How to budget for a monthly benefit payment

How to budget for a monthly benefit payment
Feeling out of control when it comes to money can be scary, especially if you don't know whether you've got
enough to live on. Getting a single monthly Universal Credit payment may be making you even more nervous
about keeping your head above water. The only way to manage your money is to draw up a household
Why budget – why now?
Over half of UK households keep a regular budget. And most of those who do say it gives them peace of
mind about how much they are spending, and makes them feel better about life in general.
Drawing up a budget of all your household income and outgoings is a must if you want to make sure you can
pay all your bills and manage until the end of the month.
Even if you're already budgeting, changes to the benefit system from 2013 onwards will probably mean you
need to make some changes to the way you go about it.
Just to remind you, the following benefits:
Income-based Jobseeker's Allowance
Income-related Employment and Support Allowance
Income Support
Child Tax Credit
Working Tax Credit, and
Housing Benefit
are being phased out for people of working age and replaced with Universal Credit.
Universal Credit will be paid in a single monthly payment to each household.
So if you currently work out your budget weekly or fortnightly, you'll have to start looking at your
incomings and outgoings across the whole month.
And if you're using different benefit payments to cover set expenses, you'll need to get used to
having a single payment to cover everything.
Some people will get Universal Credit from April 2013, while others won’t claim it until later. In the meantime,
it makes sense to get ready for the changes by getting to grips with a monthly budget.
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Drawing up your budget – where to start
Despite how daunting it might sound, a budget is just two lists:
Money you have coming in (from things like your benefit payments and your salary if you're working).
Payments that you make (such as your rent or mortgage, heating bills and insurance, as well as living
expenses and regular and irregular spending).
How to work out your income
Benefits. Look at the paperwork relating to any benefits and tax credits you get at the moment. Jot
down the amounts you get. Make sure you make a note of whether these payments are weekly, fortnightly,
four-weekly or monthly.
Wages. If you're working, check your payslips and jot down your salary (after tax and other
Other income. If you have any other income coming in, for example from a pension or child
maintenance from your ex-partner, write down the amounts and how often you get them.
Don't worry if the money you have coming in changes from time to time. The budget we'll help you draw up
will be easy to adjust without you having to start from scratch every time.
How to work out your outgoings
Household bills. Gather together all the bills you pay so you can see the exact amounts. If your rent
is currently being paid for you, be prepared to start including this in your budget soon. With Universal Credit,
you'll have to start paying your landlord yourself.
Living costs. The more exact you can be here, the better. For things like grocery shopping, it's
probably enough to look at how much you spend across a few weeks and work out an average. But for things
like school uniform and other one-off costs, you'll need to look at what you spend across the whole year and
divide by 12 to get an average monthly amount.
Insurance and loan repayments. Track down anything you pay on a regular basis such as home
insurance, catalogue payments and credit card payments and make a note of them.
Children and pets. This includes things like childcare, after-school clubs, and school trips. Some of
these costs will be regular and others will be occasional so you’ll need to work out an average. If you have
pets, add up everything you spend on their food, vets' bills, etc.
Travel. If you have a car, make sure you include all the costs (including some like road tax that you
only pay yearly or six monthly). If you use public transport, you’ll either need to include the cost of your
season ticket or work out how much you spend on average per week or month.
Leisure. If you're living on a low income, this probably feels like the most squeezed part of your
budget, but remember to include one-off events like Christmas and birthdays so that these are budgeted for