Due to many changes in Benefits, it is now even more important that you budget your finances accordingly. This guide will give you practical ways to budget your money.
There are certain bills that you need to pay first; these are called priority bills. It is important you pay your priority bills on time as not paying these could result in you getting evicted from your home or even imprisoned. The two main bills which are classed as priority bills are:
- Rent – as not paying this will result in court action and eviction
- Council Tax – as not paying this could result in imprisonment
Loans and other credit sources
It is important that if you are struggling financially, you speak with your credit providers to explain your situation and they may be able to help, such as offering you a special repayment plan and sometimes freezing the interest. You should speak with them as soon as paying your loans become a struggle to stop potential action being taken against you for non-payment. If you have a number of debts you should consider speaking to debt specialists such as Step Change or Christians Against Poverty for assistance.
Before taking out credit products you should thoroughly research which one is suitable and affordable for you, and there are a range of organisations that can advise you accordingly.
Whilst Childcare is expensive, if you are working and eligible to claim Working Tax Credit, 70% of childcare costs can be met by Working Tax Credit. Whilst gifts, treats and pocket money are important for children, they are not an essential expense and if not managed carefully, could result in financial difficulty arising. If you have dependent children in school you may be entitled to the following:
- If you are claiming a means tested benefit such as Income Support, Employment and Support Allowance, Job Seekers Allowance or Universal Credit, you will be entitled to free school lunches.
- If you are working and claiming Working Tax Credit and have an annual income of less than £16,190 you may also be entitled to free school lunches, and should speak to the school.
- If on benefits or a low income, there is usually a school fund that can be accessed for assistance with school trips.
Transport can account for a large amount of a person’s budget and therefore, the following tips should be considered.
- If you have a car, can you afford to run it bearing in mind the expenses such as petrol, insurance, MOT/Service, road tax and general maintenance. If a car is needed, it would be a good idea to shop around for cheaper deals on car insurance by comparing different products and companies. You could also look to find cheaper deals for MOT or service contracts.
- If you need a car for employment purposes, you could look to car share as not only would this reduce congestion on the roads, but also reduce the cost of running a car as journey costs can be shared between the passengers.
- If you have a disability or health condition which affects your mobility, you should put in a claim for Personal Independence Payment (PIP) and if you are awarded this at the enhanced rate, you can apply for a road tax exemption as well as insurance exemption which would save you money.
- If you claim PIP for mobility, you would have an automatic entitlement to a Blue Badge which would offer free parking in local authority car parks. You can also obtain a Blue Badge application form from Barnet Council to consider your claim, if there is no entitlement to PIP.
- If using public transport, you should get an oyster card as this is the cheapest way of using public transport within London. You could then top up a fixed amount per week which would allow you to control your spending.
- If travelling into London, you should consider travelling, if possible, after 9.30 am as this is considered ‘off-peak’ and the costs of commuting are cheaper, and you are more likely to find a seat as well!
- If you are over 60, you are entitled to a freedom pass and you should contact London transport.
- If you are a pensioner and have issues with mobility you may be entitled to free transportation from Dial a Ride services.
- If you have a disability or health condition which affects mobility, you could apply for a freedom pass through the Assisted Travel line at Barnet Council; this would enable you to have access to the buses or trains with no charge.
- If you are claiming income related benefits, Employment and Support Allowance, Job Seekers Allowance, Income Support and Universal Credit, you are entitled to a reduced oyster card which would offer you 33% off your travel. If this applies to you, you can obtain a form from your local Job Centre Plus.
- If you have a medical condition which requires you to attend hospital appointments regularly and you are in receipt of a means tested benefit, if you take an entitlement letter to the main reception they should be able to reimburse your travel costs.
Whilst health insurance is an important part of household expenditure, it can also be expensive depending on age and any outstanding health conditions that you may have. Therefore, serious consideration regarding the need for these products should be taken before signing up to these.
If you have credit card or other types of financial insurance products, you should be able to claim these back if you feel that you have been mis-sold these you should contact the Financial Ombudsman for more information. If you feel that these products are necessary, you should look at comparison sites to see if cheaper deals can be obtained. If you are an Opendoor Homes tenant, you may be eligible for cheaper home contents insurance and you should call Opendoor Homes for more information.
It is essential that you budget your money accordingly and do not fall into using expensive credit products as these are expensive to service with charges applied monthly as well as interest.
If do find yourself short of finance, you should consider more affordable methods of borrowing such as opening up a credit union account with the London Credit Union. There are also a range of bank accounts which are available, all with differing needs and additional services, such as car insurance. These accounts usually have a monthly fee applied to them and again, you should seriously consider whether you need such an account as a simple bank account can be opened free of charge with no credit facilities available. You should speak with a member of bank staff for more information on bank accounts which are available.
Pets are also nice to have as part of the family but are also an unnecessary expense, bearing in mind the upkeep of these animals including food, and insurance which are costly, and easily eat into a family’s budget. Therefore, serious financial consideration should be applied to see whether a pet can be looked after in your current circumstances. If you already have pets and are struggling to look after them, you could consider putting them up for adoption ensuring that they will be well looked after.
Hobbies and entertainment are important, but consideration of how these will impact on budgets and priority bills is important. If you are financially struggling cheaper alternatives should be identified, such as instead of purchasing books from a book club signing up with a local library, and look to go running in place of joining a gym. Additionally, there are frequent discounts which can be obtained online and through other sources towards local events and museums and these should be utilised accordingly.
It can be hard to budget accordingly for one off events such as birthdays and anniversaries, and perhaps the best method for dealing with these is to sit down at the start of the year and make a list of celebrations which may take place over the year and budget accordingly for these. You should state at this point how much you expect each occasion to cost you and factor this into your budget, and most importantly stick to this. You also need to be realistic and select an amount which is realistic and affordable.
If you are struggling to save money especially for events which can crop up from time to time, such as having to pay for an emergency plumber, you could look to open a credit union account which would promote saving whilst enabling you to borrow at a more affordable rate.
- Don’t ignore the problem and wait for it to go away – it won’t. Arrears increase quickly. By missing just one payment, it already makes arrears doubly hard to clear. Act before arrears get out of hand.
- Don’t ignore any letters we send you. Ignoring your rent arrears could cost you your home.
- If you think there has been a mistake, just tell us. We are always happy to check your account and sort out any problems, for example if we haven’t received one of your payments.
- If you are waiting for your housing benefit, tell us. We will not usually take legal action against you if we know you are waiting for a claim to be sorted out – provided you are making agreed payments.