Monday 27th September 2021
Managing your own money is a big adjustment for many young people. But when you’ve also got cancer to worry about, money might feel even more worrying – or it might be the last thing on your mind.
The Money Charity kindly worked with us to share some great tips and advice on how cancer can affect you or your family’s money (and what to do about that), budgeting and managing your money, understanding tax and pay slips, and how to face some common money worries.
You can find more information about managing your money, or book financial education workshops from The Money Charity.
What is budgeting and why is it important?
A budget is an estimation of the amount of money someone has coming in, minus the amount they spend:
Budget = Income – Expenditure
Everyone will spend money in different ways, but people’s budgets tend to include some basic survival costs, like rent or a mortgage, food, and bills, and also some lifestyle costs which is fun stuff like going out, trainers, and eating out.
Budgeting helps you to keep control over your finances.
It can help you get the most out of your money by helping you to prioritise your spending, save for things in the future and reach certain goals you might be aiming for.
How do I create a budget?
Here are some simple steps to create a budget:
- Add up your income. That’s all the money you have coming in. That might be from a job, family, and/or benefits.
- Take away your survival expenses from your total income. These are things you really need like living costs, bills, and food.
- Then take away your commitment costs. These are things that you’ve committed to paying, like a phone contract or car payments.
- Then take away your savings. That’s how much you’re able to put away and save regularly.
- And finally, take away your lifestyle costs. These are the extra things like getting your hair cut, socialising, or subscriptions you might have.
And once you’ve done this, you might want to ask yourself some questions to help you plan, like:
- What do I need to cover first?
- Will I be able to save any money?
- What are the things I most enjoy doing? Can I still do them with my budget?
The Money Charity also have an online tool you can use to create your budget called The Budget Builder.
What makes up my income?
Where you get your money from might come from a few different places right now.
That could be:
- Your family’s income. That’s money your parents, guardians or household earn which you also rely on, for example, if they pay the rent or mortgage for where you’re living.
- Gifts from family and friends. That’s money you get personally from people, either regularly or for things like your birthday.
- Working. That’s money you get paid when you’re employed to do a job.
- Benefits/grants. That’s money you claim or are given based on your situation. That could be benefits your household claim, benefits you’re entitled to because of your health, or grants you qualify for if you’re in education.
- Credit. This includes loans, overdrafts and credit cards. But it’s important to know that this is borrowed money you will need to pay back and often with interest added. See more about this in the section below.
What makes up my outgoings?
We’ve mentioned survival expenses and lifestyle costs. So let’s look at what kinds of things make these up.
Survival outgoings are things like:
- Rent or mortgage
- Council tax
- Household bills (for things like heating and water)
- Household goods (like cleaning products)
- Transport (whether that’s public transport or your own car or bike costs)
- Paying debt
- Any support you provide financially to your family (for example if you have children)
Lifestyle outgoings can be things like:
- Cosmetics and toiletries
- Subscriptions and games
- Your phone
- Sports and hobbies
- Going out socialising
- Saving up for something you want
And sadly for young people with cancer, you might have extra outgoings that are related to this.
Cancer-related outgoings can be things like:
- Travel to and from the hospital
- Parking at the hospital
- Food and snacks while you’re in hospital
- Insurance (health, travel etc.)
- Bills (that could be increased energy/water bills if you’re staying home more, or needing more data on your phone if you’re using it in hospital)
- Special items that might help with your treatment (like food that makes you feel better, different pillows, etc.)
When it comes to insurance, it’s important to know that your premiums can be more expensive if you have or have had cancer. Insurance providers may ask for your medical history when you apply for a policy, so it’s important you do your research and understand the different words they might use. There are some specialist insurance providers for people with cancer which might be helpful.
What is credit and how can I avoid problem debt?
Credit is money that is borrowed, and that you’ll need to pay back.
That could be a credit card, a loan, ‘Buy now, pay later’ or an overdraft on your bank account.
Lots of people use credit as a way of spreading the cost of big things (like a car or a holiday) and it can be a manageable way to achieve goals when you have a clear plan of how to repay what you have borrowed.
But if you borrow money without a clear way of paying the money back, this can lead to unmanageable debt.
It’s important to remember that there is often an added cost associated with using credit. That’s usually in the form of interest added to what you owe. So always make sure you’re aware of any additional costs before you sign up for any kind of credit, and that you factor that into your plan for paying it back.
How much income tax will I pay?
How much income tax you pay depends on your circumstances and how much you earn.
In the UK, we have income tax brackets. That means you’ll pay a different percentage of your salary as income tax based on how much you earn in a year.
Currently in 2021:
- If you earn under £12,570 a year, you won’t pay any income tax
- If you earn between £12,571 and £50,270 a year, you’ll pay income tax at the 20% rate
- If you earn between £50,271 and £150,000 a year, you’ll pay income tax at the 40% rate
But if you earn over a certain tax bracket, you only pay the higher percentage for the amount that is over the threshold, not on your whole salary.
So, if you are earning £60,000 a year, you would pay:
- 0% tax on the first £12,570
- 20% tax on the next £37,700
- 40% tax on the final £9,730
Income tax and National Insurance go towards paying for publicly-funded things like schools, our NHS, the police, and services for vulnerable people.
Both are taken out of your pay automatically by your employer, and how much you’ve been paid will be shown on your payslip (see section below).
If you’re ever unsure about your income tax, or think you might have paid too much or too little, check in with your employer. You can also contact HMRC.
How do I understand my payslip?
A payslip is a record of how much you’ve been paid by your employer and what deductions have been taken out of your pay (for things like income tax).
You should be given a payslip (either paper or electronically) every time you’re paid, whether that’s weekly or monthly.
Every company manages this a little differently, so it’s always good to check anything that isn’t clear with your employer.
But generally speaking, your payslip will include some standard things:
- Your gross pay. This means how much you’re paid before any tax and/or deductions are taken out.
- How much income tax you’ve paid. This will be based on how much you earn and which tax bracket you fall into (see above for details).
- How much National Insurance you’ve paid. This is also paid automatically, like tax, and based on how much you earn. Find out more about National Insurance.
- How much you’ve paid in other deductions. This can be things like a pension contribution, any student loans you’re paying off, or any benefits you get through your work (like private health care).
- Your net pay. This is the amount you will receive after all tax and deductions have come out. It’s the amount you actually get, so it’s sometimes called your ‘take-home’ pay.
- Your National Insurance number. This is assigned to you when you first start paid employment and you’ll need it throughout your life for employment and things like proving your identity.
- Your tax code. HMRC will assign this to you based on your employment status, how much you’re earning and things like if you have any taxable benefits. If you change jobs, or get an additional job for example, it’s a good idea to check HMRC have the correct tax code for you so you don’t pay either too much or too little tax.
- Payment method. You might get paid directly into your bank account (also called BACS payment), or you might be paid in cash or by cheque. It depends on your employer.
How do I manage worries about money?
It’s really common for people to worry about money. So if you’re a young person who’s facing cancer, you might have even more on your mind about your finances.
You might be thinking about:
- Unexpected loss or reduction in income if you or your family can’t work during your treatment
- Unexpected costs of cancer treatment, like travel or parking
- Struggling to find a job while you’re facing cancer
- Taking care of family during treatment
- Struggling to save for the future
- And how you’ll make repayments for borrowed money like loans or credit cards
It can be helpful to talk to those around you about any money worries you have. Even if they can’t help financially, it can help to just talk through what you’re worried about and try to problem solve together.
Your clinical care team may also be able to signpost you to any local support there might be, like help with hospital parking, as well just being another person there to listen.
And if you’re worried about debt in particular, don’t ignore it as this will only make problems worse. Talk to someone you trust, the bank or lender, and check out the many organisations that exist to help, like Citizens Advice and National Debt Line.
Managing your money is an exciting step!
Along with all this, it’s good to also remember that managing your own money is an exciting step towards being more independent.
If you take an informed approach to budgeting, talk to others when you're not sure, and make sure you understand your paperwork, you should be on track to feeling confident in managing your money!
Find out more about managing your money from The Money Charity.