If you’re moving into employment and making the switch from benefits to earned income, it can be a bumpy ride.
Here are our Top Ten Money Tips to make sure you’re protected financially as you head into work.
- Most details you need are online but if it’s too complex or you’re not so good with IT, find somewhere with help on hand or a friend who you can work it through with. Try to check when the web page was updated, so you know things haven’t changed since
- Find a friend. It could be someone you know, a volunteer with a local group or an adviser somewhere. They will give you confidence and a sounding board to discuss what you need and if you want to challenge a decision against you, they might speak on your behalf
- Know your rights. When it comes to benefits or employment law, you need independent advice in plain English. Again, this could be online but it could be a local welfare rights, Citizens Advice or community law office. Finding that information and printing it from a website means you can back up what you’re saying at formal meetings
- Get a rainy day fund behind you as soon as possible. When taking on a new job (or moving to Universal Credit), there will be some financial upheaval and you want to avoid being in debt by the time you receive your first payment. If you can without falling into debt, and if you are going to lose out financially going into work for a while, try living on that budget and set aside whatever’s left over. Do this if a change to your benefits is coming too
- Use the Money Advice Service budgeting tool for people going into work for the first time. Plan for keeping money safe if you have rent to pay or other commitments
- Make sure you have a bank account that can accept payments the way your new boss is going to pay you, for example, through electronic payments. Ideally, your account will allow you to set up direct debit payments for rent and bills but be clear about charges you may incur if you go into the red (overdrawn). Maybe set up a second ‘bills account’, transfer into enough to cover your outgoings and direct debits going from there, and live off what remains in your main account. Companies often charge less if you pay by direct debit
- To avoid nasty surprises, understand how tax will affect you. PAYE (Pay As You Earn tax) will be deducted unless you earn less than £10,600 a year (£10,800 from April 2016). If it is not deducted, you may have to declare income and pay at the end of the year. Information appears on your payslip, The Money Advice Service has a guide to understanding payslips
- If you have children, find advice on what help you could well be entitled to here. Ask around and do some research online to see what different childcare services charge locally. They can differ a lot, so shop around. Single parents can find advice here
- If you are claiming out of work benefits, ask your Job Centre if they provide financial support for work clothes, tools or travel costs when starting a new job. This could be a short-term loan to be paid back or a grant. Rules on this change over time and vary from place to place, so ask the question. These costs may also be covered by local trust funds that are not always well advertised, so ask at a local support agency as they may know if there are any. Check if you might qualify for a grant from elsewhere with Turn2us
- Get a second opinion. Many jobseekers have received inaccurate or out-of-date information about their benefit entitlements. Check it out with another adviser or on a welfare rights advice website like turn2us.org