Step 3: Create a financial statement

After increasing your income and reducing your spending, the third step to dealing with debts is to create a simple financial statement. This is a household budget. You can use it to plan how you will deal with your debts. It can also show your financial position to creditors.

To do this, list all of your sources of income. This includes your net salary (after things like tax have been taken), benefits or tax credits and any other financial help, such as contributions from other household members. If you are on a low income, an adviser can see whether you are entitled to benefits.

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. Don’t forget 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 will need to choose either monthly or weekly figures.

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

Can you spare 5 minutes to help us improve our information about money and cancer?

Please fill in our money and cancer information survey.

What is a financial statement?

A financial statement is a household budget. It shows:

  • how much income you have
  • how much you need for basic living expenses.

A financial statement is an essential tool when dealing with debt problems. It gives a clear picture of your income. It clearly shows what you spend and any money left over. This will help you plan how to deal with your debts.

You can use a financial statement to show your financial position to people or organisations you owe money to (your creditors). You can also show the financial statement to courts.

It is important to make sure your financial statement is realistic. It should always:

  • reflect what actually happens in practice
  • leave you with enough money to pay your main expenses.

Download a financial statement that you can use to show your income and spending.

How to fill in your financial statement

Follow the instructions below to fill in your income and spending as fully as you can. If you need help, call our financial guides on 0808 808 00 00.

Choose weekly or monthly amounts

You should choose to use either weekly or monthly amounts throughout your statement. If you are paid monthly, you may find it easier to use monthly amounts on your statement. If you are paid weekly, you may find it easier to use weekly amounts throughout. The important thing is not to mix the two, or the amounts won’t work.

To convert between weekly and monthly amounts, do the following calculations:

Weekly amount x 52 ÷ 12 = monthly amount

Monthly amount x 12 ÷ 52 = weekly amount

Some income or costs may be quarterly (paid four times a year). To convert quarterly amounts to monthly or weekly ones, do the following calculations:

Quarterly amount ÷ 3 = monthly amount

Quarterly amount x 4 ÷ 52 = weekly amount

Tips for recording income

Below are some tips to help you fill out the income section of the financial statement.

Your salary

The salary you record should be based on the amount of money you actually get each month, after things like tax have been taken off. Only include extra salary for things like overtime if you receive it regularly.


You may be claiming Personal Independence Payment (PIP), Attendance Allowance or the Disability Living Allowance (DLA). These benefits are meant to pay for health needs, so it is important that your financial statement shows how you are spending the money. If you need to, you can write down extra information to explain this in the notes section of the financial statement.

Tips for recording spending

Below are some tips to help you fill out the spending section of the financial statement.

Household bills

If you pay gas and electricity quarterly, you will need to add your last four bills together and divide the total by 12 to give you a monthly amount. To get a weekly amount, divide the total by 52 instead. If you pay on a pre-payment meter, think about what you use in the winter and the summer, and average this out to get a monthly amount.

If you pay your TV licence annually, divide the cost by 52 for a weekly amount or by 12 for a monthly amount.


This could include life, health, travel and home insurance. If you have car insurance or breakdown cover, you may want to record that spending separately under car costs. Make sure you don’t accidentally record the same spending twice in different parts of the financial statement. If you have health insurance, remember to check whether you can get a payout because you have cancer. Our financial guides can help you understand insurance. You can call them on 0808 808 00 00.

Food and drink

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


You need to account for an amount for clothing, even if you have not bought any recently. £5 per person, per week is considered reasonable. If you’ve lost or gained weight, or if your body shape has changed, you could increase this amount. But make sure you explain the reason for the increased figure.

Children’s costs

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

Savings and investments

Include contributions you make to a personal pension scheme. If pension contributions are taken off from your salary and paid into a workplace pension, do not include anything here.

Remember, do not include any debt payments in the financial statement. You are still working out how much you can afford to pay your creditors.

Work out your disposable income

Your disposable income is extra money that is left over after you’ve paid all your expenses. To work out your disposable income, follow these steps:

  1. Add up all of your income.
  2. Add up all of your spending.
  3. Take away the total spending from the total income.

Total income – total spending = disposable income

If you need more help

If you are worried that you are not good with numbers, you can get help filling out the financial statement. Call our support line on 0808 808 00 00.

We have a budget calculator that can help to calculate your monthly income and spending. This includes a tool to convert from weekly or yearly amounts.

You can also use the Money Advice Service’s budget planner to work out a detailed spending breakdown.

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.


If you can’t pay back your non-priority debts in a reasonable time, speak to a debt advice agency straight away.

Debts you leave behind

If you have debts when you die, it reduces the value of your estate. This means your beneficiaries will receive less money.