Welfare Reform

Make your budget work for you

www.milton-keynes.gov.uk/welfare-reform

Why budgetIt’s always a good idea to keeptrack of your money.

Budgeting is keeping track of the moneyyou have coming in and what you are ableto spend. This can help you to:

• make decisions about your money, asyou’ll know where it’s going andwhether you have any left over

• identify where you can make changesto your spending habits if you’restruggling to make ends meet, and

• make your money go further bygetting into the savings habit if youhave any left over.

Budgeting involves setting money asidefor rent or mortgage payments, bills,essential day to day spending,replacement household items and anyloan or credit card repayments.

Paying late for loans or credit cards mayaffect your credit history.

A good credit history is important. It mayaffect your ability to secure private rentedaccommodation as many landlords willrequire a credit reference to be done.

Other companies may also look at yourcredit history if you apply to set up a

Direct Debit, for example to pay a mobilephone contract.

Finally, budgeting can help you work outhow to live within your means – givingyou peace of mind.

Key PointsBudgeting helps you:

• Know where your money isgoing

• Avoid or get out of debt and

• Make savings and have morechoices about what you do withyour money

You only need to set aside a few minuteseach week to look at your finances.

Start by listing all your income, forexample your benefits, tax credits orearnings.

Make your budget work for you

Money coming in

You need to know exactly what moneyyou have coming in. Check which benefitsyou receive and the amounts. You mayneed to check if you are having anydeductions taken from your benefits.

If you are receiving wages your payslipwill tell you how much you actually get. Italso tells you how much you pay in Taxand National Insurance contributions. Youcan check you are on the correct Tax codeby contacting the Tax office or asking youremployer’s HR department.

If you are not sure you are receiving all thebenefits that you may be eligible for

contact your local Job Centre Plus,Citizens Advice Bureau or seewww.direct.gov.uk.

Set up a savings plan with Credit Union.See www.swancreditunion.org.uk/mk-community-bank

Secure employment. You will always bebetter off if you are working. You will haveextra money coming in. If you arecurrently looking for work contact theNeighbourhood Employment Programmeat www.milton-keynes.gov.uk/neighbourhood-employment-programme

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Other incomeYou may have money coming in fromother sources, for example from relatives,or rental income if you have a lodger orrent out a property you own.

You may find that your income varies frommonth to month, especially if your wagesare based on the hours you work or youget paid by commission.

You may receive money in chunks, such astax credits arrears payments or studentloans that are paid out at the start of eachterm. If so, it could be worth working outyour average income for each month.

Key points• Check your benefit payments.

• Claim any other benefits or taxcredits you may be eligible for.

• Check your payslip is correct

• Keep a spending diary so thatyou can see where your moneyis going. Try writing down whatyou spend each day for amonth.

• Don’t forget occasional items,like school uniforms,replacement household items,and birthdays.

Make your budget work for you

Money going outNow you know what’s coming in, the nextstep is to find out how much is going outand plan your budget.

Use the form included in this leaflet towork out what you have coming in andwhat you have going out.

Don’t worry if you can’t account for everypenny coming in; the most importantthing is to know roughly where you stand.Keeping a spending diary can help.

Don’t forget occasional items such asschool uniforms and trips, birthdays,Christmas or other festive presents. Alsothink about other outgoings that you payfor once a year, for example car tax andinsurance. It’s helpful to put in a monthlyamount for these, perhaps by estimatingand dividing up the average that you’dspend during the year.

Unexpected expenditureIf you experience unexpectedexpenditure, or do not receive benefits ormoney you were expecting, then inexceptional circumstances help may beavailable from Milton Keynes CouncilLocal Welfare Provision. Phone 01908253040, visit the LWP Team at the CivicOffices or go to www.milton-keynes.gov.uk/lwp

Keep trackCheck your income and expenditureregularly. If your circumstances change,for example your benefits change, you geta pay rise or your bills increase, look atyour budget again to make sure it’srealistic or that you’re making the most ofany extra income.

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Make your budget work for you

To be consistent, use weekly or monthly amounts for both your income and yourspending.

Income - Section A £

Your pay after tax (net pay)

Your Partner’s pay after tax

Child Tax Credits

Working Tax Credits

Child Benefit

Maintenance you receive

Job Seekers Allowance/Income Support

Employment Support Allowance/Incapacity Benefit

Disability Living Allowance

Retirement Pension

Pension Credit

Other state benefits

Works Pension/Private Pension

Contribution from other adultsliving with you

Other

Total income

Total income (from Section A)

Total spending (from Section B)

Income minus spending (A-B)

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Spending - Section B ActualHousehold £

Rent/Mortgage

Council Tax

Gas

Electricity

Household (supermarket shop)

TV licence

Water Rates

Court Fines

Child Care Costs

Other

Non Priority payments £Satellite

Broadband/Telephone line

Mobile Phone

Catalogues

Credits Cards

Car insurance/MOT/Servicing

Travelling Expenses

House insurance

Pet Expenses

Clothing

Health Expenses

Occasional items eg birthdays

Other Loans

Eating out/takeaways

Other

Total spending

Managing your budgetOnce you have worked out how muchmoney you have coming in and goingout, you’re in a better position already. Ifyou haven’t got much money left over oryou think you might be getting intodifficulties, don’t panic – there is freehelp at hand.

Always make sure you pay your prioritydebts, for example, rent or mortgage, gasand electricity bills and Council Tax. Ifyou’re struggling, it’s best to get in touchwith those you owe money to as soon aspossible. They may be able to set up anarrangement where you can spread yourpayments until you get your financessorted.

Not much money left over?If you find that you’re regularly strugglingto make ends meet, you will need toreduce your spending. These tips mayhelp.

• Consider making small cutbacks onnon-essential items. What could youdo without to help you get back ontrack?

• Avoid taking money from payday loancompanies, door step lenders orgetting items on hire purchase or

credit. Companies that offer credit topeople with bad credit charge veryhigh interest rates which makes anyitem you are purchasing moreexpensive than normal.

• You may get a better deal by switchingservices such as phones, electricity orgas to new suppliers. There are variousinternet switching services or searchengines you can use.

• Alternatively, speak to your supplier tofind out if you qualify for a WarmHome Discount.

• Don’t be tempted to upgrade yourphone; look for a sim only deal. Somecontracts can work out to beexpensive.

• If you are a BT customer on a lowincome and claiming means-testedstate benefits, you may be able switchto their low-cost service, BT Basic.Contact BT for details.

• Reducing the amount you spend onnon-essential expenditure such aseating out, Sky or mobile phonecontracts

Make your budget work for you

Getting into difficulties?You may have the start of a debt problemif you find you are:

• using credit (loans, doorstep lenders,payday loans and loan sharks) to paybills

• paying no more than the minimumpayments due on your credit cards

• using your credit card to take out cashadvances

• using your credit card to pay your rentor mortgage, or

• borrowing money without planninghow you’re going to pay it back. Even ifit is from friends and family.

Think carefully about borrowing moremoney to pay off existing debts or tomeet your day to day expenses. It couldmake things worse. If you borrow moneyand then are unable to pay your rent ormortgage you are at risk of losing yourhome.

In trouble?

If you find that the situation is spirallingout of control, try not to panic. Experthelp is available. Several organisationsoffer a free service, either face to face, orby phone, for example, Milton KeynesMoney Advice, Citizens Advice Bureau,Money Life Line, or National Debtline.

See the Organisations that can helpsection at the end of this leaflet.

These advice agencies can help you tackleyour debts. They will help you set up abudget sheet, prioritise your debts andwork out how you can live with theincome you have.

If you are not able to pay your rent youshould contact your landlordimmediately. If you are a Council tenantin the first instance you should contactthe Rent department on 01908 252937 totalk to them about your arrears.Depending on your circumstances if youare having difficulty paying your rent youmay be able to claim extra help. This iscalled a Discretionary Housing Payment.To apply for this you should contactMilton Keynes Council on 01908 253040or go to www.milton-keynes.gov.uk/dhp

Don’t ignore the problem; talk to thepeople you owe money to. They may beable to help you manage yourrepayments.

You may see adverts or get calls fromcompanies offering to help you manageyour debts. Beware though as they maycharge a fee.

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Staying in controlIf you’ve got some money left over, it’stime to get it working for you. Here are afew ways to get you started.

• Ensure you prioritise your bills such aspaying your rent

• paying off your debts

• reducing your debts

• saving up for furniture, schooluniforms, or a deposit for a home, or

Work out a system to keep track of yourspending in a way that suits you. Youcould keep a separate notebook or do itonline. Consider:

• making a calendar note of whenpayments are due, for example rent,council tax, TV licence, car tax andMOT. You’ll be better prepared if youknow when they’re due. It could alsohelp you avoid late-payment charges

• looking at your bank and credit cardstatements as soon as you get them.Contact the bank or credit cardcompany if you think anything lookswrong, and

• checking your bank statements. If youare incurring bank charges forunauthorised overdrafts and returneddirect debits you may need to speak toyour bank or open a new account thatdoes not incur these charges

• reviewing your budget regularly. Ifyour circumstances change, forexample your benefits change or youget a pay rise or your bills increase,adjust your budget so you knowwhere your money is going.

• saving regularly if you have money leftover after all your expenses, and yourpriority bills are paid, and any loans areat a manageable level. Considerputting a little aside each week ormonth.

You can save money in a bank, buildingsociety, credit union or by using NationalSavings and Investments.

If you already have a savings account,check the interest rate you’re getting. Youmay be able to get a better rate byswitching accounts or providers.

Make your budget work for you

You can also save in savings schemes andclubs run by supermarkets, large retailersand local shops. This may be for Christmashampers or gift vouchers. But with theseoptions you’re not earning any interest onyour savings, so your money isn’t growing,and your savings may not be protected.

Saving for emergencies

It’s a good idea to put some money asidefor emergencies, or possible expensessuch as replacing household items. Theamount will vary depending on yourcircumstances. Keep it in a savingsaccount that you can take money from atshort notice in an emergency.

Shop around

You can get a better deal with yoursavings if you shop around first. You maybe used to doing this for things like TVs,washing machines or other householdgoods.

Make sure you know exactly what you aregetting, and that you are happy with theterms and conditions.

It can be worth shopping around face toface on the high street, or by phoningaround. Talking to someone in your bankabout your particular needs can help, butmake sure you ask them about the rangeof products they offer. Sometimes theycan only sell or advise on their ownproducts, so the range is limited.

Key points

• Decide on your financial goals.

• Get into the savings habit tohelp you meet your goals.

• Keep track of your budget usinga system that suits you.

• Check your budget regularly soyou know where you stand.

• Shop around and ask questionsso you get the right deal foryou.

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Make your budget work for you

Remember….• Your rent or mortgage payments are a

priority to pay – if you do not paythese your home is at risk

• Prioritise your payments accordingly

• If you cannot pay for any reasoncontact the person or companyimmediately – they may be able tohelp

• Beware of taking out credit - highinterest rates often mean you end uppaying a lot more – its often better tosave

• Put some money aside for unexpectedexpenses

• Keep a spending diary

• Remember to review your budgetregularly to make sure you’re livingwithin your means, especially if thereis a change in your circumstances.

• Remember if you need helpprioritising your debts or need somefree money advice, there are specialistagencies that can help.

Useful Contacts Milton Keynes Citizens Advice Bureau01908 604475www.miltonkeynescab.org.uk

Money Life Line0300 123 519www.mkmoneylifeline.org.uk

Milton Keynes Money Advice01908 226049www.newlifechurchmiltonkeynes

National Debtline0808 808 4000www.nationaldebtline.co.uk

Money Advice0300 500 5000www.moneyadviceservice.org.uk

DebtHelpCompare.com0300 777 777 2www.debthelpcompare.com

Swan Credit Union/MK Community Bank03030 300 147www.swancreditunion.org.uk/mk-community-bank

Neighbourhood EmploymentProgramme01908 252323www.milton-keynes.gov.uk/nep

Job Centre Plus0345 604 3719www.gov.uk/contact-jobcentre-plus

Consumer Focuswww.consumerfocus.org.uk

Milton Keynes Council01908 691691www.milton-keynes.gov.uk

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QuestionMy circumstances have recently changedand I am struggling to pay my bills andhaving to borrow to pay them.

AnswerContact one of the many agencies thatcan help you with your budgeting so thatthe situation does not go out of control.

Also check you are getting the correctamount of benefits or credits.

QuestionI have large debts to various companies andI am unable to pay them off.

AnswerYou should contact Money Advice Serviceto find an authorised debt agency. Theywill be able to advice you about a DebtManagement Plan or a Debt Relief Order ifthe debt total is less than £15,000.

QuestionI have not been able to pay my rent and I amnow in arrears.

Answer

You should contact your landlordimmediately to discuss the situation – ifyou are evicted for rent arrears you maynot get help with re-housing.

QuestionI have a large utility bill that I cannot pay.

Answer

You should talk to the utility company tomake an arrangement and stop additionalcosts. Also most utility companies have atrust that you can apply to for possiblehelp clearing the debt. This is dependenton your circumstances.

QuestionI am being charged every month by mybank for overdrafts etc.

Answer

Open a basic bank account that does notallow you to go overdrawn – you will notpay unnecessary charges but you willneed to be able to budget your money.

M14336 Jan 2015

Available in audio, large print, braille and other languages

01908 253040

Welfare ReformCivic Offices1 Saxon Gate EastCentral Milton Keynes MK9 3EJTel: 01908 253040E mail: welfare.reform@milton-keynes.gov.ukWeb: www.milton-keynes.gov.uk/welfare-reform

www.milton-keynes.gov.uk/welfare-reform