Managing your money day-to-day

Cancer can put a strain on your household budget. At a time when you might have extra costs, your income may change too.

It’s important to budget your spending so you know how much money you have coming in and going out. This means making sure you don’t spend more than you earn. If you’re unable to pay your bills, you may have to use your savings or borrow some money. However, borrowing should be a last option. Always look for the cheapest ways to borrow and make sure you have a plan for how you will repay the money.

It’s also important to manage your bills and bank accounts to make sure you don’t have any extra charges. This may include using direct debits or online payments. Getting someone you trust to help with banking tasks may take some of the pressure off you.

You should also make sure you are paying the right tax, which includes checking you aren’t owed a tax rebate if you’ve stopped working.

Our financial guides can give you more information. Call them on 0800 808 00 00.

Budgeting

Working out your weekly or monthly budget is an important first step to managing your everyday finances. A budget is a record or prediction of how much money you have coming in and going out. Once you’ve created a budget, it will help you understand what you need to do next.

How to create a budget:

Step 1

Write down your regular income from all sources. This could include:

  • Wages
  • benefits
  • savings
  • insurance
  • pension payments.

Then add all this together.

Step 2

Write down everything you spend. Then add all this together. Be realistic and make sure you put in enough for items such as food, housekeeping, heating and transport costs. Remember that if you have cancer, these costs may increase. For example, you may need to have a more expensive diet, additional heating, or more hospital visits.

Bank statements, credit card statements and bills will help you work out how much you are spending. If you’re not sure where all your money goes, try keeping a spending diary for a week or two.

Step 3

Subtract your total spending from your total income. If the final amount is less than zero, then you have a shortfall. You may be able to cover a shortfall in the short-term by using savings or borrowing (see the sections on Income and Borrowing). But in the long-term, a shortfall isn’t sustainable and needs to be addressed. Check whether you can increase your income and look at ways to cut your spending.

If you can’t get your budget to balance and you’re getting into debt, you can contact StepChange Debt Charity for some advice.


Borrowing

Main types of borrowing

It’s important to explore all the possibilities first before you consider borrowing money.

  • Make sure you’re getting all the income you’re entitled to.
  • Use an emergency fund if you have one (money you’ve saved for an emergency, for example in a savings account).
  • Claim on insurance and pensions.
  • Budgeting and make savings if possible.

Borrowing to deal with existing debts you can’t repay is rarely a good idea. Talk to a trained debt adviser first about options for dealing with your debts or credit commitments. You can speak to one by calling StepChange Debt Charity.

If you do borrow money, it makes sense to choose the cheapest type of borrowing. See this table of the most common types of borrowing you could consider [PDF, 41.9 Kb], listed from the cheapest to the most expensive.

Whenever you borrow money, you should try to have a clear idea of how you’ll make the repayments. You could use our online budget planner to help you do this.

Borrowing tips

  • Check what other options you have before borrowing.
  • Look for cheap ways to borrow.
  • Try not to use store cards, pay-day loans, door-to-door lending and unauthorised overdrafts.
  • Bear in mind that, with a secured loan, your home is at risk if you don’t keep up with payments.
  • Avoid illegal lenders (loan sharks). They charge excessive fees and typically use aggressive tactics if you cannot repay. You can report illegal lenders to government Illegal Money Lending Teams on 030 0555 2222 (England), 014 1287 6655 (Scotland) or 030 0123 3311 (Wales). In Northern Ireland, call the Trading Standards Consumerline on 030 0123 6262.

How cancer might affect borrowing

Your health isn’t directly relevant when you are taking out a loan or credit card, but it can become a factor if you’re taking out insurance or if your credit score has been damaged because of the effects of illness. There is more information below about your credit score.

Insurance linked to a loan or credit card

Generally, you shouldn’t be asked any questions about your health when you borrow money, but you will be if you take out any related life or health insurance. If you don’t take out insurance, you should be able to get the loan or credit card without having to disclose details of your health.

You may be given the impression that taking out insurance is a compulsory part of a loan deal, but this is seldom the case. In particular, you normally don’t have to take out payment protection insurance (PPI) with a loan, however much the salesperson recommends that you do.

The right insurance can provide valuable protection for you, but you should be treated fairly by firms when you buy it. If you would like this kind of cover, you should shop around.

Our financial information includes more information about insurance.

Your credit score

Many lenders use credit scoring to work out the likelihood of you keeping up the repayments if they lend you money. If they decide you’re high-risk, they may refuse to lend to you or charge you a higher-than-average interest rate.

Your credit score depends on a variety of factors, such as how long you’ve lived in your current home, whether you own it, whether you’re employed and how long you’ve been in your current job, your marital status, your income and whether you have a bank account and existing loans.

Your credit score doesn’t depend directly on your health. But if health problems mean you’ve had to stop work, your income is reduced or you’ve already borrowed a lot, your credit score may be lower.

Loans from your local authority or loans made through Universal Credit are not credit scored, so you may qualify if your income is low and you’re claiming certain state benefits.

Credit unions and community-based lending schemes are more likely to lend to people with a poor credit score than other loan providers.

There is more information about Universal Credit. Credit unions and community-based lending schemes are more likely to lend to people with a poor credit score than other loan providers.

Credit referencing

As part of assessing your credit score, a lender will check the data held about you (called your credit file) at one or more of the three UK credit reference agencies.

These agencies hold publicly available information about you, such as your name and address from the electoral register, and private information about how you have handled your previous or current loans and credit.

When you apply to borrow, you have the right to ask the lender whether they‘ve used a credit reference agency when assessing your application and, if so, which one. At any time, you can contact the credit reference agencies and ask to see your file for a fee of £2. Checking your file lets you see if there are any errors.

If you do discover any mistakes, the credit reference agency will tell you how to correct them. It’s likely that all three credit reference agencies hold a file about you and the information contained may be different.

To check your file at each one, contact Callcredit, Equifax and Experian.


Managing bills & bank accounts

Many of us find it hard to keep track of our bills and bank accounts. Remember that you can pay most bills and check your bank accounts online. This is often easier and quicker. It also helps you check your accounts more often.

Avoid paying bills late, as you may be charged extra. Credit card providers will charge you a penalty each time you miss the payment date and it may affect your credit rating.

Direct debit

The simplest way to ensure that your bills are automatically paid on time is to pay by direct debit. You can do this for most bills, including council tax, water rates, fuel, phone and your TV licence. Fuel providers often give a discount if you arrange to pay this way.

If you’re paying by direct debit, make sure you have the money in your account on the payment date. If you find it harder to know when you’ll have money, paying bills on an individual basis may work better for you.

You can even arrange to pay your credit card balance by direct debit. You choose whether the arrangement pays off the full amount each month, a set amount or the minimum repayment.

However, be careful paying for insurance by direct debit. Some policies – including many car or home insurance policies – treat it as a loan when you arrange to pay monthly rather than in one payment, and will charge you interest.

To arrange to pay a regular bill by direct debit, contact the company providing the goods or service.

Online payments

If you’re confident that you’ll get around to paying bills, but find it hard to get to a post box, post office or bank, consider paying the bills online. This is now possible for most fuel, phone and credit card bills. Some companies give you a discount if you pay this way. If you have an online bank account, you can make all your bill payments online.

To arrange to pay a regular bill online, contact the company providing the goods or service. To sign up for online or telephone banking, contact your bank.

Or, if you prefer, you could make all your payments using telephone banking.

Prioritising your bills

If you’re finding it hard to pay your bills, don’t ignore the problem. Debts quickly get worse if they’re left. It’s especially important to deal with any priority debts. We have more information about these below.

Mortgage/secured loan

If mortgage payments aren’t made for a few months, your property or home may be repossessed. However, there are schemes designed to help those struggling with mortgage payments. Visit gov.uk (England, Scotland and Wales) and nidirect.gov.uk (Northern Ireland) and search for ‘mortgages’ for more information.

Rent arrears (unpaid rent)

You could be evicted after eight weeks if you don’t pay your rent. If you’ve made an application for Housing Benefit or universal credit, it’s important to make sure your landlord is aware of this.

Council tax or rates

In England, Scotland and Wales, you could face a magistrate’s court fine or eventually more serious action if you miss council tax payments. In Northern Ireland, you could be taken to court for not paying your rates.

Unpaid gas or electricity bills

Your gas and/or electricity may be disconnected if you don’t pay these debts, but explaining your circumstances to your energy supplier may stop this from happening. If you’re ‘vulnerable’ and are unable to pay your bills, most of the major energy suppliers will not disconnect your supply. But you have to let them know that you’re classed as ‘vulnerable’. You might be ‘vulnerable’ for reasons of age, health, disability or severe financial insecurity.

Fines, maintenance and compensation orders

You may face a magistrates court (sheriff’s court in Scotland) fine for failing to pay these.

TV license

You may face a magistrates/sheriff’s court fine for failing to pay this, and a bailiff (a person legally authorised to recover a debt) may be given the right to seize your possessions.

Tax and VAT

Failing to pay these means you will be charged interest and penalties, may be taken to court and your possessions up to the value of what you owe may be seized. You may face a magistrates/sheriff’s court fine for failing to pay.

Hire purchase and conditional sale agreements

Items you have purchased using these may be repossessed.

Parking penalties

Civil action could be taken and your vehicle could be seized. These penalties should be treated as priority debts because of the level of action that can be taken.


Bank and building society accounts

For information about different types of bank accounts, visit the Money Advice Service website.

When you’re coping with cancer and its effects, having someone else help you with banking tasks may take some of the pressure off you. There are two main ways someone else can help you run your account:

  • A third-party mandate is where you arrange for your bank to accept instructions made on your behalf by someone else, such as your partner or carer. The account remains yours, but that person will be able to make withdrawals, write cheques and carry out other transactions in your name. A bank doesn’t have to agree to allow a third-party mandate.
  • A joint account is owned by two people. You can alter an existing account so that it’s held jointly with someone else (your partner, for example) or open a new joint account with them. They become the joint owner of the money in the account with you. They would be able to write cheques and make other decisions and, if you died, they would automatically inherit the whole account.

In either case, it’s essential that you can completely trust the person helping you run the account. As an extra safety measure, consider opening a separate bank account for this purpose and just keeping a limited amount of money in it. To set up a third party mandate or open a joint account, contact your bank.

A further option would be to give someone power of attorney to run your financial affairs on your behalf. We have more information about sorting out your affairs.

Protect your PIN

PIN stands for personal identification number. This is a code that you use to authorise a transaction when you use a debit, credit or cash card at a cash machine or a keypad in a shop.

Even if you want someone else to make payments or cash withdrawals for you, don’t give them your debit, credit or cash card and PIN. By giving away your PIN, you’re breaking your bank’s rules, and if money goes missing from your account, the bank could refuse to refund it.

When you set up a third-party mandate or joint account, the person helping you can have their own card and PIN.

Post office card account

A post office card account (POCA) accepts state benefit and pension payments and lets you draw them out in cash at post offices using a card and pin. If you find it hard to get to a post office, you could choose to have your benefits paid into a bank or building society account.

You can ask to be paid by cheque instead. You can then sign the cheque on the back to authorise someone else to cash it for you. This could be convenient if several different people will be helping you.

Getting help

You can apply for one person (called your ‘permanent agent’) to be given permanent access to your POCA. They will be issued with their own card and pin so they can take out cash and check your balance for you. Make sure anyone you choose as your agent is a person you trust.

To appoint someone as a permanent agent for your POCA, get an application form from a post office. To ask for payment of benefits by cheque, contact the office responsible for making the payment. Details should be on the paperwork showing your benefit entitlement.


Your tax affairs

Tax rebate

If your earnings fall or stop part way through the tax year, you may have paid too much income tax on your earnings, savings or other income. If this is the case, you may be able to claim a tax rebate. You don't have to wait until the end of the tax year to do this.

To check whether you’re due a tax rebate, contact HM Revenue & Customs.

If you have problems making a tax rebate claim and your income is low, you can request free help from TaxAid or, if you are aged 60 or older, Tax Help for Older People.

PAYE taxpayers

Most people in employment pay their income tax through Pay As You Earn (PAYE). HMRC uses a tax code to tell your employer or pension provider how much tax to deduct from your wages or pension. This means the correct amount of tax should be deducted automatically from your pay or pension before you get it. However, mistakes are not uncommon and it’s up to you to make sure that you pay the correct amount of tax.

Once every three years or so, you may be sent a tax review form P810, so that HMRC can check it has all the right details. You can also request this from HMRC if you’d like them to check your tax code is correct. You should send this back as soon as you can or give details asked for by phone using the number on the form.

To discuss any problem sending back a tax review form P810, contact the tax office detailed on the front of the form.

Self-assessment taxpayers

If you’re self-employed or have complicated tax affairs, you may be asked to fill in a tax return each year. This can be a paper form or an online tax return. There are strict deadlines for sending back (‘filing’) tax returns. The deadlines are:

  • 31 October for paper returns (if you miss this, you have to file online to avoid a fine)
  • 31 January for online returns.

If you miss the January deadline or if you send in a paper return after the October deadline, there is an automatic fine of £100, even if you have no tax to pay or have paid the tax you owe. Further fines will be added after three months. There are also set dates for paying any tax you owe, and you’ll be charged interest and penalties if you miss those dates.

You can appeal against fines and penalties but you have to show that you had a reasonable excuse for missing a deadline. What counts as a reasonable excuse depends on the facts of each case, but HMRC say an illness must be so serious that it prevents you controlling your business affairs (for example, a coma or stroke).

If you have a lengthy stay in hospital, HMRC would normally expect you to make arrangements for your tax return to be completed for you. The illness of your partner or a close relative may not be accepted as a reasonable excuse.

For more information, contact the Self-Assessment Tax Helpline on 0845 900 0444 or visit gov.uk/personal-tax/self-assessment


Back to Planning your finances

Assessing your finances

Cancer can lead to extra expenses. By assessing your situation, you can plan ahead to meet your needs.

Planning your budget

Reviewing your savings, investments and income will help you plan your budget.