Managing money is always tricky and when you have a low income, a slight change in circumstances can make a huge difference. That’s why budgeting and planning is a crucial part of managing your money but how can you start doing this?
Working out your budget
To start with you need an idea of what you have coming in and what you have going out to create your budget. There are some good budget planners online at sites like the Money Advice Centre. This will include looking at how much basics cost such as rent or mortgage, gas and electricity and your weekly food bill.
By creating a budget, you can see what you have coming in and how this compares to what you have going out. So, if you find that you have more outgoings than incoming, you know you have a problem and need to get some help.
Can you claim benefits?
When you are on a low income, there are lots of ways the government can help you. Depending on your age and circumstances there are various benefits that you might be entitled to. If you have medical conditions this might also add to the situation and help with more financial assistance.
If you are of retirement age, you may be able to get Pension Credit which tops up the state pension to help you achieve a better income. Contact the Pension Service of the DWP on 0800 731 0469 to find out if you qualify for it and what you need to do to put in a claim – a lot can be done by downloading and printing online forms and returning them in the post or even over the phone.
Next you need to look at what costs you the most and see what can be done about it. Rent or mortgages tend to be fixed, although you may be entitled to help depending on your situation. One of the next biggest bills is your gas and electricity.
Shopping around for the best deal is very important. Price comparison sites don’t need a lot of information to help you find that best deal and can make the process of switching extremely easy. Often you don’t need to ring anyone, cancel your old contract or anything. Just make sure there are no penalties for leaving your old provider and you don’t end up with a big bill to pay.
When you budget, you can start to see potential problems on the horizon and try to do something about them. For instance, maybe the car MOT is due in four months and you know there are some repairs needed. You might be able to put some money away each week to have some money ready for this expense.
Other times expenses come along unexpectedly, and these can be the hardest when you are on a fixed income. But there is help available. Budgeting loans, for example, come from the Social Fund from the government and can help with a range of things such as:
- Travelling expenses
- Clothing including footwear
- Some furniture or household items
- Money to help you start or get back into work
- Home security measures or improving the house
- Advance on rent or removal costs if you are moving home
Budgeting loans do need to be paid back but there’s no interest added so you only pay back what you borrow.
Be very careful about other types of borrowing as this can make things worse. For example, payday loans may seem an ideal option for short term borrowing but always remember the amount of interest you pay. And if you can’t pay it back, the situation can rapidly escalate and end up where you owe a substantial amount of money.
Don’t be afraid to get help
If you are struggling with budgeting or your finances, don’t be afraid to get help. There are charities such as StepChange who exist to help people with financial problems and their services are free to use. Ignoring the problem won’t make it go away and things will only get worse so do something as soon as possible and stop the problem quickly, at the earliest possible point.