Financial Wellbeing

Being in control of your money starts with understanding what income you have and what you are spending. This can be tricky, especially if you have different sources of income paid at different times of the month. 

Our quick and easy budget planner tool will do the hard work for you. Simply add in the amounts and choose the frequency of payments in each of the boxes and let the tool work out your overall budget and make some suggestions on how to improve your financial outlook. You can also choose to save your completed budget to check back at a later date. 

Some tips for completing your income and outgoings: 

• Always use net income - check your wage slip, Universal Credit statement or bank statement to check exactly how much you are paid after any deductions such as tax, national insurance and pension contributions. 
• Working out your spending can be daunting - a good place to start  is with regular, fixed amounts such as rent, council tax and other direct debits 
• Use bank statements to work out how much you realistically spend on things like groceries, travel and other regular day to day expenses. If you normally prefer to pay in cash, check your statement to see how often you take money out at a cash line and how much you tend to withdraw. 
• Don't forget any 'hidden' expenses. These could be things you only need to pay annually like a car MOT, vaccinations for your pet or new glasses. Budgeting for these costs throughout the year could save you falling short in the month they are due. 

After you have worked out your income and outgoings, your next move should be to check that you have accessed all available financial support to maximise your income. 

A range of social security benefits are available to help people with a low income. You do not have to be out of work to make a claim and how much you are entitled to will depend on your individual circumstances. A number of benefits can be claimed even if you have some earned income coming into your household: 

• Universal Credit
• Council Tax Reduction
• Housing Benefit for people who cannot claim Universal Credit
• Disability benefits such as Personal Independence Payment., Disability Living Allowance for a child under 16 or Attendance Allowance for people who have reached state pension qualifying age. 
• Carers Allowance

To check if you might be entitled to make a claim to top up your income, our simple benefit calculator (opens new window) should take no more than 10 minutes to complete and can help you to identify what to claim. 

Financial Support Grants

If your income is low you may qualify for a one-off grant to help with the cost of a range of essential items. To qualify, you will usually need to be in receipt of a means tested benefit, but many working households may still qualify if income is low. 

• Warm Home Discount - an annual credit of £140 to your electricity account to help towards winter fuel costs. People who get Guarantee Pension Credit are known as the 'core group' and are paid automatically. Many suppliers also have 'broader group' criteria for the most vulnerable households such as those with very young children or someone with a disability or long term health condition. Applications usually open every summer and a new application will need to be made each year. Check if you are eligible for a Warm Home Discount (opens new window) from your supplier. 
• Best Start Grant - payments for families are available through Social Security Scotland. Payments are available for new babies, early years and school age children. Click here to check if you are eligible to claim a Best Start Grant (opens new window)
• Free School Meals and Clothing Grants - Families with school age children may also be eligible for help with school related costs. The criteria for free school meals and clothing grants are slightly different so Check the criteria for help with school costs here.

For advice and support to make a claim, contact the Advice Shop on 01506 283000 or email advice.shop@westlothian.gcsx.gov.uk (opens new window)

If your income is maximised, the next step toward improved financial wellbeing is to look at your outgoing costs to see where you could make savings. 

Switch and Save 

Try using price comparison tools to check that you aren't paying more than you need to for household bills. Some of the areas you could make savings include:

• Gas and electricity - it's a good idea to compare prices at least once per year, around the time you receive your annual statement. Even if you don't want to switch providers, you can contact your current supplier to check if they can give you a better price. Be careful to check for early exit fees and,. if you usually qualify for a Warm Home Discount, check that the supplier participates in the scheme before switching. 
• Broadband - as more and more services move online, reliable broadband has become a necessary expense for many households. Consider factors such as speed and usage as well as price to help you find the best deal. 
• Mobile phone - if your handset is in good working order, consider a SIM only deal. Many providers now offer month to month SIM only contracts meaning that you are free to take a new deal whenever you wish to. 
• Bank account - you can compare both current and savings accounts online. Many banks offer incentives for making regular deposits and some offer cashback on household bills. Comparing accounts online makes it easier to check that you are getting the best return for your money

It is important to consider a range of factors before making the switch as the lowest price isn't always the best option for your needs. This handy price comparison guide (opens new window) from the Money Advice Service tells you all you need to know before you get started. 

Deal with Debt

We often need to borrow to make big purchases and when debt is affordable and well managed this can be a normal part of day to day budgeting. When you can no longer afford to reliably repay debt, this can lead to bigger problems and significant money worries. The earlier you can get on top of things the better to help you stay in control and avoid long-term consequences. 

If you are worried about debt, the Advice Shop offer free advice and support to help you get things under control. Our team of specialist debt advisers can provide:

• Help to deal with secured or unsecured debts
• Assistance with Council Tax arrears
• Negotiation with creditors on your behalf
• Advice on bankruptcy
• Help to access different government schemes for dealing with debts

If you are having difficulty keeping up with your repayments, it is important to speak to your lenders at the earliest possible opportunity. If you are struggling financially or need help getting your debt under control, the Advice Shop can help. Contact us using our quick and easy online referral form. An advisor will contact you directly to discuss your situation. 

Credit is used when a customer receives something of value then agrees to pay the lender back at a later date, usually interest is charged by the lender.

The first thing you need to do is ask yourself if borrowing is the best route to take.  Taking on more bills may not be the best option especially if you are already struggling with your budget. Use this quick and easy budget planner tool to work out your if you can afford repayments. 

When used responsibly, credit can be a very useful tool to help with financial planning. It is important to recognise that not all debt is bad. Debt only becomes a problem when repayments become unaffordable or unsustainable. 

The Cost of Credit

Credit can be helpful as part of your overall financial planning, but it usually comes at a price. You will normally need to pay back the amount you borrowed plus a bit extra, known as 'interest'. 

You must always check the amount of interest you will be paying on top of the purchase price to make sure you are getting the best deal.

Don't just look at the repayment amount because you think it is affordable, quite often you will end up paying back close to double the cost of the item;

An example:

• Washing machine costs :£ 337
• Repayment amount : £6.39 per week
• Number of weeks :104
• Representative APR(Annual Percentage rate) :119.9%
• Total Payable :£664.56

If you are considering borrowing, you can use this loan calculator tool (opens new window) to work out how much you will repay. 

Credit History

Your ability to obtain credit from a lender will depend on your credit history. Lenders will look at how you have handled any borrowing you have had in the past and use this information to decide if they want to lend to you. Not having any credit history can also affect your ability to obtain credit.

There are some simple steps you can take to help build a good credit history:

• Get on the Electoral roll
• Open a bank account
• Take out a small form of credit, like a mobile phone contract
• Manage your household bills
• Set up Direct Debits - late or missed payments affect your credit score
• Limit Credit applications - too many in short period can make you look desperate for credit
• Try and use no more that 25% of your credit limit, a higher balance can reduce your score.

There are a number of benefits that come with having a good credit score: 

• You will have access to credit with lower interest rates
• You will be offered higher credit limits
• Access to more offers from a wider range credit providers

Credit Reports

Credit reports contain information about your credit history within the last 6 years.

Your credit report contains:

• the name of the company or companies you have credit agreements with
• the date the credit was obtained
• the type of credit (loan, credit card, catalogue etc)
• balance outstanding
• payment history and details of any missed payments

Lenders use credit reports ,when you apply for credit ,to help them decide whether or not to lend to you.

If you miss a payment then the lender can update your credit report and this can affect your credit score.

Consequences of Non-Payment

Missed payments are recorded on your credit file making it harder to obtain further credit.

Lenders have different ways of dealing with unpaid debt. It can vary dramatically between lenders.

They will have their own timescales for when they take further action , how they contact you and their attitude when they contact you. In general, when you miss payment(s) you can expect the following to happen: 

Missing one or two payments:

• Your creditors will generally start with reminders by phone or in writing , asking you to bring account up to date. They may be sympathetic and ask if there has been a change in circumstances which has made it hard for you to pay 

Missing three or four payments:

• Your creditors might threaten further action, you may receive calls more frequently. They may advise that you see free debt advice. They will send a default letter(this advises you have broken a credit agreement) and they will record a default on your credit report, this will make it a lot harder to get credit.
• Your creditors might also pass your debts over to a debt collection agency to try and recover the debt. You will then start receiving letters from new companies asking you to set up a payment arrangement with them.

Missing five or six payments:

• By now creditors have sent multiple letters and may be looking to take further action, possible legal action to recover the debt
• Creditors could send out a letter requesting you attend court, they will be looking for repayment in full within 14 days or could look to try and arrest earnings or your bank account.

It is in your best interest to seek advice as soon as you start falling behind or have difficulty keeping up with repayments.

The Advice Shop offers free debt advice service where we can look at a variety of debt solutions. Contact us using our quick and easy online referral form An advisor will then contact you directly to discuss your situation. 

Banking

Your bank is one of the best tools you have to stay on top of your money and make it work for you. You can have as many bank accounts as you want, they don't need to all be with the same bank and don't even need to be traditional high street bank accounts. There are lots of different banking options available, including accounts aimed at specific circumstances such as student accounts or jam jar budgeting accounts. What's important is that your bank works for you. 

Check out this guide to different bank accounts (opens new window) to work out which option is best for your circumstances. 

Many people are not fully aware of everything coming in and out of their account and it's easy to lose track of money coming in and going out. There are a few simple things you can do to make sure you are on top of your account: 

• Check your direct debits and cancel anything you don't need. Think about that gym membership you no longer use, or a service you signed up for a free trial and never got around to cancelling. Don't spend money for nothing, cancel what you can and make immediate savings. Remember, if you are still under contract, check the cancellation policy for any fees that might be charged. 
• Check if there is a charge for your bank account. Many banks offer premium accounts that come with features like free travel insurance or mobile phone insurance. These accounts usually charge a monthly fee, so make sure the rewards are worth the price. For example, if you don't travel often or your mobile is covered under your home insurance policy, it may not be worth paying the price for the upgraded account. 
• Check your bank statements regularly. Don't be afraid of looking at your statements as these are a window to your finances. Regularly reviewing your statements will help you notice any patterns in your spending, quickly find any areas you could cut back and will also make sure you notice any unusual activity on your account as soon as possible. 

Many banks and building societies have advisers who can go over your account and explain what type you have and even recommend and change of account. Get in touch with your local branch or check your bank website for details on how to access this service. 

Bills

Bills are ongoing regular payments such as rent or mortgage, council tax, gas and electricity or phone bills. 

Bills generally fall into two categories: priority and non-priority

Priority bills are those that carry the most serious consequences if you don't pay them. Non-payment of priority bills can result in penalties such as wage or bank arrestments, eviction from your home for mortgage or rent arrears and disconnection from vital services like gas and electricity. 

Non-priority bills still have consequences of not paying but are less serious. These bills are still important however, as you can be taken to court for non-payment which could add additional costs to your unpaid bill and may impact your credit rating going forward. 

It is really important that you recognise and understand the consequences of non-payment of bills whether they are priority or not. If you are struggling to keep on top of your bills, you can seek help and advice from the providers of your bills, as they may have options to temporary reduce or freeze repayments. There are also many different advice and support agencies in West Lothian who can help. 

Budgeting helps to create a spending plan for your money. A realistic budget ensures that you will always have enough money for the things you need and the things that are important to you. Following a budget or spending plan can also keep you out of debt or help you work your way out of it.

Once you have mapped out your income and outgoings using a budget planner tool , this will give you a better understanding of your financial position and will show if you have any money left after paying all your outgoings. This is known as disposable income and you should also have a plan for what you would like to do with this. Options include: 

• Buy things you want - your budget plan will account for the things you need to buy such as groceries and travel costs. We all deserve a good standard of living and it's important to build some 'fun money' into your budget if your income allows. Disposable income can absolutely be used for things like concert tickets, going out to dinner or new items just to make you happy. 
• Pay down debt - debt repayments should already be built in to your day to day budget but you can also use your disposable income to get ahead and pay off debt faster. Be careful to check for any early repayment fees that might apply. 
• Build up savings - putting money aside for a rainy day can help to protect against 'financial shock'. Having funds readily available in case of an unexpected expense can really help to cushion the blow on your finances. Similarly, planning ahead for things like Christmas, birthdays, holidays or even car serving and MOTs or school uniform can help to spread the cost and lessen the impact on your day to day budget. 

Local credit unions can be a good option to start saving. There are 3 credit unions available in West Lothian, each offering different products and services. Find out more using the links in the table below: 

All credit unions are authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority.