief deduction accurate and up to date?

. Can you reduce or reorganise your personal debt?

. Are you paying a competitive mortgage interest rate?

. Would it make sense to refinance personal and credit card loans with one personal loan at a lower interest rate?

. If you have considerable personal debt but have a high equity ratio in your family home, would it make sense to refinance your mortgage to clear all your debt and improve monthly cash flow?

. Is there any scope for reducing utility or food bills? Can you encourage other members of the family to turn off lights, lower the central heating thermometer a few degrees and limit the number of local and long distance phone calls?

. Are your savings yielding a high enough return? By reviewing deposit rates you may earn more income over the year.

. Would it makes more sense to use savings that are earning low interest rates to pay off higher cost debts?

. Are you paying too much for insurance? A good broker can review your policies with a view to achieving savings.

. Would a bank Budget Plan suit your family? Such plans will average out the cost of all your major outgoings during the year, divide the total by 12 and ensure that sufficient funds are in your account each month to meet the outgoings by way of a flexible overdraft. Everything from regular debts like mortgages and utilities are included as well as large annual outgoings like car insurance, school fees and holidays.

If the Minister for Finance can find an additional £400 million savings in the national Budget, it stands to reason that every working family should be able to find ways to reduce their expenditure.

Independent financial advisers, ideally those who will charge a fee, are in the perfect position to assist in setting up a family budget and to help you plan for the following years.

The Irish Brokers Association, the Pensions and Insurance Brokers Association or and your local community centre should be able to recommend a financial adviser in your neighbourhood who can offer such assistance.