With the New Year family finances are often tighter after the festive season; many of us could take advantage of free budgeting advice to help ease those January blues.
The Department for Work and Pensions and Money Advice Service have teamed up to provide impartial support and guidance to help people on benefits balance their finances.
The advice could be particularly useful for people on the new Universal Credit who are now being paid their benefits monthly – which mirrors the way most people in work are paid – rather than fortnightly under the old system.
Nick Hill, a Money Expert for the Money Advice Service comments:
“Some people may need extra help adjusting from being paid once a fortnight to once a month. You will need to develop new routines and make sure you set a budget. This will make the change much easier to cope with and will help you take care of things like rent as top priority.
“If you think you are going to struggle to pay off any debts, it’s important to get help as soon as you can.”
Universal Credit is now in over three quarters of all jobcentres and will be in every Jobcentre by April 2016. Universal Credit is designed to make work pay by combining six benefits and it adjusts automatically as people’s circumstances change, and ensures people are better off in work.
Universal Credit is transforming lives and under the new system people are significantly more likely to be in work, and earn more than under the old system.
In work earnings progression sits at the heart of Universal Credit as an in and out of work service. The core objective of Universal Credit is to support claimants to enter work, earn more, prepare for more work in the future, and ultimately become financially independent.
Budgeting Tips for Universal Credit
1. Set a budget
Now your payments are coming in monthly, drawing up a budget of all your household income and outgoings is a must to make sure you can pay all your bills and manage your money across the month. All it really means is drawing up two lists: the money you have coming in and the payments you have to make.
To get started, it’s worth gathering together any papers or emails you have that might help, like details of your Universal Credit payments, bills and living costs. You could then sit down with the Money Advice Service’s online budget planner, which can help you work things out more smoothly.
2. Consider setting up Direct Debits/standing orders
A Direct Debit gives a company permission to take money from your bank account on an agreed date and a standing order instructs the bank to pay an exact amount to another account regularly. Setting up either of these can be very helpful, as it means your most important bills are paid automatically, giving you peace of mind. You could also open a separate account that is just for your bills – which would leave the money for everyday spending in your regular account. Otherwise, keep reminders on your calendar or phone for when these Direct Debits are coming out. This can help you to keep an eye on your bank balance and avoid going into the red.
3. Work out your priorities
Not all things in your budget will be equally as important, of course. Top of your list should be paying your rent on time. To adjust to monthly Universal Credit payments, you could ask your landlord to move the day your rent is due closer to the day your Universal Credit is paid. This way, it’s always the first thing you sort out when your money comes in. You can use a standing order or Direct Debit to make this easier for you.
If you’re ever in trouble with housing and are worried about your situation speak to your landlord straight away. For more help you can speak to charities like Shelter, or the Citizens Advice Bureau.
4. Couples: prepare for joint payments
If you are in a couple and both of you receive benefits, Universal Credit means that you’ll now need to make a joint claim and will get a single monthly payment for your household rather than individual payments. This might mean you need to manage your money together more closely than you have done in the past.
A joint account can make managing money as a couple much easier, as long as you are like-minded when it comes to spending and can agree to a budget. If you do keep separate accounts, you should still use your budget planner to work out how to split the money coming in, and set up a standing order or Direct Debit to make sure you’re both automatically taken care of.
• Universal Credit will eventually replace;
– Jobseeker’s Allowance
– Income Support
– Employment and Support Allowance
– Working Tax Credits
– Child Tax Credits
– Housing Benefit
• Universal Credit is paid monthly, mirroring the way most people are paid in work.