Step 2 Create a financial statement

After increasing your income, creating a simple financial statement will help you develop a strategy for dealing with your debts. It can also demonstrate your financial position to creditors. 

To do this, list all of your sources of income. These may include your net salary, benefits or tax credits and any other financial help, such as contributions from other household members. If you’re on a low income, have your entitlement to benefits checked by an experienced advisor.

Next, add up all of your expenses. These are basic living costs like mortgage or rent payments, household bills, hire purchase items, children’s expenses and healthcare costs. Make sure these are realistic. And don’t forget less obvious costs such as clothing, school meals or emergency funds.

Any income you have left over after these expenses are paid (income minus expenses) is your disposable income. To work out your budget, you’ll need to choose either monthly or weekly figures.

Your financial statement may become a key document. If you’re dealing with creditors, you can use it to suggest repayment plans.

Why complete a financial statement?

The second important step is to work out a simple financial statement to show your creditors. This shows how much income you have and how much money you need to meet basic expenses.

A financial statement is an essential tool when dealing with debt problems. It presents a clear picture of individual or family income, identifies expenditure and clearly shows available disposable income.

Once you have completed a financial statement, you can demonstrate your current financial position to creditors or courts and develop a strategy for dealing with your debts. It’s important to make sure your financial statement is realistic. It should always reflect what actually happens in practice, leaving you with enough money to pay your main expenses. A realistic budget is an essential tool for solving debt problems.

The financial statement may become a vital document and is an extremely useful tool when dealing with creditors, as it forms the basis for any proposed repayment schedule.

Download a sample financial statement [PDF, 41.0Kb] that you can adjust and use to show your income and expenditure.

Guidelines to filling out your financial statement

Completing a financial statement will start you off on the road to dealing with your debts. Here are some important points to remember:

  • When you work out your budget, it’s important to use either monthly or weekly figures. Don’t mix the two or the sums won’t work out. Table 1 shows you how to do the calculations.
  • Add up all of your sources of income.
  • Add up all of your basic expenses.

After following those steps, you’ll be able to calculate your disposable income. This is the income you have left over once your basic living costs are paid. If you worry that you’re not good with numbers, you can get help filling out these pages. Details of the help available can be found in this PDF about about sources of advice for financial issues [PDF, 349Kb].

Table 1. Calculating weekly or monthly payments
If your bill is:To change it to:Do this:

Weekly amount x 52 ÷ 12




Quarterly amount x 4 ÷ 12

Quarterly amount x 4 ÷ 52

MonthlyWeeklyMonthly amount x 12 ÷ 52



Annual amount ÷ 12

Annual amount ÷ 52

You may also want to try our interactive budgeting tool.

The following points will help you fill out the details in your financial statement.

What does income include?


Add the income from your net pay once all deductions have been made. Only include overtime if you receive it regularly.

Benefits and tax credits

If you’re on a low income, it’s always a good idea to have your entitlement to benefits checked by an experienced adviser.

Disability benefits

If you have cancer, you may qualify for disability benefits. Please note that Disability Living Allowance, Personal Independence Payment and Attendance Allowance are intended to cover health needs, so your financial statement needs to represent this if you are receiving either benefit. This means that these benefits need to be recorded as income, but that you should also show how you’re using this money as expenditure for care needs, perhaps under ‘other costs’ or ‘healthcare costs’.

Other financial help

This includes contributions from other household members, eg non-dependants, lodgers or boarders.

Expenditure includes


Check your entitlement to help with these payments through your insurer, your payment protection insurance or benefits.

Council tax

Check with you local authority (council) to find out if any discounts or help with council tax payments are available to you.


If you pay this quarterly, you’ll need to add your last four bills together and divide the total by 52.

If your heating bills are very high, it may be useful to contact your energy supplier to see if they have any tariffs that could reduce your payments. They may also provide energy efficiency advice.

The government and energy suppliers run various schemes to help people who are finding it difficult to pay their fuel bills. This includes the Warm Home Discount Scheme, which was introduced in England, Scotland and Wales in April 2011. The scheme entitles certain people (including those who receive certain benefits) to an annual rebate on electricity bills. Since January 2013, the government’s Energy Companies Obligation (ECO) has required energy suppliers to provide measures that help low income and vulnerable households to affordably heat their homes. Speak to your individual energy provider for more information about the help that may be available.

Our section on ways to keep warm without the worry contains more information about managing energy costs. You can also find tips on how to improve energy efficiency in your home.


Include your regular landline and mobile bills. These can be classed as essential when you’re unable to go out due to your illness or if you’re in hospital, as it helps you keep in touch with family or work.

Water rates

Water companies aren’t allowed to disconnect your water supply. Some water companies have trust funds that may be able to help pay your water bill.

TV license

Check the annual cost for this and divide it by 52 for a weekly amount or by 12 for a monthly amount.


This should include all food items, toiletries, cleaning materials, newspapers and so on. You can also include some entertainment expenses. The following are rough weekly figures that people might spend on housekeeping, based on suggestions from the Financial Services Authority:

  • single person £27 - £73
  • couple £46 - £122
  • each child £12 - £26
  • non-dependant £17 - £53.

However, there may be reasons why your weekly spending figures are different from those listed and everyone’s situation is different.

You can add an extra figure for any special dietary needs, but you need to state a reason for these on the financial statement.

Hire purchase items

If the hire purchase item is needed for your work or due to disability, an explanation of this will need to be included in your expenditure.

Travel expenses

Include travel to and from hospital as well as travel to and from work/shopping. If you have a car, include maintenance costs, such as MOT, tax, insurance and petrol.


As a general guide, you should allow £3–£8 for clothing per person on a weekly basis. If you’ve lost or gained weight, or if your body shape has changed, you could increase this amount, but explain the reason for the increased figure.

Children’s expenses

This could include after-school clubs or school trips. It is a good idea to add an additional note about this on your financial statement if these expenses are particularly high.

School meals

It’s worth checking your benefit entitlement to see if your child/children qualify for free school meals.

Healthcare costs

This should include charges for items related to your illness, such as bedding, special equipment and help in the home.

Other items

As shown on the financial statement, this should include funds put aside for emergencies, or for things like birthdays, public holidays/religious celebrations and household repairs.

Back to Managing debt and borrowing

Debt and borrowing overview

Living with cancer can bring extra expenses. Learn how to manage your debts using a clear step-by-step process.

Step 1: increase your income

Increasing your income is the first step to managing your debts. Check your entitlement to benefits and insurance payouts.