Money a+e’s guide to opening and managing a bank account
Universal Credit is set to replace a number of out of work and low income related benefits and the level of benefits available will also be capped. TheTransition to Universal Credit will begin from October 2013 for new claimants. Universal Credit will consist of two elements: A Living Cost element and a Housing Cost element. Universal Credit will be paid to claimants in a lump sum on a monthly basis. Unlike Housing benefit, the housing cost element will also be paid to the Claimant and not directly the Landlord.
It is therefore vital now more than ever to ensure that those who are in receipt of benefits firstly have a bank account/s and secondly that they learn how to manage those bank accounts and prioritize all their financial obligations, here is our guide to help you get started.
Step 1 - Opening a Bank Account
The first thing you need to do is find a bank account that is correct for you. There are many different types of bank account available, so it is very important you check which will be most appropriate for you. For more information about bank accounts check out, The Money Advice Service’s guide,‘How to choose the right bank account’ (https://www.moneyadviceservice.org.uk/en/articles/how-to-choose-the-right-bank-account)
One of the biggest issues faced when opening a bank account is ensuring you have the appropriate ID. To find out what ID is required for various banks please check out The Money Advice Service’s guide, ‘Identity requirements for basic bank accounts’. (https://www.moneyadviceservice.org.uk/en/articles/identity-equirements-for-basic-bank-accounts)
Step 2 - Managing a Bank account
Use more than one bank account to help you budget
• Using several accounts to manage your money can help you stay in control of your spending.
• Divide your income each month into separate accounts – (e.g. you could have one account set up for paying your rent, council tax and other priority bills and another account for spending on yourself).
As soon as you receive your income divide it into separate accounts by setting up standing orders. Make sure the standing orders are set up for the date you are due to receive your money. This will avoid any temptation of dipping into money that should be set aside for essential bills and ensure that you keep on top of your all your financial obligations.
Check your bank statements and bills on a monthly basis
• Once you have set up your accounts, it is important that you keep an eye on what money you have coming in and out of your bank accounts each month.
This is crucial if you’re keen for your budget to stay balanced. You should check your accounts on a regular basis and go through your bank statements
and bills to ensure that important transactions have been processed correctly and to make sure that no suspicious spending is showing on your accounts.
• Review your spending on a monthly basis, this will highlight where you might be over spending and encourage you to make cuts if necessary.
Keep a spending diary
• Keeping a spending diary for a few weeks is a good way to check that your money is really going where it should.
• Buy yourself a small note pad or if you have a smart phone you can download the Spendometer App (http://www.spendometer.co.uk/Welcome/DownloadOptions). Write down everything you spend for a minimum of four weeks and at the end of each week review your spending, this will give you a full overview of where your money is actually going.
• Many people find that keeping a spending diary tends to focus their minds on what they’re spending and can act as a deterrent for unnecessary spending.
Reassess your budget on a regular basis
• The key to successfully managing your budget is to ensure you revisit it on a regular basis.
• Each time there’s a change in your situation that will have an impact on your finances, it is important that you amend your budget accordingly to reflect these new changes. For further tips and information on money management check out our ‘Money management’ page. http://www.moneyaande.co.uk/advice/money-management
Posts
