Moneymanual
for Single Parents
For many single parents, looking after children alone is stressful enough, but a very large number will also face real pressure when it comes to handling money. This booklet is designed to provide real hope, and practical advice, to the many single parents who are currently struggling with their finances.
Lynton House, 7-12 Tavistock Square, London WC1H 9LT Tel: 0207 380 3390 office@creditaction.org.uk www.creditaction.org.uk Registered Charity No.1106941
Production of this guide kindly sponsored by
MoneyBasics.co.uk Simple, clear, independent information about money
Essential reading for single parents
Gingerbread is the leading national charity dedicated to supporting Britain’s 1.9 million single parent families. We run a Single Parent Helpline providing advice and support to thousands of single parents each year, as well as active membership, training programmes and resources for both single parents and professionals, and high-profile policy and campaigning work. Single Parent Helpline: 0808 802 0925 Open 9.00am to 5.00pm Mondays to Fridays, with extended opening to 8.00pm on Wednesdays (calls from landlines and mobiles are free) Membership: 0800 018 4318 Open 2.00pm to 5.00pm Mondays to Fridays Gingerbread Single Parent Information Online: all our information for single parents is available to read online or download anytime at www.gingerbread.org.uk info@gingerbread.org.uk www.gingerbread.org.uk
Production of this guide kindly sponsored by
MoneyBasics.co.uk Simple, clear, independent information about money
Moneymanual for single parents
Keith Tondeur Chris Tapp
Contents Š Credit Action 2010 First published in 2000 Second edition 2003 Third edition 2008 Published by Credit Action
Introduction
2
Dealing with the pressure of living on a low income
3
Managing debt
8
6th Floor Lynton House 7-12 Tavistock Square London WC1H 9LT
Budgeting
11
Managing your spending
16
Saving
25
Benefits and tax credits
26
Increasing your income by working
31
Money-saving ideas
40
Tel: 0207 380 3390 office@creditaction.org.uk www.creditaction.org.uk Credit Action is a registered charity no. 1106941 and a company limited by guarantee, registered in England and Wales no. 5244075
Conclusion
45
Helpline 0800 138 1111 (operated by the Consumer Credit Counselling Service)
Financial jargon buster*
46
Originally written by Keith Tondeur and Tina Lambert
Useful organisations
49
Notes
56
Fully updated in 2007 by David Deller for Credit Action and Elspeth Harrison for Gingerbread and in 2010 by Miranda Keymer for Credit Action Design and production by stephen lown graphic designer Credit Action is a national money education charity dedicated to helping educate individuals and families in all aspects of money management. Credit Action works in partnership with another charity, Consumer Credit Counselling Service (CCCS), who answer all our helpline calls. CCCS is a charity dedicated to providing confidential, free counselling and money management assistance to financially distressed families and individuals. This book is only a guide to managing money and we have had to simplify some issues and make general comments. Dealing with money is often extremely complicated and so you cannot hold us responsible for any
* The Financial jargon buster explains
action you take, or do not take, based only on what is written in this book.
what certain words and phrases mean. If a word is printed in bold you can look
If you have serious problems with debt, you should get expert advice immediately.
it up in the jargon buster.
Introduction
There are many different routes into
You are not alone in feeling the pressure of trying to
becoming a lone parent – having a
make ends meet on a low income. 42 per cent of lone
baby on your own, splitting up with a partner, husband or wife, becoming a widow or widower – but the one thing you are likely to have in common
parent families live on an income of less than £200 a week and it is estimated that the average cost of raising
Dealing with the pressure of living on a low income
a child until they are 21 is now equivalent to £184.81 a week!
is having to care for your family on a very limited amount of money. Whether your income has suddenly dropped or you are used to struggling to make ends meet, this booklet is for you. We have lots of information and advice about dealing with debt and other money worries as well as ideas and tips about how you can manage your money better and plan for the future. As a lone parent, it’s hard to cope with everything on your own and in some situations
Coping with your emotions Money worries can really stress us out and we can often feel a failure or guilty for letting others down. We shouldn’t be too hard on ourselves; often debt is caused by things happening to us over which we have little or no control. Most people have never been taught to handle money and it can be particularly hard to live within your means if you are on a low income. However you became a lone parent you’ll have had to make a lot of adjustments both emotionally and practically. It’s a lot to cope with anyway and in the midst of this your financial situation may have changed dramatically – unfortunately the bills probably
you should definitely get
didn’t! It may well be that you have drifted into debt or that with less income or more
specialist advice. At the end of
spending you simply cannot balance the figures. When you are caring for children on
this booklet you will find a list
your own, dealing with your own emotions and finding that you just don’t have enough
of useful organisations – most
money, it’s hard to think about the future let alone plan for it! But we should try to make
importantly those that give free, independent and expert advice about dealing with money problems and emergencies.
some long-term plans. Acknowledge the problem and ask for help It is really difficult to face up to money problems that can seem impossible to solve, especially when you have other problems to worry about. Caring for your children alone also means you have limited time and energy.
If you don’t know your AER from APR don’t worry!
None of us likes to admit that we’re struggling. Adverts are always telling us that
To help make this guide easier to use we’ve added
success, sex appeal and popularity come from wearing the right clothes, right
a financial jargon buster so that you don’t need to
perfume, having a nicely decorated home and being able to get out and enjoy life. So
be an expert to know your way around money.
we all take pride in saying ‘Yeah, I’m coping fine thanks’ even when the exact opposite
Just look out for words in bold and then just flick
may be true.
to the back of the guide to find easy to understand explanations. 2
3
Not dealing with money and debt problems will make things worse. Missed payment you may find yourself in an emergency situation which will be more difficult to sort out.
Dealing with the pressure of consumer advertising
The stress of worrying about money problems can also affect your health and your
Those little voices in our head telling us to ‘spend, spend, spend!’ don’t appear from
relationships with other people, including the way you are with your children.
nowhere. Companies pour billions of pounds into advertising to persuade us to part
charges, other bank charges and interest on debt are all expensive and at some point
If you feel you can’t face up to dealing with your money worries then you need help to do it. And there is help out there – see useful organisations on page 49 for where to get free, independent and expert advice.
with our precious cash. You know the pressures because they affect us all, whatever our age – the latest fashions, a new games console, flat screen TV etc. If you can’t follow the fashion and your TV’s on the blink, again you end up feeling down on yourself. Try not to be taken in by adverts. Your self-image is about who you are and
Getting help or advice will not resolve all your problems
not about what you wear. Prioritise what you need (see Managing your spending on
straightaway, but it is the way to get started. If you know
page 16), shop around, and just be aware of what adverts are trying to do to you –
how you plan to resolve the problem, this will make you
encouraging you to spend, trying to convince you that a ‘want’ is really a ‘need’.
feel more in control and less worried and stressed. It may also help to talk to friends and family about how you are feeling. If you’re struggling it’s easy to have very
Dealing with pressure from your children
negative feelings – to be afraid, to feel guilty
Kids are especially targeted by the advertisers. You only have to watch children’s TV to
and generally have a low opinion of
see that. Kids can be taught about adverts as well and although you don’t want a six-
yourself. You’ll be amazed at how much
year-old cynic, you can teach them very early on that adverts are designed purely for
better you can feel just by talking. If
us to say at the end ‘I want that!’ Try explaining that just thirty seconds of advertising
you’ve got friends in similar situations,
costs a fortune and how all the money has to be recouped by lots of kids nagging until
you may find that they are as worried as
their parents go out and buy the product they’re pushing.
you are and the mutual support that you can give each other is invaluable. Other lone parents are likely to have experienced the same or similar problems; see details of single parent organisations on pages 50-51.
4
Your children will learn more from your example than from your words so this may be a good point to stop and do a little self-examination. Below are some questions that you may like to answer to see how ready you are to begin teaching your children responsible money management.
• • • • • • •
Do you have a financial plan to get you through the week or month? Do you plan for infrequent bills, change of circumstances, etc? Do you attempt to save, however little? Do you buy now, think later and live to regret it? How much has advertising influenced your purchases over the last month? Do you have a shopping list and do you stick to it? Have you made a will?
5
Obviously some of the questions are very hard and you may want to think about them
If they spend it all on one pair of trainers and have nothing left for a pair of jeans, they
for a while. For example, it may be difficult to think about making a will – this is not only
have only themselves to blame and next time they’ll think twice before they make a
about money, but may also be about who will care for your child if you die and you are
decision. They’ll also learn about waiting and saving up to get what they really want.
the only person with parental responsibility for the child. Call the Single Parent Helpline for more information about Parental Responsibility and appointing a guardian as part of your will and whether you may be able to get help with the costs of doing this. How to teach your child about responsibility and needs Learning that money doesn’t grow on trees can be quite devastating – kids tend to
Some parents choose to give their kids money for an extra job, like cleaning the car or mowing the lawn. There is nothing wrong with this, and it can be very helpful in teaching a child motivation, but there are hidden dangers! Kids may then come to expect payment for helping with routine jobs like washing up and tidying their room and not do them out of a sense of responsibility or simple enjoyment in helping you.
assume that there is an endless supply of money and it can be difficult for them to
See page 40 for ideas about how to save money on toys and
understand that there is a limit to the amount of money available.
treats so that you are one step ahead of your kids.
It isn’t impossible to teach them though and pocket money is a useful way to do this. Setting an amount can be difficult when their friends may get more, but having a limited sum will teach them early on to shop around and be careful spenders. As they grow up, clothes and toys are like what cars and nice houses are to us – status symbols. The ‘right’ trainers get you respect, the ‘wrong’ ones might mean being teased or even bullied. Children who can feel confident in who they are, regardless of what they wear and what toys they have, will cope a lot better if this happens to them.
Remember kids are creatures of habit – if you give in once about chocolate when you are in the supermarket they won’t forget next time. Make the first move – surprise them with your own treats when they haven’t nagged. You’ll enjoy giving to them more when it’s your idea not theirs. It’s all too easy to feel stingy when kids always want, want, want. So talking to your kids is vital, even when it’s about something as routine as money. Try and find time to have regular chats with your family
Confidence building is largely
and answer their questions honestly.
down to you and if you talk about these things with your children they can grow up feeling safe and have a view of life and people that doesn’t revolve around money and possessions. Later on when we look at budgeting (see page 11), talking things over with your kids will be essential, because budgeting must be a team exercise.
As a lone parent you may have to deal with extra challenges if your child’s other parent behaves differently about money to the way you do, for example, always buying the things your child asks for. If possible, talk to them in a non-confrontational way about how you deal with money and spending when the child is with you and your reasons for this. The ideal situation is for both parents to be consistent and agree on priorities. If this is not possible, all you can do is be consistent about the way you deal with things and explain to your child the reasons for this. It may be tempting to try and compete with the other parent, but this could get you into debt and your child will not have the opportunity to learn about the value of money and how to manage it. Do not criticise
When they are teenagers you may like to
the other parent in front of your child and keep any disputes about money between you
offer them a clothes allowance (for non-
away from the child.
school clothes) so that they can begin to handle more money. 6
7
Managing debt
If you are in an emergency, for example you have been told you will be evicted or you are about to have your fuel supply disconnected, call one of the organisations on page 49 for advice
about your rights and what you can do.
2. Get advice You will need to contact your creditors (see below), but you should speak to a specialist money adviser first. Contact one of the organisations listed on page 49 for free expert
Drifting into debt?
advice. They will not judge you
Having to meet all your family’s expenses when you have a low income can mean you
through the following steps.
and can help and support you
are likely to drift into debt. 31 per cent of lone parents have at least one debt and it is mainly household bills that cause the problem. However disciplined we are, it can be hard not to end up living just up to, or just beyond our means. This can seem ok until something unexpected happens. It may be that you haven’t been affected by financial difficulties, and this is good news, but look
Whatever you do, don’t go to any organisation that charges you for its advice. 3. Check that you are liable to pay the debt
at the following questions and ask yourself how your family would cope if faced with a
A specialist money adviser (see above) can do this. You should especially get advice
major financial challenge.
if a debt is not in your name or is a joint debt with an ex or deceased partner or if you have not paid the debt or contacted the creditor within the last six years.
• • • • • • •
Do you always pay your credit card bill or catalogue payments on time? Do you know the total amount that you pay when you buy through a catalogue with
4. Maximise your income
weekly instalments?
See page 26 to check that you have claimed all the benefits and tax credits your family
Do you know, without looking it up, the total of all your financial commitments?
may be entitled to.
Do you have fewer than two credit and store cards? Does your bank account pay interest when in credit?
You may wish to start work or increase the hours you work or perhaps rent a spare room to increase your family’s income. Always get advice first about whether this will
Do you save any money? If you had a windfall of £3,000, would you be able to save it?
Every ‘no’ is a potential problem. If you answered ‘no’ to several questions, you could
make you better off overall and how it may affect the amount of your debt repayments. Also see page 49 for details of organisations who can advise you about benefits and tax credits including whether you are likely to be better off in work or by increasing the
be drifting into debt without realising it.
hours you work. 5. Draw up a budget
Managing your debt
See page 11 for how to do this. This is a crucial step to help you manage your debt
1. Acknowledge the problem
and plan for the future. It will also show you and your creditors how much money you
If you are afraid to open letters, answer the phone or open the door, it is time to get
are able to pay them.
help. Ignoring the debt will make you feel the situation is out of control and may also make you dread what tomorrow might bring. Facing up to the problem can be a frightening thought but it is the first step towards doing something about it. 8
9
6. Make savings on your spending
Careful budgeting should see you and your kids
This may seem impossible when you are already on a tight budget but look at the section on managing your spending on page 16 and money-saving ideas on page 40. Go back and look at your budget sheet again. Can any of your expenses be reduced?
through nursery, primary, secondary school and
Budgeting
beyond. Being a single parent means that your budget is likely to be a tight one for a long time. Let’s face it, kids are expensive. Come to that, life is expensive! Have
7. Prioritise your debts
you ever reached into your pocket expecting to
Some debts are more important
find that last tenner only to realise that you’ve
to pay than others. The debts that
spent it on bits and bobs – Jack’s school trip money, the launderette and that
are most urgent are those where
magazine? The list is endless. You may think that this just proves that money
non-payment could lead to
disappears and so budgeting is a waste of time. But budgeting can take the strain off
imprisonment, you losing your
you more than you realise.
home, or the disconnection of an
A budget is a first step towards being in control of your finances. It is a plan that helps
essential utility. A specialist
you to identify regular income, expenses and savings. A budget will also help you to
adviser will help you identify which
identify the level and importance of your expenses and help you to see exactly where
debts you need to deal with first.
your money goes.
8. Negotiate repayment of your
If you are negotiating payments to a creditor (see What to do if you are in debt on page
priority debts
8) you will also need to draw up a budget to show what you can afford to pay –
After you have taken advice, you should contact all
a money adviser can help you do this. See useful organisations on page 49.
your creditors and make an offer of repayment. Your completed budget will show you how much money you have left and you will now
Why budget?
have to decide how this will be divided.
Making a budget helps you to:
A specialist money adviser will be able to help
•
you work this out and can negotiate with creditors on your behalf, providing them with your budget or financial statement to
your spending habits;
•
show that the amount you are offering is reasonable. Creditors may also send you their own budget form to complete.
be possible to have interest and other charges frozen for a certain period of time.
10
know how much money you have coming in each week or month, and how much you have to spend;
9. Negotiate repayment of your non-priority debts
that is suitable to your needs – a specialist money adviser can help you with this. It may
know whether or not you are in control of your finances;
•
As with your priority debts (see above), you may be able to negotiate a repayment plan
get rid of stress by planning and monitoring
• • •
cut back on unnecessary spending; show a creditor what you can afford to repay; and save money!
11
When you budget…
2. List your regular commitments. This includes things like Council Tax, mortgage, rent, heating, insurance and so on.
…be accurate It is hard to be sure how much you spend on food, bus fares, magazines and the other bits and pieces. The best way to be accurate is to keep a notebook for a month and
3. Add up what you are spending on normal day-to-day living expenses – this includes things like shopping for food, clothes, transport, entertainment and so on.
write down absolutely everything you spend money on, then you can work out what,
4. Record what you spend on occasional items – such as birthday and Christmas
on average, you spend per month on food, rent, gas, etc. Go through all your bills and
presents, repairs or decorations to your house or flat, holidays and so on. You don’t
make sure you put in any money you give to your kids.
buy these items regularly but it is helpful to put an amount to one side for them every month.
…be honest There is no point being wildly out with your calculations, even if it is to make some bills look a little less bad! The only person you will fool in the end is yourself.
5. Make sure that you work out your income and spending for the same period. For example, if the income is a monthly figure, the spending should be a monthly figure as well. The example below explains how to do this.
…review your budget
6. Add up your income and then add up your spending. If the spending is more than
You should review your budget each month to make sure the amounts are still accurate
the income, you need to look at where you can save money and whether you can
and from time to time you may want to alter your priorities.
increase your income. The information in the rest of this booklet will help you to do this. It is important to review your budget every month and adjust it as your income and
How to create a budget Budgeting is not difficult, although it may take some concentration and a bit of work. You don’t need to be a financial wizard or a maths genius to do it!
expenses change.
Example Liz spends about £200 a year on the family holiday to Dorset. She wants to put a
Creating a budget
little away regularly so that she can save up for the holiday.
Use the sample budget form and follow the
If she budgets monthly she must divide 200 by the 12 months in a year:
steps below to create your budget.
£200 / 12 = £16.67 a month
1. Work out your income (including wages,
If she budgets weekly she must divide 200 by the 52 weeks in a year:
benefits and tax credits). Make sure you are
£200 / 52 = £3.85 a week
taking your net income, that is, your income after tax and National Insurance have
If she budgets fortnightly she must divide 200 by the 26 fortnights in a year: £200 / 26 = £7.69 a fortnight
been taken off. The example on the form shows you the type of areas your income could come from.
12
13
Sample Budget Form Income Main wages or salary including overtime (after tax) Income Support/Jobseeker’s Allowance Tax credits Child Benefit Housing Benefit and Council Tax Benefit Other benefits Maintenance (child support) Interest or other investment income (from savings accounts etc) Other
£ __________ __________ __________ __________ __________ __________ __________ __________ __________
Day-to-day expenses Food School meals/meals at work Clothing and shoes Travelling expenses Entertainment – videos, magazines, pub, cinema etc Chemist and prescriptions Children’s pocket money Pet food/bedding Other 1 Other 2 Other 3
__________ __________ __________ __________ __________ __________ __________ __________ __________
Occasional costs Car repairs Household repairs and redecoration Birthday presents Christmas expenses Holidays Vets’ bills Replacing household appliances (e.g. microwave, fridge) Dentist Optician
__________ __________ __________ __________ __________ __________ __________ __________ __________
__________ __________ __________ __________ __________ __________ __________ __________ __________
Total (D) __________
__________ __________
__________
Total (C) __________
Total (A) __________ Expenses – Regular commitments Mortgage (including any endowment policy) Second mortage/secured loan Rent Council Tax Electricity Gas Water rates Phone and mobile TV licence Child minder or nursery Car tax Car MOT Insurance – car/house and contents/personal HP (hire-purchase) payments Loan repayments Pension payments Credit card payments
£ __________
Total of all expenses (B+C+D) = E
__________
Total income (A) Less total expenses (E) Balance
__________
__________ __________ __________ __________
__________ __________
__________ __________
Total (B) __________
The above items are examples – you may need to put in other items of your own. When you have finished your budget you should have a good idea how much money, if any, you have left over to repay debts or to save. Budgeting should help you to enjoy your money more. You can have the odd luxury without worrying about what bill might crop up next week. For budget forms online visit www.creditaction.org.uk or to find budget calculators to make budgeting easy go to www.moneybasics.co.uk
14
15
Managing your spending
Deciding the difference between wants and needs
Money does go too quickly, but there are particular things that make us spend more. We need to remember:
• • •
The more we go shopping, the more we are likely to spend. The more we watch TV, the more we are likely to spend. The more we look at magazines, the more we are likely to spend.
After dealing with any emergencies and getting advice about debt (see page 8) we need to think about our attitude to spending. Spending on something we want can give us a short-term buzz but it can also bring long-term worry. It is essential that we identify the difference between our wants and needs. We all have dreams about what we want but we have to first cover the things we need like rent, food, clothes,
If we have credit or store cards, we are more likely to spend (people who use credit cards are likely to spend 34 per cent more than people who don’t). Of course credit cards can be useful but often we buy things that we’d never have bought if we had had to pay by cash or cheque. See The dangers of using credit on page 20.
heat, etc. Wants tend to be immediate – we see something and we want it straightaway. The problem is that we may have £15 left at the end of the month and think ‘well, I can buy the skirt now’, but next week when an unexpected bill comes we go into a blind
Buying an item
panic.
You may think that this is all pretty simple stuff but if you’re on a low income you need
To plan ahead for all essential expenses can be difficult, particularly when your kids
to be sure that when you buy an expensive item you are actually getting your
may be nagging you to buy something they want.
money’s worth.
Once we recognise that every spending decision affects another
Price
spending decision it all becomes easier. For example,
What are you getting for your money?
spending £15 on a skirt may mean living in the cold and dark for a week because there’s no other
Discounts
money left for electricity. In other words,
Are there any discounts or special offers, for example, for paying by cash or for slightly
always know your priorities! And if you
damaged goods or seconds services?
don’t know them now, reading the rest of
Guarantees
this book (especially about budgeting) Are there any guarantees with the item? If so, for how long and what exactly do
will help you find out.
they cover? There are many things we have to spend money on – food, housing costs, fuel bills, essential clothes, bus
After sales service
fares etc so when it comes to the unexpected extras, the
Is there any and is it free? You need to know who is responsible for paying if something
leftover (if there is any!) has gone.
goes wrong.
‘Maybe it went in the newsagent or perhaps in the
Conditions for return
supermarket. No I think it went on the catalogues – I’m not really sure, but I do know that Kate’s going to kill me if I don’t give her back the twenty quid I owe her.’
16
If the product is faulty you can get your money back as there is a legal entitlement to a refund if goods are faulty. You do not have to accept a voucher (credit note), but you do need to return the goods within a reasonable time.
17
VAT
If you receive your income weekly, it may be tempting to use a key meter for your fuel
Does the ticket price include VAT? If this is not included you will have to add on nearly
bills, which effectively means that you pay as and when you use your gas and electricity and/or pay other bills weekly such as your TV licence – but beware, you may
a fifth (currently VAT is 17.5 percent).
be paying a higher amount for what you use or amounts sooner than you would by Delivery charge
paying monthly. If you have a key meter (perhaps because you were in debt to a fuel
Are there any charges for delivery, alteration, fitting, etc?
company), contact the supplier about changing this. If they refuse to do so, get advice (see useful organisations on page 49).
Payment options Have you looked at the different ways to pay – for example, cash, credit card, credit
If your income is weekly and your outgoings are monthly:
sale, debit card, hire purchase (HP)? Use a calculator to multiply the monthly amount for the bill by 12 (months in the Comparisons
year) and then divide by 52 (weeks in the year) – this is the amount that has to be
With so much choice around, you need to be sure that you are buying the product best
set aside each week for the monthly payment.
suited to your needs at the best price, taking account of all the possible extras above. Shop around for the best deal. The internet is a great way of doing this (see page 55).
As with anything else you buy, shop around for the best deal. Regularly check that you
Haggling
are not paying more than you should. Also check for any discounts and other extras.
This is something to mention as a final note. It’s something we aren’t very good at
Visit internet comparison sites to find
in Britain!
the best deals for utilities, loans and other services. See page 55 for a list of
If you are spending a fair bit, ask the seller to throw in a few extras for free or to give a
comparison sites.
discount for cash. You can carefully suggest that you could go elsewhere. Market traders are particularly open to a bit of haggling for clothes for example. When you’re buying
If you’re struggling with a bill, don’t wait
several items, you may be able to persuade them to knock a bit off for a bulk purchase.
until you receive the red bill (the final warning before disconnection) to contact the supplier. Utility suppliers can be very helpful if they know that you are trying to pay but you are a little behind this month. If you
Bills
don’t tell them and you are disconnected, the charge for
It’s not just spending money that is important. Careful money management is also
reconnection can be high.
about when and how we pay bills. It can be difficult to budget over a long period of
If you are in debt to a fuel or water company call the Single
time for bills that come every three months such as electricity and gas or twice a year
Parent Helpline and ask for our factsheet Managing your
such as water rates. To help you budget, particularly for fuel bills, you may be able to
household bills – a guide for single parents for details of
set up regular payments to the gas or electricity company so that huge winter bills
charitable trusts who may be able to help people in certain
don’t cripple you. They will help you work out your annual bill and divide it into 12
circumstances.
months so that each payment from your bank account remains the same each month. You may even qualify for a discount by paying this way.
18
19
Prioritising your spending To manage your money well, it is important to prioritise your spending (decide which items are most important). This may vary from person to person but here is a general guide.
•
First, pay your bills. Make sure your most important expenses are covered each month – for example, rent or mortgage, utility bills (gas, water and electricity) and your car payment.
• •
Then pay your day-to-day needs, like food and travel. Occasional costs can come up every three months or every year. Make sure you have put money aside to pay for these.
•
Save some money for emergencies. Unexpected situations can occur and it is
‘France’s first branch of Crazy George’s, the British-owned furniture and domestic appliance chain, has had to close after only two days of trading amidst a storm of political criticism over its sales methods. The store, which targets customers on low incomes and offers easy but expensive credit, opened last Saturday. The repayment schedule may make the goods two or even three times more expensive than if bought outright. Examples included a washing machine for
helpful to have an emergency fund.
•
Extract from a newspaper article
When you have covered all of these expenses and cleared any debt you have, the next step would be to save money for future plans such as buying a house,
£5.50 a week, retail price £377, credit price £854! In Britain, where there are already more than 50 such stores and hire
education and so on.
purchase is common, this passed almost unremarked.’ The Independent. If you can save-up and buy with cash you’ll always save money.
Using credit
Different kinds of credit
Borrowing money through
Secured
mortgages, loans, overdrafts, using credit and/or store
This doesn’t mean that you have got a good secure loan! What it does mean is that when
cards can be a good way to
you borrowed from the creditor they insisted on having some form of security from you
help manage a budget, if done
before they agreed to lend you the money. So, if you fall behind on the repayments and
in an informed way. But when
all else fails, the creditor can claim the item you used to secure the loan. A good example
you are on a low income it can
of this type of credit is a mortgage, where the house itself is the security. Be very wary of
be tempting to use sources of credit that
taking out any other loan that requires your home as security. If you are on a low income
you had not planned to when money is
it can be hard to keep up with repayments and you will risk losing your home.
tight. It can also be difficult to always pay
Unsecured
off the amount you owe so you do not pay This generally means that the creditor has confidence in your ability to repay the loan
any or only a minimal amount of interest.
and will, in any case, have built into the interest rate charge an allowance that you Borrowing money with no sure way to repay puts pressure on your family’s future. Over-
might default. For example, purchasing a fridge-freezer on a store card.
borrowing also prevents many families from achieving long-term financial stability. Fixed Term This means that you pay back a sum of money each month for an agreed period of time. The amount of money may fluctuate as interest rates go up and down, but at the end of the period the debt will have been cleared. A bank loan is an example of this. 20
21
Revolving
Consolidated Loans
This means that you only have to repay a minimum amount per month. On this basis,
In recent years these have become an increasingly popular way to try to get out of
if you make the occasional purchase and you don’t pay off the balance in full each
debt. They usually promise lower interest rates and lower monthly payments, but you
month, you could be paying towards this type of credit forever. Store cards and credit
need to be very careful.
cards are examples here. This type of credit needs to be used sparingly and carefully, as you can end up paying interest on interest and a small debt can grow out of all proportion.
A consolidated loan is a single loan that you can take out to pay off all your debts. So, instead of trying to pay off a number of debts, you would have just one consolidated loan to pay off.
The costs of credit
However, firstly, consolidated loans often reschedule debts over a much longer period
As you can see, there are different risks involved with different forms of credit. There are also different interest rates and fees so, if you have to borrow, try to ensure that you are paying the cheapest rates possible. You can compare the rates associated with similar types of loans by looking at the APR (annual percentage rate). Generally the lowest APR will be the best deal. An easy way to compare a variety of loans is to visit internet comparison sites. A list of these can be found on page 55. Unfortunately, families on a low income have limited credit options – those that come with a higher risk (for example, a secured loan, see previous page) and/or those that
so that you pay a lot more interest and secondly, these loans are usually secured against your property. This means you could lose your home if you do not keep up with repayments. You should always get advice before making a decision about a consolidated loan. Am I creditworthy? Lenders generally carry out credit checks to find out about your credit history and your current credit standing. In other words, to find out how risky you are as a borrower and whether you are a good person to lend to.
are particularly expensive. Other companies, like mobile phone or utility companies, will run a credit check on you Examples of expensive credit:
• •
before offering you an account to make sure you will be able to pay for their services.
Doorstep lenders commonly charge 183 per cent APR each year. Store cards are tempting as they may offer discounts but the typical charge is 23-30 percent APR – higher than most credit cards.
•
‘Rent to own’ retailers (who rent items such as TVs and sofas) charge a total amount that is several times the normal retail
If you miss payments and/or have a County Court Judgement (CCJ) your file with the credit reference agencies would be marked accordingly. In effect, this would mean that you would find it difficult and very expensive to get new credit for the next 6 years, which could be harmful for you and your family. This would be especially true if you had a major expense during the period, such as moving home.
price and also have a reputation for rapid repossession of the
The Office of Fair Trading’s Consumer Direct website (www.consumerdirect.gov.uk)
goods if you miss your weekly
explains how to get a copy of your credit file. If by any chance your file is wrong, the
payments.
site also explains how to have information corrected. Contact details for the main credit reference agencies are provided in the useful organisations section on page 49.
If at all possible try to avoid these types of credit.
22
23
Top 10 credit tips
Saving may seem like the last thing that you want to
If you’re going to use credit, these 10 tips from the Office of Fair Trading will help you
think about if you are on a tight budget. However,
Saving
savings can give you real peace of mind so that when
to borrow safely.
the unexpected does happen a drama doesn’t become 1. Can you afford it? Before you commit yourself, make sure you can really afford the
a crisis. In general it is a sensible aim to have put
repayments by making a budget (see page 11) – don’t be talked into borrowing more
away about two months wages to cover
than you want to.
unexpected emergencies.
2. Shop around for credit. The first thing you’re offered may not be the best deal.
Putting a little amount away regularly is a good pattern to get into, even for very small
There are many types of credit and many different rates on bank loans, credit cards,
amounts. If you have a bank account, you can arrange for a little to be taken out each
hire-purchase agreements and so on. Don’t pay more than you need to.
month and put into a separate account. That way you don’t have to remember to save
3. Read the forms before you sign. If you don’t understand them get help from a
and you can’t easily raid it! As you save you’ll also receive interest – money will be
trading standards office or a Citizens Advice Bureau. Once you sign, you can’t change
working for you, not against you!
your mind if you signed on the trader’s or lender’s premises. If you signed anywhere else, you will have a short ‘cooling off’ period to change your mind. 4. Check exactly how much you’ll pay back including interest and charges. Is it
The Child Trust Fund We all want to help our children have a solid start in life particularly at the point when
good value?
they want to fly the nest and become independent adults in their own right. This can 5. Compare APRs. This is the easiest way to compare similar credit products – so if you’re looking at credit cards for instance, go for the one with the
be an expensive process whether it’s going to university or buying a car and our children will often look to their parents for support.
lowest APR. Usually the lower the APR the less you pay in interest. Sometimes a low APR is only offered for a short period.
To encourage saving for your children and help them learn about personal finance the government has set up the Child Trust Fund which is a long-term tax-free savings
6. Watch out for other charges such as the lender’s fees or fees to arrange the loan.
account. The scheme is for children born on or after 1 September 2002 and to set up an account you need to be claiming Child Benefit. The government will automatically
7. Look at the length of the loan, not just the monthly
put £250 (£500 if you qualify for the maximum amount of Child Tax Credit) into the
payment. The longer the loan period, the more interest
account when it is opened. An additional £250 (or £500 if you qualify for the maximum
you’ll pay back.
amount of Child Tax Credit) will be put into the account by the government when the
8. Watch out for optional extras. Sometimes paymentprotection insurance is included when you haven’t asked for it. You don’t have to take this up and it may not cover your
child is aged 7. Each year up to £1,200 can be put into the account by parents, family or friends. This money cannot be touched until the child turns 18, but then they are free to do whatever they want with the money that has built up. If you want to find out more about the Child Trust Fund visit www.childtrustfund.gov.uk
situation. 9. If you use your home as security for a loan and don’t
or phone 0845 302 1470.
keep up repayments, you could lose it. 10. If you act as guarantor for someone else’s loan, you will have to repay the debt if they don’t. 24
25
Benefits and tax credits
If you are under 18 there are different rules for
•
some of the benefits listed here. To find out what you might be entitled to, call the Single Parent Helpline on 0808 802 0925 and ask for a
Claim Child Tax Credit for each of your dependent children. You can get the form from a Jobcentre Plus Office, or by calling the Tax Credit Helpline on 0845 300 3900.
•
If you work 16 or more hours a week also claim Working Tax Credit (paid with Child Tax Credit,
copy of Money for Teenage Parents. If you are studying,
see above) to top up your wages. Working Tax
ask for our factsheets Money for further education students or Money for higher
Credit can include an amount towards the costs
education students.
of certain registered or approved childcare. The childcare element of Working Tax Credit helps with up to 80 per cent of your childcare
Benefits and tax credits for day-to-day living expenses •
costs, up to costs of £175 a week for one child or £300 for two or more children. This means that you could
Make sure you are getting Child Benefit for any dependent children who live with
get up to £140 per week for one
you as this could affect whether you are entitled to other benefits and tax credits for
child and £240 per week for two or
your children. Dependent children are children you are responsible for, aged up to
more children. You can get help
16, or 20 if they are in ‘non-advanced’ full-time education (that is, at a school or a
with childcare costs up to the
college of further education) or in approved training.
September following a child’s 15th
•
If you do not work or work less than 16 hours a week, claim Income Support from
birthday, or 16th birthday if the child
your local Jobcentre Plus office. If you are pregnant with your first child you can
receives Disabled Living Allowance
claim from 11 weeks before your baby is due or earlier than that if you are incapable
or is registered blind.
of work because of ill health. From 25 October 2010, lone parents whose youngest child is 7 or over will have to claim Jobseeker’s Allowance (see below) unless there
•
office if you are entitled to any bereavement benefits and/or the Funeral Payment
is another reason which means they should claim Income Support, for example,
from the Social Fund.
because they are ill or disabled or a carer.
•
If you do not work or work less than 16 hours a week and your only or youngest child
•
the Single Parent Helpline and ask for the factsheet Money during maternity and
available for work and claim income-based Jobseeker’s Allowance, which is paid at
adoption: a guide for single parents.
the same rates as Income Support. You can continue to claim Income Support if, for receiving Carer’s Allowance.
•
If you are pregnant or have had or adopted a baby recently, you may be entitled to maternity, paternity or adoption benefits and/or the Sure Start Maternity Grant. Call
is aged 10 or over, you will normally have to register at the Jobcentre Plus office as
example, you are unable to work because of sickness or disability or you are
If your husband, wife or civil partner has died, check at your local Jobcentre Plus
•
If someone in the family is long-term sick, disabled or a carer you may be entitled to extra benefits and a higher amount of other benefits and tax credits. Call the
If you do not work or work less than 16 hours a week and have paid National
Single Parent Helpline on 0808 802 0925 for more about this.
Insurance contributions you may qualify for contribution-based Jobseeker’s Allowance if you are available for and actively seeking work. This would make you better off only if you did not qualify for Income Support (for example, because your other income or savings were too high). 26
27
Benefits and other help for your housing costs
Help with the costs of your child’s education
•
•
Claim Housing Benefit (if you pay rent) and Council Tax Benefit. If you are claiming Income Support or income-based Jobseeker’s Allowance, fill in a Housing Benefit
based Jobseeker’s Allowance, you do not
and Council Tax Benefit application form that is included in your claim pack.
work 16 hours a week or more, and are on a
Otherwise, apply directly to your local authority’s Housing Benefit and Council Tax
low income, you can get free school meals for
Benefit department. You can claim whether or not you work but
your children.
you may not qualify unless you are on a fairly low income.
•
If you receive Income Support or income-
•
Contact your local education authority to ask if you
If you are already receiving Housing Benefit or Council Tax
will qualify for financial help towards the costs of
Benefit and you need extra financial help so you can pay
school uniforms. In Wales, if your child is entering
your housing costs, you can ask the
their first year of secondary school and qualifies for
Housing
free school meals, you will receive a grant of £100.
Benefit
department
for
Discretionary Housing Payments. You do not have an automatic right to these
•
16-19 year olds who are in full-time education may qualify for an Education Maintenance Allowance (EMA).
payments, it is up to the local authority to
For more information call the Learner Support Helpline on
decide, although there are some cases
0800 121 8989, open 7.00am to 8.00pm, or see www.ema.direct.gov.uk (for England),
where they cannot make a payment, for
www.emascotland.com (for Scotland), www.studentfinancewales.co.uk (for Wales).
example, if it is to cover arrears of rent or service charges that you owe. Get advice from a benefits adviser when you apply and also if you are refused these payments.
•
If you do not work or work less than 16 hours a week
Health benefits •
You may be entitled to Healthy Start vouchers, which you can exchange for fresh fruit and vegetables as well as milk and infant formula if you receive Income
and you are a homeowner, amounts can be added to
Support or income-based Jobseeker’s Allowance or you do not work 16 hours a
your Income Support or income-based Jobseeker’s
week or have a low income. Find out more from the Healthy Start website
Allowance for mortgage interest and interest on loans
(www.healthystart.nhs.uk) or call 0845 607 6823.
to pay for certain repairs and improvements, service charges (although some may be excluded) and ground rent. There is a waiting
•
If you receive Income Support or income-based Jobseeker’s Allowance or are on a
period before these payments start. For more information call the Single Parent
low income you are entitled to free prescriptions, dental treatment, sight tests and
Helpline on 0808 802 0925.
glasses, fares to hospital, free wigs and fabric supports. If you do not automatically qualify you may still be entitled to help towards these costs. Ask for form HC1 from
•
You may be eligible for a housing grant or a home insulation grant. Contact your
Jobcentre Plus.
local authority for information about these.
•
If you do not live with another adult, you will qualify for a 25 per cent discount on your Council Tax bill. Contact your local authority for information. 28
29
Grants and loans from the Social Fund
Maintenance/Child Support
The Social Fund is part of Jobcentre Plus and is there to make payments to people
Both parents are legally responsible for financially maintaining their children. If you do
in need.
not have an arrangement for the other parent to pay child maintenance, consider
•
If you are entitled to Income Support or income-based Jobseeker’s Allowance, you may qualify for a Community Care Grant or an
on your behalf.
interest-free Budgeting Loan for
Prior to October 2008, if the parent with care was claiming benefit, they had to use the
items such as furniture, clothing or
Child Support Agency to make child maintenance arrangements. However, from 27th
rent in advance. Always apply for a
October 2008, parents with care can choose to leave the Child Support Agency and
grant first and get advice if you are
make their own arrangements for child maintenance with the other parent.
refused.
•
applying to the Child Support Agency for them to calculate and collect maintenance
If you claim means-tested benefits some of the maintenance you receive will reduce
If you are entitled to Income Support
your benefits. Maintenance does not affect tax credits.
or income-based Jobseeker’s
For more information about maintenance, dealing with
Allowance or if you receive Child
the Child Support Agency and how maintenance
Tax Credit of more than £545 a year (or £1,090 if your youngest child is under 1 year) or the disability element of Working
affects benefits, call the Single Parent Helpline on 0808 802 0925.
Tax Credit, you can qualify for the Sure Start Maternity Grant (if you are pregnant or have just had a baby). This is a one-off payment of £500.
•
Increasing your income by working
Living on benefits and staying debt-free is very difficult.
If you are entitled to Income Support, income-based
Getting a job as a single parent can also be
Jobseeker’s Allowance, Housing Benefit, Council Tax Benefit,
difficult, and there are a lot of things to consider:
the disability element of Working Tax Credit, or if you receive Child Tax Credit of more than £545 a year (or £1,090 if your youngest child is under
•
If you have become a lone parent recently, you may feel that for a certain time work can not be fitted in around dealing with your and your children’s needs.
1 year), you can qualify for a Funeral Payment. You must be the person responsible
•
for the costs of the funeral.
•
Will the job fit in with school collection times and available childcare?
In an emergency or disaster anyone (whatever their income) can apply for a Crisis
•
Is there good quality childcare available for the times you need? For more about childcare see page 38.
Loan at the local Jobcentre Plus office if they do not have enough money for the family’s immediate needs, for example, for food or fuel.
•
•
Will you be better off in work? You can find out for sure by asking a New Deal for
If you are entitled to Income Support or income-based Jobseeker’s Allowance and
Lone Parents Adviser at your local Jobcentre Plus office or call the Single Parent
have a child under 5 years or you receive the disability or severe disability element
Helpline on 0808 802 0925 for advice.
of Child Tax Credit, you will automatically receive a Cold Weather Payment. It is only paid in periods of very cold weather (as defined by the government).
•
Would it be better in the long-term to take up training or go into education before starting work? A New Deal for Lone Parents Adviser at your local Jobcentre Plus office may be able to help with vocational training.
30
31
The flip-side of the coin is that as a single parent your life can be lonely. Work can give
•
are not working or working less than 16 hours a week; and
new friends. Obviously you need to think it through carefully. There is a risk in taking
•
are not an asylum seeker (unless you have exceptional leave to stay or refugee status).
work and you have to be sure that it’s a job that you really want and that you and your
To find your nearest Jobcentre Plus office see www.jobcentreplus.gov.uk
us a sense of fulfilment and it’s an important way of getting out and about and meeting
family will be better-off financially and emotionally. Being out of the house all day and
How can New Deal for Lone Parents help me?
then having the kids all evening can be very tiring and you need to find out what they think, as well as seriously thinking through the issues for yourself. You need to look
You will have a meeting with a Personal Adviser, who can offer the
after yourself just as much as you look after your children!
following:
At a recent Church Action on Poverty – National Poverty Hearing, Moraene, a single
•
Help with preparing for and looking for work.
parent from North London, expressed some of her views on work and life. ‘We need
•
A calculation to work out whether you will be
access to creative and cultural activities; we need to explore our abilities and find positive ways to express our feeling and ourselves…We don’t want to spend the rest of our lives judged by negative labels that are stuck on us by other people. I am a
better-off in work.
•
Help with the costs of looking for work, including help with travel and/or childcare costs to attend
lone parent. I’m not an irresponsible one. I’m disabled, I’m unemployed but not
meetings and/or job interviews.
unemployable…We are undervalued and very much underestimated’.
•
Help available, in certain circumstances, with other costs of looking for and/or starting work.
Looking for work
•
Help with finding and paying for training, including help with any extra travel or childcare costs. If you are thinking
The first step is to contact New Deal for Lone Parents Adviser at the Jobcentre Plus office.
of starting a further education or other course, always
New Deal for Lone Parents is the main Government programme to help lone parents
discuss with your Personal Adviser whether it can be
who want to return to work. It is a voluntary scheme. You do not have to take up work
funded by New Deal for Lone Parents. Jobcentre Plus
or training or be available for work and you can leave the scheme at any time. Joining
budgets are currently quite tight. This means that less
or leaving the scheme will not affect your benefits.
training is now being paid for but it should be available Who can join New Deal for Lone Parents?
to you if you would not be able to start work without
You can join New Deal for Lone Parents if you:
it. Training can also include work-placements.
•
are a lone parent aged 16 or over;
•
have a dependent child under 16;
•
You can get an additional £15-a-week Training Premium on top of your normal benefits, if you are doing a course or other type of training that was arranged by your Personal Adviser.
•
Help with finding childcare.
•
Help to pay for childcare during the week immediately before you start work to enable you to help settle your child into their new childcare arrangements that you need in order to go to work.
32
33
•
Help with childcare costs for up to 52 weeks if you receive a qualifying benefit and move into part-time work of up to 16 hours a week that your Personal Adviser has
Applying for jobs You may need to draw up a Curriculum Vitae (or CV) to send to employers. Again
recommended.
your New Deal for Lone Parents Adviser at the Jobcentre Plus office can help you with
•
Support if you want to become self-employed. This includes a 26-week test period.
this. This is an example of what a CV might look like.
During this time, you can carry on claiming benefits and be entitled to receive the £15-a-week Training Premium (if you receive a qualifying benefit) as well as help with childcare costs (see above). Any profits you make will not be available until
Personal Details
12 Walter Crescent
after the end of your test trading.
•
Julie Banks Birmingham
Support once you have found work and have started work. This can include help
B14 5HU
with making benefits and tax credit claims, applying for child maintenance from the
0121 494 0839
Child Support Agency, help with resolving any problems with claims and help with
Nationality: British
any childcare problems.
Date of Birth: 03/06/1976 Note: help with childcare costs is only available for registered
Training/Education
North Clegley College of Further Education
or approved childcare. To find
NVQ Level 1 in Craft and Design
out more about this speak to
1987-1994
your Personal Adviser.
Clegley Comprehensive School
In some areas of the country,
4 GCSE: Maths; English; French; Art
there are differences to the help available to lone parents who want to
1994-1995
Employment
1992-1994 Sales Assistant at Woolworths
start work or training. This is because the
(Saturdays and some holidays)
Government is trying out different initiatives, which may become available in all areas in the
2002-2006
future. In some areas, called Employment Zones,
Assistant at King’s Arms (part-time)
this service is run by private companies, but you
North Road, Clegley
can still find out information about going to work from your local Jobcentre Plus. In some areas
Other skills/interests
Craft and design
you can get extra money on top of your
Reading
benefits if you join New Deal for Lone Parents
Basic typing skills
and are actively looking for work. Check at
Volunteer helper at local playgroup Good organisational and people skills
your local Jobcentre Plus office if there is any extra help in your area.
34
References
Available on request
35
When applying for a job you will usually need to accompany your CV or the application form with a letter of application. In the letter
Help with your housing costs If you have been receiving benefits for 26 weeks before you start work, and the job you are starting is expected to last for 5 weeks or more, you can qualify for:
of application try to show how suitable you are for the job. Mention your other skills, which may include being
•
An extra 4 weeks of Housing Benefit and/or Council Tax Benefit. You need to notify
organised, methodical, enjoying working with people, being
Jobcentre Plus or the benefits section at your local authority within 4 weeks of
hardworking, practical and often taking the initiative. Sell
starting work.
yourself! Ensure that the CV fits the job. This may mean ‘tailoring it’ for different applications. For example, if you are
•
An extra 4 weeks of mortgage interest if you were receiving help with mortgage interest as part of your Income Support or income-based Jobseeker’s Allowance. It
applying for a job in a shop emphasise the previous times you
is paid at the same rate as the amount being paid with your benefit before you start
may have worked in shops!
work. Tell Jobcentre Plus when you will be starting work and the payments will be
Another area to consider is voluntary work. As well as meeting
made to you automatically.
new people, you can build up skills which can later be
Note: If you were getting help with housing costs as part of your Income Support or
transferred to paid work. Some organisations will offer
income-based Jobseeker’s Allowance and you re-claim within 52 weeks, you will get
child care facilities and obviously this will affect your
help with your housing costs straightaway.
decision the most. They will often pay your expenses and some may offer you free training. Expenses don’t affect your benefits, but remember to let the Job Centre know
Job Grant
about your voluntary work if you are claiming Job Seeker’s Allowance. Voluntary work
If you have been receiving benefits for 26 weeks before you start work, and the job you
is a good way to build up confidence and plan for the future.
are starting is expected to last for 5 weeks or more, you can qualify for a Job Grant of £250. The grant is paid automatically but you must give details of your job to your local
Financial help when you move from benefits into work
Jobcentre Plus office before you start work or within 21 days of starting. The Advisers Discretion Fund A New Deal for Lone Parents Personal Adviser has the discretion (that is, you do not
If you stop claiming Income Support, income-based Jobseeker’s Allowance, Severe
have a right to it, it is up to your adviser to decide whether you qualify for it) and limited
Disablement Allowance or Incapacity Benefit because you start working 16 or more
funds to help you with the costs of finding work, for example, buying a new suit to
hours a week, or because your earnings have increased, you may be entitled to some
attend an interview or paying upfront childcare costs when you first start work.
extra financial help.
Spending from the fund is very limited, but talk to your adviser about any extra costs you have.
In-work Credit This is available to lone parents who have been on benefit for 52 weeks before they start work. It is £40 a week (or £60 if you live in London) and is paid for 12 months.
In-work Emergency Discretion Fund You may be able to receive a payment from this fund (through your local Jobcentre Plus office) if, in an emergency, you need extra funds in order for you to stay in work.
36
37
Child Maintenance Bonus
These are the main types of childcare that must be registered and inspected by law:
You may qualify for this bonus if you were receiving child maintenance calculated by
•
childminders;
•
day nurseries;
Support or income-based Jobseeker’s Allowance.
•
private nursery schools;
For details of the amount of the bonus call the Single Parent Helpline on 0808 802 0925 or
•
out-of-school services (including after-school clubs and holiday play schemes if
the Child Support Agency under the ‘old rules’ (generally this means that the other parent had to start paying maintenance since before March 2003) while on Income
providing care for children under eight years of age, or for more than two hours a day);
ask Jobcentre Plus for an estimate of the amount of the bonus you have built up so far. Tax when you start work
•
pre-schools/playgroups;
If this is your first job, or you haven’t worked since becoming a lone parent, it is very
•
crèches open for six days or more a year;
important that you notify your employer so that they can ensure you fill out the correct
•
nannies working for more than two families, in the family home of one of the children
tax forms. If you don’t have all the necessary paperwork done you could end up paying
being cared for; and
more tax than you should. If you have not worked for part of the tax year check with the tax office whether you are entitled to a tax rebate.
•
Childcare providers who join the voluntary part of the Ofsted Childcare Register in England or apply to the Welsh Assembly to be an approved childcare provider in Wales. The type of childcare for children aged eight and over that could now qualify
Childcare
includes:
Obviously, if you’re going to go out to work you’ll have to
– activity based childcare (for example, a playscheme); and
make arrangements for your kids if you can’t be there to
– childcare provided in the child’s own home (for example, a nanny, but not a child
pick them up from school or look after them at home.
carer who is a parent or relative of the child).
Your local council’s Children’s Information Service will
Ofsted or the Welsh Assembly will require the childcare provider to demonstrate that
have details of local childcare providers. When choosing
the service they provide is safe and of a suitable standard.
what to do you’ll have to consider what would be best in the long run for your child. Will they get adequate educational support? Will they be safe and secure? To find
You can claim for help with the costs of the above types of childcare; see Benefits and tax credits on page 26.
out more about your local Children’s Information Service
Friends and family as childcarers
visit www.childcarelink.gov.uk or call 0800 2346 346. Also
Many parents feel more comfortable if friends or family look after their child and
the Daycare Trust (www.daycaretrust.org.uk) provides
generally speaking this kind of arrangement can be very flexible and much cheaper.
information about childcare options.
Some children may find it less stressful to stay with someone they know while their
Paying for childcare
parent is at work.
You may be able to get help towards the costs of childcare while you are working
However, it is worth bearing in mind that you may not be able to claim financial help
through Working Tax Credit (see page 27) or through employer’s childcare vouchers.
with the costs of this type of childcare. It can also be difficult to deal with any issues
Always check which way you would be better off before accepting childcare vouchers.
about care that may arise when you already have a personal relationship with the
The childcare must be either ‘registered’ or ‘approved’. See opposite.
person who is providing the care.
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Moneysaving ideas
If you are living on a low income, you’ll have thought of any number of ways to save money simply to stay afloat. Here’s a list of our ideas –
Heat and light •
The most expensive appliance in many homes is the immersion heater. If you have to have an immersion heater, keep the temperature at the lowest acceptable level
some of which, hopefully, should be helpful.
and insulate the tank and all exposed pipes.
General •
Don’t confuse price with quality. It doesn’t
•
Always switch lights off when leaving a room.
•
Make sure that your home is adequately insulated. Draught excluders are very cheap and effective.
necessarily follow that the more expensive
•
something is the better it is,
Saving Trust on 0800 512 012 or visit www.energysavingtrust.org.uk
so shop around. Use the Which? guides in your local library to find the best kettle, or whatever you’re buying.
•
You can get grants for some energy saving improvements. Contact the Energy
•
Take showers instead of baths if possible.
•
Run your washing machine at night as often electricity rates are cheaper at this time.
Shop seasonally – for example you can always buy half-price Christmas cards in January. A child’s warm winter coat will be reduced in the summer.
•
•
Telephone •
Try to make as many calls as possible
Try waiting thirty days (well at least seven!) before
off-peak (after 6pm and at weekends) but
you buy something. This should test how much
do keep in touch with friends and try to meet
you really need it.
with them regularly.
Keep receipts and guarantees in case things go wrong. Often small problems can be easily fixed if you still have the appliance instructions. It will save the cost of an engineer. Beware their call-out charges.
•
Check if other providers can give you a better deal.
•
Monitor the length of your teenagers’ calls (or put a lock on the phone).
•
Ask your friends how they manage.
•
Avoid gambling – it may seem like a good idea, but in the end you nearly always
investigate whether a pay-as-you-go contract rather
lose money. You have more chance of dying in the week that you buy a National
than a monthly contract will save you money.
•
If you use your mobile phone only occasionally
Lottery ticket than of winning the jackpot! Now there’s a cheery thought for you!
•
Visit internet comparison sites (see page 55) to find the best deals for utilities, loans and other services.
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Car expenses
Grocery shopping
•
•
Keep your car well maintained – check oil and water levels regularly as well as tyre pressure. If this all sounds daunting, get a friend to show you how.
•
Look out for special offers, reduced item shelves
old and keeping them for three years
etc. Three for the price of two offers are good value
is the most economical way of
for tinned food, for example, where the food won’t go off.
owning a car – but make sure you get
•
the car checked over before buying.
•
stick to it!
•
Buying cars when they are two years
Plan a weekly menu, make a shopping list and
Compare prices in different shops and supermarkets. The price of milk, for example, varies enormously.
For major repairs, get a detailed
•
written estimate as this restricts
Take advantage of seasonal variations in the price of fresh fruit and vegetables. Or why not even grow your own?
unexpected add-ons.
•
Never go shopping when you are hungry and try to avoid taking your children if you can.
Recreation/entertainment •
•
•
Ready-meals and products from well known brands can be a rip off. You can get great bargains at markets or by buying own-brand goods in supermarkets.
Think of going to certain places out of season. Visit your local tourist information centre to find out about attractions that are free and possibly pick up special offers.
Avoid waste – put your leftovers into a soup or cook a large quantity of something and then freeze what’s leftover to have another day.
Study your local newspaper for good cheap or free family recreation. Check the notice board in your local library too.
•
•
•
Make your own baby food by mashing-up or processing your food. You’ll save a fortune.
Don’t forget snacks, drinks and packed lunches to keep you and your children going without having to spend a fortune on food while you’re out.
•
Borrow books, videos and CDs from the local library. If you’re looking for jobs the local library should have a good selection of newspapers and trade magazines to
Clothes •
look through.
Repairing is much cheaper than buying new! Save buttons from old clothes for repairs.
•
Join a baby-sitting circle – preferably for single mothers who are prepared to have
•
your child stay over.
Kids grow out of clothes so fast – balance the quality and price of clothes with the length of
•
Holidays can be cheaper if you book them either very early
time they will actually fit your children.
or at the last minute.
•
Check out charity shops, jumble sales and car boot sales – you can get some great bargains.
•
Try to have a base colour with which to mix and match – that way you can get a lot of outfits from mixing and matching a few items of clothing.
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Conclusion
Toys and kids’ things
It is essential not to lock yourself away but to seek
•
Keep a bits-and-bobs box if you have young children. Keep old boxes, packaging,
Parent and Toddler, or other support groups in your
bottle tops, egg boxes, bits of wood, silver foil, containers, card etc. to make
area? Get in touch with Gingerbread who have a
pictures, space stations and dolls’ houses... Kids love to be creative and however
network of self-help groups for lone parent families.
much we spend on toys, some kids still love the packaging more! Old clothes and
As a single parent you have got a lot to cope with
jewellery are good for dressing up.
on your own and money worries are sadly often
Find out if there is a toy library in your area – you can borrow toys for a short time
one of them. Wise budgeting can save you and your kids a lot of heartache. Feeling in
just as you would borrow books from the library (Social Services will have details or
control of your money can give you a purse with no holes and peace of mind.
•
visit the National Association of Toy and Leisure Libraries at www.natll.org.uk)
help and company whenever you can. Are there
Hopefully this booklet has helped in this area, but please do seek the help you need from the organisations listed at the back of
•
Make your own modelling dough. Combine 3 cups of flour, 1 cup of salt, 1 cup of
this booklet.
water and a little food colouring. Knead the mixture well and store in a polythene bag.
•
Look for toys in jumble sales or charity shops, but make sure that they are safe.
Around the house •
Re-use plastic bags as bin liners.
•
Wash J-cloths and re-use for a while.
•
White vinegar is a very cheap and effective cleaning agent.
•
Save old Christmas cards to cut up and use as gift tags or even make your own cards if you or your kids are feeling creative. Similarly help your kids make birthday cards for their friends.
•
Shredded newspaper makes great cat litter.
•
Re-use old envelopes by buying labels – charities often sell these.
•
You can apply for council grants for some home improvements. Ask at the Housing department for details.
•
Use energy saving light bulbs. These are more expensive to buy, but running costs are low and they last for years.
•
Try DIY if you can. You might find you actually enjoy it!
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Financial jargon buster
Annual Equivalent Rate (AER) Used to
Credit reference agency An organisation that collects information on people’s credit
compare interest rates on savings accounts.
history, and reports to prospective lenders.
Usually the higher the rate, the better. Annual Percentage Rate (APR) The actual yearly cost of a loan, including interest and charges. Usually the lower the rate, the better.
Credit sale This is where you pay for goods in installments, usually with interest. The supplier cannot repossess the goods if you fall behind in repayments but can take court action to recover money owed. Creditor A person or business money is owed to.
Assets Things that are owned such as cars, property and money. Bankruptcy A process of legally declaring that a person cannot repay their debts, and providing protection for the debtor (the person who owes money). Budget A financial plan drawn up for an individual, a family, a business or a government. It is usually for a period of a month or a year, but can be for longer. Charge Card Similar to a credit card, but the holder has to pay off the balance in full every month. Collateral Something owned by a borrower that a lender has a right to take
Curriculum Vitae (CV) A document designed for potential employers which outlines your personal details, qualifications and work experience. Debit card A card issued by a bank. Used in a similar way to credit cards, but the amount is taken from the bank account immediately. Debt Money owed to another person or business. Debtor A person or business who owes money to another person or business. Default When an individual or company fails to meet loan repayments.
possession of if the borrower defaults on payment (stops making repayments).
Earnings See Income.
Compound interest Interest paid or received on both the original amount of a loan or
Financial Planning The process of setting financial goals, and producing plans (for
investment, and on any interest which is added to the loan or investment.
example, budgets) to achieve those goals.
Cost of loan The total cost of a loan which includes interest plus charges, fees and
Gross income The full amount of money earned (that is, before deductions such as tax).
so on.
Guarantor A person who guarantees that they will make loan repayments if the person
County Court Judgement (CCJ) A court order which decides if you owe a creditor
who is actually borrowing money fails to keep up with repayments.
money and, if so, how you will pay the money back.
Hire purchase (HP) A form of credit involving a down payment followed by regular
Credit Money to buy goods or services that the lender will require to be paid back in
monthly payments. Until the payments are finished, the goods belong to the credit
the future.
company, and the user is hiring them from that company.
Credit card A card used to borrow money or to pay for purchases. The card allows the
Income Amount of money received or earned over a period of time.
cardholder credit which they can repay monthly.
Income tax A tax on personal income.
Credit history A record of credit someone has had in the past.
Individual voluntary arrangement (IVA) An agreement between an individual and
Credit note When returning a product rather than giving you cash a shop may give a
their creditors where an agreed amount is paid off each month over a given period after
voucher equivalent to the value of the returned product which you can use when you
which time the balance owing should be written off.
go back to the shop in the future.
Interest Money that you earn on money you keep in a bank account, or money you pay for borrowing money.
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Interest rate The amount of interest paid or charged (given as a percentage).
Tenancy agreement The legal document between you and your landlord covering rent payments and restrictions on what you can do in the property etc.
Liabilities These are the same as Debts. Loan An agreement between a lender and a borrower. The borrower agrees to repay
Term The period over which a loan is scheduled to be repaid or an investment runs.
the money borrowed over a period of time – with or without interest.
Unpaid balance The amount still owed on an account.
Minimum payment The smallest amount you can pay towards money you owe on a
Unsecured loan and credit A loan not backed up by collateral or guarantee of any sort.
credit card. It is stated on your monthly statement. Mortgage A loan to finance buying a house, with the house given as security for the loan.
Utilities Services such as gas, electricity and water. VAT or Value Added Tax A government tax added to the purchase price of products.
Mortgage provider The financial company providing your mortgage. Generally a bank or building society. National Insurance A deduction made from your pay by the government to fund things like pensions and unemployment benefits.
If you don’t have internet access at home remember that you can use the internet for free at your local library.
Net income The amount of income after all deductions (for example, tax and National Insurance). Also called ‘take home pay’. Overdraft An arrangement with a bank which allows customers to withdraw more funds from a current account than they have in the account. It is a form of lending.
Useful organisations
General advice and information Advice UK
Payment-protection insurance Insurance to make repayments on a loan if for a
UK-wide network of advice centres. Can supply details of
specific reason you cannot make the repayments. In many instances this insurance is
member agencies in your area.
expensive and only pays out in a very small range of circumstances.
020 7469 5700
Repossession A legal process which involves a lender taking possession of a
mail@adviceuk.org.uk
property which has been pledged as security for a loan, or a hire-purchase company
www.adviceuk.org.uk
taking possession of the goods, when repayments haven’t been made.
Association of Charity Officers
Savings account A bank account which pays interest. It is not designed as a day-to-
Provides information to people applying for financial help from charities, by providing
day bank account.
a signposting service and putting them in touch with organisations who might be able
Secured loan and credit A loan with property or other assets as security. Security See Collateral.
to help them. They also produce ‘A Guide to Good Practice in Grant Making for Individuals in Need’, available in most public libraries and has information about local and national charities that give grants to individuals in need.
Store card A store card works like a credit card, but only can be used in the store that
01707 651 777 helpline www.aco.uk.net
issued it. Take-home pay See Net income.
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Citizens Advice Free confidential advice and information provided through local bureaux including
Single parent organisations
specialist money advisers. The website has a range of useful information, ranging from
Gingerbread
family issues to money matters.
Free information for lone parents on benefits, work, education, holidays, children,
Details of individual bureaux on website or in Yellow Pages.
relationship breakdown and child maintenance. Also provides information on other
www.citizensadvice.org.uk
helpful organisations and lone parent groups throughout the UK, and offers a membership scheme.
Office of Fair Trading
0808 802 0925 (Single Parent Helpline)
Government body protecting the rights of consumers. The consumer direct website
www.gingerbread.org.uk
explains your rights. 08454 04 05 06
Dads UK
www.oft.gov.uk
Information, advice and details of local contacts. Also has an online forum, which can put you in touch with other lone fathers. Free membership.
SSAFA Forces Help
www.dads-uk.co.uk
Helps current and ex-service personnel and their divorced, widowed or separated spouses and partners. Provides a range of services, advice and support in areas such
Single Parents Action Network (SPAN) UK
as social work, health, welfare and housing. Telephone for local branch.
Network of self-help organisations for single parents. Also provides an advice,
020 7403 8783
information and signposting service to lone parents and can offer help to those
www.ssafa.org.uk
wanting to set up a new self-help group. 0117 9514231 www.spanuk.org.uk
Childcare 4Children Advice and information on all aspects of out-of-school childcare. 020 7512 2100 helpline www.4children.org.uk Daycare Trust Provides information on childcare issues for parents, employers and childcare providers. 0845 872 6251 helpline www.daycaretrust.org.uk
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Child maintenance
Debt and managing your money
Child Support Agency (CSA)
Credit Action
Collects child maintenance for your child from the non-resident parent. You can
Free service offering practical and confidential advice on personal money management
download an application form from the website.
and debt.
0845 713 3133 national enquiry line
0207 380 3390
www.csa.gov.uk
www.creditaction.org.uk
Independent Case Examiner (ICE)
Consumer Credit Counselling Service (CCCS)
An independent body who can help resolve complaints about the Child Support
Charity providing free advice and support to those with debt problems.
Agency. You must go through the Child Support Agency’s complaints process first.
0800 138 1111
0845 606 0777
www.cccs.co.uk
Textphone: 0151 801 8888
National Debtline
www.ind-case-exam.org.uk
Provides free confidential and independent advice on how to deal with debt problems. 0808 808 4000 helpline
Children and parenting
www.nationaldebtline.co.uk Moneymadeclear
ParentlinePlus
The Moneymadeclear service is provided by the Financial Services Authority and
Provides advice and support for parents.
provides free information about money matters. The website includes budget and loan
0808 800 2222 Parentline 24-hours
calculators as well as lots of other useful information.
Textphone: 0800 783 6783
0300 500 5000
www.parentlineplus.org.uk
www.moneymadeclear.fsa.gov.uk
Saving for Children Website showing the different ways children can save money. www.savingforchildren.co.uk
Housing
Toy Libraries
Shelter
Social services should have details of the toy libraries in your area or you can contact
Leading charity addressing housing issues in the UK.
the National Association of Toy and Leisure Libraries on 020 7428 2286.
Freephone helpline: 0808 800 4444
www.natll.org.uk
www.shelter.org.uk
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Legal
Comparison websites for getting the best deal
Community Legal Advice Provides general advice about legal services and advice to people who qualify for Legal Aid. Its website includes a calculator to work out whether you may be eligible for legal aid.
uSwitch.com Well known internet comparison site for utilities, loans and credit cards etc. www.uswitch.com
0845 345 4345
moneysupermaket.com
www.communitylegaladvice.org.uk
Internet comparison site for utilities, loans and credit cards etc. www.moneysupermarket.com
Credit Reference Agencies
MoneySavingExpert
If you have been turned down for credit you can obtain details of your credit file from:
Dedicated money saving site covering a wide range of consumer issues. The excellent weekly money saving tips email is well worth signing up for.
Experian Ltd One of the three main credit reference agencies.
www.moneysavingexpert.com
0844 481 8000
simplyswitch
www.experian.co.uk
Well known internet comparison site for utilities, loans and credit cards etc.
PO Box 8000, Nottingham NG80 7WF
08000 111 395 www.simplyswitch.com
Equifax plc One of the three main credit reference agencies.
Energy Saving Trust
www.equifax.co.uk
An impartial body designed to provide
Equifax Credit File Advice Centre, PO Box 1140, Bradford BD1 5US
advice about how to save energy. They can provide details of your local Energy
Callcredit plc One of the three main credit reference agencies. 0870 060 1414
Saving Trust advice centres. 0800 512 012 www.energysavingtrust.org.uk
www.callcredit.co.uk PO Box 491, Leeds LS3 1WZ Check My File Website that helps you check your credit history online for a fee. 0800 612 0421 www.checkmyfile.com
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Notes
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