Budgeting is the practice of setting limits on spending for essentials, nonessentials and savings. It helps you avoid overspending on unnecessary items while saving for the future.
When creating a budget, you’ll separate fixed expenses like rent or mortgage payments from variable ones like shopping and dining out. Then you can keep track of how much money is spent to determine if your plan is working.
What is a Budgeting Advance?
Budgeting Advances are short-term loans designed to assist universal credit claimants cover unexpected or one-off expenses. Interest free and interest-free, they must be repaid via deductions from your monthly Universal Credit payments until it’s fully repaid.
Your loan amount will be determined based on an assessment of your circumstances and any savings you have. The Department for Work and Pensions (DWP) will reduce the loan amount offered you by PS1 for every PS1 in savings over PS1,000.
To be eligible for a Budgeting Advance, you must have been receiving Universal Credit or another qualifying benefit for at least six months and earned less than PS2,600 (PS3,600 if married) during that same time period. Furthermore, you cannot have paid off another Budgeting Advance during these same six month period.
Your work coach can assess if you qualify for a Budgeting Advance and estimate how much money is available to borrow. In most cases, they’ll make their determination the same day.
How much can I get?
Budgeting advances can be a useful tool to provide extra money when needed. They could cover things like the cost of a season ticket or your first pair of shoes, for instance.
However, it’s essential to be aware that you only qualify for a certain amount of money. This amount is set by the Department for Work and Pensions (DWP), and depends on your individual situation.
Applying for a Budgeting Advance starts by speaking to your Jobcentre Plus work coach over the phone. Together, you’ll decide how much money to borrow and what it will be used for.
You should receive your money within three days. The Department for Work and Pensions (DWP) will write to you with an estimate of how much will be deducted from your Universal Credit (UC) and a plan on how to repay the debt. This could include automatic deductions from earnings or engaging with debt collection agencies to recover the money.
How do I apply?
Budgeting Advances are short-term loans designed to meet essential expenses. They’re interest-free and typically repaid through deductions from your Universal Credit payments.
Apply for a Budgeting Advance online or by phone. Typically, you’ll get your decision via email or text message within seven working days of applying.
The application form for a Social Fund loan asks for details about your income, savings and outgoings. Based on this data, the decision you receive will indicate how much your repayments will be and provide an estimated timeline.
You are only eligible for one Budgeting Advance at a time and must repay it before being eligible for another one. Otherwise, the Department of Workplace Pensions could request your employer make automatic deductions from your wages or hire an outside debt collection agency to recover the money owed.
What happens if I don’t pay back my Budgeting Advance?
Budgeting advances can be a great way to finance that big ticket item you’ve always wanted, like a new TV or cooker. But if you don’t pay them back in full, debt accumulation could become an issue.
The Department for Work and Pensions (DWP) will send you a letter outlining how to repay your budgeting advance, usually in the form of a lower than usual Universal Credit payment. Furthermore, they have the power to pass along any money owed to either your employer or debt collection agencies.
However, it’s essential to remember that not everyone will qualify for or be able to claim a Budgeting Advance. Therefore, getting advice before applying is highly recommended; your work coach can offer suggestions as to the most advantageous options for you and your family. Ultimately, make sure you maximize the benefits from these advances while remaining debt free.