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Managing your money

How care experienced young people can manage their money, plan a budget, manage bills and avoid debt.

Keeping on top of your finances is always a challenge.  It's hard sometimes to work out what’s coming in and what’s going out.

Really spending time with your Pathway Advisor (PA) to go through your budgets and plan as part of your pathways plan what you are getting and entitled to and what you need to pay for is important for you to stay out of debt.

Use your pathway plan to work through how your PA supports you to budget, as well as understanding how to run and home and what all the different bills are and what they mean.  

Top tip: keep a little notebook of the different phone numbers for the energy providers, call centres and your account details as this will help when you need to make phone calls to sort things out. 

How to budget

We will give you support with budgeting your money and help you learn how to budget and live independently.  We can also offer you a finance education course to give you a bit more support whether this is through Multiply or through a local community or hub session.

Watch a video on how to budget for beginners from Money to the Masses.

How to manage rent and bills

You will need to use your own money to pay your own rent and bills. This might be from a job, receiving benefits or a bit of both.

Ask your social worker or pathway advisor for help understanding your bills like:

  • Mortgage or rent
  • Electricity and Gas
  • Council Tax
  • Water
  • Home Insurance
  • Food
  • Broadband/phone
  • TV licence
  • TV subscription and WiFi subscription
  • Mobile phone bill 

Do not ignore official looking letters, they could be important.

Mortgage and rent

This is the most important bill to pay, as you will always need a roof over your head. It is also the most expensive monthly cost too. How much you have to pay varies greatly and depends on many factors, although the location and size of the home have the biggest impact.

Electricity and gas

This is your second biggest bill to consider. How much you will actually pay, again, depends on many different factors. Gas is generally cheaper to use when heating your home, so if your new house has some kind of electric heating system, your energy bills will probably be higher.

The energy efficiency of your home is also something not to be ignored. All homes sold must provide an energy performance certificate, which will tell you how energy efficient the house is and its potential. The better the rating, the cheaper it is to run.

There are plenty of changes you can make that will improve the efficiency of your home, some inexpensive, some far more costly. Some homes have pre-payment meters, so you must top them up in advance. These tend to be more expensive than standard meters; avoid them if you can. If your home does have a pre-payment meter, you can request your energy company to switch it.

If you have a standard meter, you can either pay quarterly when you receive a bill or you can set up a monthly direct debit. Energy companies tend to offer better deals for direct debit customers, although the downside is you could end up with the energy company owing you money by the end of the year. Or even worse, you owe them.

If you decide to pay monthly, and this is your first home, the energy company will estimate your annual usage. I would then suggest providing regular meter readings every month so you can keep a closer eye on your bills. Shop arounds as some companies are much cheaper than others and they offer very competitive prices and will give you credits for using them as a supplier. It takes ages to shop around but it is worth it in the end. 

Try to be economical as possible when using your energy – only use what you need. For example, if you have a separate hot water cylinder, it is cheaper to only turn your hot water on when needed. Its not true that keeping your heating on for longer costs less than turning it on and off.  Look at the information on line about energy efficiency….there is loads of advice out there. 

Water bills

Unlike electricity and gas, you can’t choose who provides your water, your location determines it. Where you’re situated also may be the difference between one and two bills. In some areas, you will receive one bill covering the supply and disposal of your wastewater, whilst in other areas, these bills are separate. Most water companies will allow you to either pay a monthly direct debit or you can pay twice per year when you receive a bill.

If you find that your water bill is too high, there are plenty of ways to save.

Drip drop savings: Simple tips to reduce water bills - Household Money Saving

Home insurance

Home insurance is broken into two sections – buildings and contents.

Buildings insurance covers the actual structure of your house. So ,if there should be major damage to your house or it should burn down, you’ll receive money to repair or rebuild. If you rent your home, this isn’t something you need to worry about. However, if you own the house, then it is often a requirement of the mortgage company for you to have this cover. Even if it isn’t, it’s something you really should have.

Contents insurance covers your belongings. So if something should happen to your goods through a disaster such as a fire or theft, you can receive replacements. Again, costs vary greatly depending on the insurance company, previous claims, where you live and numerous other reasons.

It is possible to lower costs. For example, you can remove accidental cover. Without this, if you put your foot through the TV or drill through a pipe, you can’t put in a claim.

You can also increase the amount of excess you pay. The excess is a certain figure you agree to contribute every time you make a claim. This reduces the risk to the insurance company that you’re going to put in multiple claims and reduces their costs too.

Food

This bill is worth keeping an eye on as it’s easy to get carried away. Supermarkets like Aldi and Lidl are great value but tend to have a limited choice against the likes of Sainsbury’s and Tesco. But your decision of where to shop may be limited depending on how close the stores are to you, think about this when doing your big shop and sometimes putting a little away each month to do bulker buys and get them delivered pays off in the end. 

Take a list when you do your weekly shop and try not to get sucked into buying extra items you don’t need. There are receipt apps available that will either earn you cashback or give you free items. Using the apps is a great way to save a few pence here and there or get a little treat from the store. 

TV licence

This is one of those essential bills. You can pay for the year or monthly.

Apply for a TV licence.

TV subscription

The last few years have seen a big change in TV watching. There are plenty of channels available on Freeview, but if you don’t fancy that, there are a variety of subscription services on offer. This is one of those bills you can live without if money is tight. 

How to track your spending

Make sure that you keep a close eye on your bills. As time goes by, you’ll find that most of them will increase and before you know it, you’re paying extra per month. Spend the time to sit and plan your budget spend so you can keep track of the money coming in and out, so you know what you have for other items such as clothing, travel and social and leisure money. One way to track your bills is by keeping a simple spreadsheet. However, you do need to remember to update it.

You can also get help from: