Managing your money is always a balance between what you have coming in, and what you have going out, or how much you spend, in other words. But if your budget is largely made up of benefits, you may need some advice on managing your finances.
Budgeting sounds pretty boring, but in reality everyone does it to some degree – and regardless of how much money you have at your disposal, budgeting is just a balance between what you have coming in and what you are paying out. Getting control of your finances is empowering and helps you to avoid unexpected costs.
What’s coming in?
Jot down everything you have coming in to your household – this may be a combination of benefits and wages, include tax credits, and make sure you take into account whether or not your wages are always the same or whether they differ month-to-month. You may also get other income such as child maintenance, so make sure you note this down. If you’re a single parent and coping on one income, organisations such as Gingerbread can help you understand the benefits you’re entitled to and how to apply for them, as well as offering advice on managing your household finances. There’s a free helpline that will put you in touch with an advisor who will carry out a full benefits check.
What’s going out?
Start with the essentials – rent, food, bills and loan repayments and then branch out. Make sure you include everything – childcare costs, clothing and entertainment. Include everything, even those things that you may not think of on a day to day basis such as vet bills, birthdays or travel expenses.
Martin Lewis, better known as the Money Saving Expert, points out the importance of honesty when budgeting: “The main problem is that because budgets concentrate on a typical month, they massively underestimate your real spend, as this misses huge costs such as Christmas, summer holidays, new sofas or even changing car every five years. Broad categories like ‘motoring’ make it too easy to forget the small expenditures that add up. Instead it needs to be MOTs, new tyres, petrol, insurance, breakdown cover and more.”
Free, online budget calculators, which break down categories of spend, are widely available to help you plan your income and outgoings. The Money Advice Service also has a handy online ‘cut-back’ calculator, which can help you identify and cut out regular non-essential expenditure.
If you receive benefits, you’ll receive something called ‘Universal Credit’, which was introduced in 2013 and is being rolled out in phases until 2017. It’s designed to be much simpler and is a single payment which means you get your money in one payment rather than from a range of different sources. You’ll also be able to manage your payment online. Find out more at www.moneyadviceservice.org.uk
Universal Credit replaces:
- Income-based Jobseeker’s Allowance
- Income-related Employment and Support Allowance
- Income Support
- Child Tax Credit
- Working Tax Credit
- Housing Benefit
Unlike a lot of previous benefits, which were paid weekly, Universal Credit is paid monthly, so you’ll need to know how to make your money last. Following the basic system of understanding your income and outgoings, cutting back where you can, and making sure you get all the benefits you’re entitled to, can really help you get control of your cash.
Disclaimer: This is a collaborative post