Smart Budgeting Strategies for Low-Income Families - Make the Most Out of Your Money!
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Stretching your finances to cover your monthly bills and make ends meet can be a daunting task, especially when you’re on Universal Credit. With limited income and a need to pay for rent, food, and other expenses, budgeting can often seem impossible. However, with the right knowledge and a few tips, budgeting while on Universal Credit can be made easier. With thoughtful planning, you can make the most of your money and have a better financial outlook. Knowing how to track your income and expenses, create a budget, and make smart financial decisions can help you get back on track and manage your finances better.
What is budgeting?
Budgeting is a financial planning process that allows you to estimate and plan for your expenses and income. It’s essential for anyone who makes a budget to stick to that budget, as it allows you to see where your money is being spent. This will make it easier for you to know where to cut back if you find yourself in a financial situation where you need to save money. Making a budget can help you to make better financial decisions and may even help you to pay off debt faster. There are a number of benefits to making a budget, including - Helping you to see where you stand financially and assess your spending habits. - Allows you to see how much you can save and set financial goals. - Helps you to create a spending plan, stick with it, and make sure you don’t go over your budget. - Helps you to prioritize your spending and pay off debt faster. - Helps you to make better financial decisions, such as by choosing the right bank account.
Establish a budgeting plan
When you’re creating your budgeting plan, it’s important to know what your income will be for the upcoming month. This way, you’ll have a better idea of how much money you’ll have to spend and what you’ll need to spend it on. To determine how much money you’ll have to spend, it’s best to look at your monthly income and take out any expenses you know you’ll have to pay throughout the month, such as rent or loan payments. This will allow you to have a better idea of how much money you’ll have left over to spend on other things. To create a better budget, you’ll want to determine where your money is going each month. This will allow you to see where you can cut back or where you can set aside funds. For example, if you know that you spend £50 a month on groceries, you can set £50 aside each month for groceries. This will help you to plan for those costs and have a better idea of how much money you’ll have left over to spend on other items.
Tracking your income and expenses
When you’re tracking your income and expenses, you’ll want to keep a record of how much money you make and how much you spend. This will allow you to see where your money is going and will make it easier for you to create a budget. You can use a notebook or journal to track your income and expenses, or you can use an app like Mint. When tracking your expenses, you’ll want to keep track of anything that uses money, including your rent, utilities, food, and other expenses. This will allow you to have a better idea of what your expenses are and how much money you’ll need to spend on them. You’ll also be able to see if there are any areas where you can cut back and save money.
Setting financial goals
When you’ve created a budget, you can start to set financial goals for yourself. This will allow you to have a better idea of how much money you can save, and you can use that money to help you achieve your financial goals. Some common financial goals include saving for retirement, paying off debt, or starting an emergency fund. For those looking to save for retirement, the best thing you can do is to start saving early. The sooner you start, the more time your money will have to grow, which will make it easier to save a substantial amount of money. You can start saving by setting up a retirement account, such as a SIPP or ISA with minimum payments of £25 per month and in some cases £1.
Budgeting tips for low-income families
- Make a list of your monthly expenses. This will help you to see where your money is going and what you can cut back on. - Shop around before you buy anything. This will allow you to compare prices and find out if there are any stores that offer lower prices than other stores. - Shop during sales season. This will allow you to make better use of your money and buy items for less. - Bundle your bills. This will allow you to pay multiple bills at once and save money on paying multiple bills each month. - Find ways to make more money. This can be done by taking on a part-time job, babysitting, or finding other side hustles.
Saving money on essential items
When you’re trying to save money on essential items, it’s important to look for deals and coupons. You can also try shopping at discount stores, such as Tk Maxx, £1 shop, and Primark, as they often have discounted items. Another way to save money on essential items is to buy used items, such as furniture and appliances, instead of buying new items. You can also make your own items, such as cleaning supplies, beauty products, and food, instead of buying them. You can also save money on fuel car sharing with co-workers, taking public transportation, or walking instead of taking a car. When you’re shopping for food, it’s important to buy items that are in-season or on sale, and avoid impulse purchases. You can also try making a meal plan for the week so that you only buy items that you’ll need. Food parcels and good-to-go food from supermarkets such as Aldi are great ways to save on your food shopping.
Budgeting advice for Universal Credit recipients
When creating a budget, it’s important to know the amount of money you’ll receive from your monthly Universal Credit payment. You should also take into consideration any additional income you may receive. Making a budget will allow you to know how much you’ll have to spend and how much money you’ll be receiving each month. If you’re having difficulty creating a budget, you can talk to your local government assistance office or financial advisor. They can help you create a budget and determine what you’ll need to spend each month. You can also visit the Money Advice Service website to find budgeting tips that are tailored to Universal Credit recipients. Here is an outline taken from gov.com of how universal credit is calculated.
Download our monthly budgeting plan here
****Please note the information below is directly from Gov.com, it can be confusing so please do contact your local DWP for further advice.****
What you'll get
How much Universal Credit you get depends on:
your standard allowance
any extra amounts that apply to you
any money taken off your payment
Use a benefits calculator to see how much you could get.
Your monthly assessment period
Universal Credit is paid monthly and is based on your circumstances each month. This is called your ‘assessment period’ and it starts the day you make your claim.
For example, if you made your claim on the 10th of the month, your assessment period will start from the 10th of that month until the 9th of the following month. Your Universal Credit payment will then be paid on the 16th of each month.
Changes in your circumstances can affect how much you’re paid for your assessment period. You should report a change of circumstances to get the correct payment.
How much Universal Credit you get will also depend on your earnings.
Standard allowance You’ll get one standard allowance for your household. How much you’ll get monthly standard allowance.
If you’re single and under 25 £265.31
If you’re single and 25 or over£334.91
If you live with your partner and you’re both under 25£416.45 (for you both)
If you live with your partner and either of you are 25 or over £525.72 (for you both) Extra amounts You may get more money on top of your standard allowance if you’re eligible.
If you have children
You’ll get an extra amount for your first and second child.
You will not get extra money for any more children unless:
your children were born before 6 April 2017
you were already claiming for 3 or more children before 6 April 2017
other exceptions apply
How much you’ll get the extra monthly amount?
For your first child £290.00 (born before 6 April 2017)
£244.58 (born on or after 6 April 2017)For your second child and any other eligible children£244.58 per childYou’ll also get an extra amount if any of your children are disabled. You’re eligible for this extra amount no matter how many children you have.
You’ll get:
£132.89 if your child is disabled
£414.88 if your child is severely disabled
Childcare costs
You can claim back up to 85% of your childcare costs if you’re working. If you live with your partner both of you need to be working, unless one of you is unable to work due to a disability or health condition.
The childcare needs to be from a registered provider. You can get help paying for childcare including nurseries, childminders, breakfast clubs, after-school care, and holiday clubs.
The most you can get each month is:
£646.35 for one child
£1,108.04 for 2 or more children
You need to pay your childcare costs up front and claim the money back as part of your payment. You can get support to help you pay your childcare costs up front. Talk to your work coach after you’ve made your claim. Read more about childcare costs and Universal Credit. If you have a disability or health condition How much you’ll get Extra monthly amount
If you have limited capability for work and work-related activity£354.28If you have limited capability for work and you started your health-related Universal Credit or Employment and Support Allowance (ESA) claim before 3 April 2017£132.89If you get the severe disability premium and you’re moving to Universal Credit, you might also be entitled to a ‘transitional protection’ payment. If you care for someone who gets a health or disability-related benefit How much you’ll get an extra monthly amount
If you provide care for at least 35 hours a week for someone who gets a health or disability-related benefit £168.81
This is on top of any extra amount you get if you have a disabled child.
Housing costs You could get money to help pay your housing costs. The payment can cover rent and some service charges. If you’re a homeowner, you might be able to get a loan to help with interest payments on your mortgage.
Money taken off your payment
Your payments might be reduced if any of the following apply:
you are paying back an advance on a Universal Credit payment
you have more than £6,000 in money, savings and investments
you would get above the amount limited by the benefit cap
you’ve been overpaid benefits in the past
you owe money for Council Tax, court fines, electricity, gas, water or Child Maintenance
you pay your gas or electricity bill directly from your Universal Credit payment
you have a paid job
you have other income – for example, money from pensions or certain other benefits
From the information above you can get some understanding of how universal credit is worked out, in some ways its variable as it depends on your income assessment for the month which determines how much you will be eligible to receive on that same monthly basis.
None the less once in place, it can help you in many ways. Thank you for reading please share this blog post with someone or an organisation you feel will benefit from the information today.
See you in the next blog post.
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