Managing Money
Main Content
Managing Money
Looking for hidden charges
Keeping your mobile bill under control
More money saving ideas
Income tax and national insurance
Getting a current account
Credit cards and store cards
If you want to keep a tight rein on your finances, setting yourself a budget will really help. It allows you to see how much of your income is taken up by necessary expenses like bills and accommodation costs and works out what you have left to spend on other things like socialising with friends.
If you are struggling to keep your spending under control, a budget planner can also show you where you can cut back on spending in some areas. It's also a good idea to keep a record of every cash withdrawal and payment that goes out of your account. You can use these records as a rough guide to your spending habits when you're filling in your planner.
Look for hidden charges
If you're shopping online, the price that you see is sometimes not the total cost of your goods. Before you confirm your order, you need to know the costs that you may have to pay. For instance, postage and packing costs may be added for goods being delivered; or a booking fee may be added if you’re ordering cinema tickets. Also, the price initially shown may not be inclusive of VAT.
Keeping your mobile bill under control
Make sure you choose the right tariff for your needs so you don’t get too many extra costs. Ringtones, text alerts and multimedia messaging are becoming more and more popular. But before you know it, the costs can start adding up and you'll end up with a bill that could push you into debt.
More money saving ideas
Income tax and national insurance
Over 25 million individuals pay income tax in the UK, but not all income incurs tax. The first bit of income is tax-free and is known as your personal allowance. The rest of the income is then taxable and is subject to different tax rates depending on the tax band the income falls in. You pay income tax on the basis of what you're going to earn in a whole year and not just month by month. Most tax in the country is collected by the PAYE or 'Pay As You Earn' system. This means that employers deduct the tax directly out of a person's wages and give it to HM Revenue and Customs on their behalf - generous, huh?!
You pay National Insurance contributions (NICs) to build up your entitlement to certain social security benefits, including the state pension. The type and level of NIC you pay depends on how much you earn and whether you're employed or self employed. You get your own National Insurance number (NI number) to make sure that what you pay is recorded and it acts as your reference number for the whole social security system. You should only give this number out to HM Revenue and Customs, your employer, Jobcentre Plus if you claim Job Seekers’ Allowance or your local council if you claim housing benefit. If you don't already have a NI number you must apply for one as soon as you start work. To be able to apply you must be over 16 years of age. To get your number, telephone the Jobcentre Plus NI allocation service helpline on 0845 600 0643.
For more information on National Insurance and Income Tax, go to the HM Revenue & Customs website.
Getting a current account
If you're earning a wage or claiming benefits, it's highly likely that you'll need a bank account. There's a range of current accounts available, but shopping around to find out which one suits you best is vital.
Current accounts are just another name for a simple bank account, and they allow you to withdraw money from a cash machine, transfer money to other accounts and earn interest on your cash. They allow you to control what goes in and out of your own account more closely.
You can also set up standing orders and direct debits from a current account for the regular payments that you have to make, like your mobile phone bill. This means that you won't have to worry about missing any payment deadlines as your bills are paid automatically.
There are hundreds of accounts to choose from, but to find out which is the best for you, think about the things you'll be using the account for:
You may also want to think about setting up a savings account, either for things like a new MP3 player, a holiday with your friends, or in case of emergency. Some of these are instant access, but the ones that offer a higher rate of interest usually take a while to get your money back – which may be a good thing!
Credit cards and store cards
When you're 18 and have a regular income, you can apply for a credit card or a store card. However, when you buy something using these cards, you are really just "borrowing" the money.
If you pay this back each month in full then you will not charged interest. However, if you only pay back the minimum payment the card company requires, your debt will reduce very slowly and you will end up paying interest. So you end up paying a lot more for your goods.
Why not budget for items you need and buy everything with cash or your current account debit card? Remember – there’s a lot in the old saying "If you haven’t got it, don’t spend it!"
Keeping your mobile bill under control
More money saving ideas
Income tax and national insurance
Getting a current account
Credit cards and store cards
If you want to keep a tight rein on your finances, setting yourself a budget will really help. It allows you to see how much of your income is taken up by necessary expenses like bills and accommodation costs and works out what you have left to spend on other things like socialising with friends.
If you are struggling to keep your spending under control, a budget planner can also show you where you can cut back on spending in some areas. It's also a good idea to keep a record of every cash withdrawal and payment that goes out of your account. You can use these records as a rough guide to your spending habits when you're filling in your planner.
Look for hidden charges
If you're shopping online, the price that you see is sometimes not the total cost of your goods. Before you confirm your order, you need to know the costs that you may have to pay. For instance, postage and packing costs may be added for goods being delivered; or a booking fee may be added if you’re ordering cinema tickets. Also, the price initially shown may not be inclusive of VAT.
Keeping your mobile bill under control
Make sure you choose the right tariff for your needs so you don’t get too many extra costs. Ringtones, text alerts and multimedia messaging are becoming more and more popular. But before you know it, the costs can start adding up and you'll end up with a bill that could push you into debt.
More money saving ideas
- Shop around for goods, especially online as things are often cheaper on the Internet than they are on the high street.
- Loyalty cards are handy if you buy a lot of things from the same shop, and you'd be surprised how quickly points can add up. You can use these points to buy more things!
- Keep your eyes peeled for any money off vouchers in magazines.
- Top salons are expensive – many hairdressing academies are always on the lookout for people who are willing to let a student cut their hair for a reduced price. There is always a lecturer around to ensure no mistakes are made and the discounts can be huge.
Income tax and national insurance
Over 25 million individuals pay income tax in the UK, but not all income incurs tax. The first bit of income is tax-free and is known as your personal allowance. The rest of the income is then taxable and is subject to different tax rates depending on the tax band the income falls in. You pay income tax on the basis of what you're going to earn in a whole year and not just month by month. Most tax in the country is collected by the PAYE or 'Pay As You Earn' system. This means that employers deduct the tax directly out of a person's wages and give it to HM Revenue and Customs on their behalf - generous, huh?!
You pay National Insurance contributions (NICs) to build up your entitlement to certain social security benefits, including the state pension. The type and level of NIC you pay depends on how much you earn and whether you're employed or self employed. You get your own National Insurance number (NI number) to make sure that what you pay is recorded and it acts as your reference number for the whole social security system. You should only give this number out to HM Revenue and Customs, your employer, Jobcentre Plus if you claim Job Seekers’ Allowance or your local council if you claim housing benefit. If you don't already have a NI number you must apply for one as soon as you start work. To be able to apply you must be over 16 years of age. To get your number, telephone the Jobcentre Plus NI allocation service helpline on 0845 600 0643.
For more information on National Insurance and Income Tax, go to the HM Revenue & Customs website.
Getting a current account
If you're earning a wage or claiming benefits, it's highly likely that you'll need a bank account. There's a range of current accounts available, but shopping around to find out which one suits you best is vital.
Current accounts are just another name for a simple bank account, and they allow you to withdraw money from a cash machine, transfer money to other accounts and earn interest on your cash. They allow you to control what goes in and out of your own account more closely.
You can also set up standing orders and direct debits from a current account for the regular payments that you have to make, like your mobile phone bill. This means that you won't have to worry about missing any payment deadlines as your bills are paid automatically.
There are hundreds of accounts to choose from, but to find out which is the best for you, think about the things you'll be using the account for:
- do you want easy access to your money 24 hours a day?
- do you want to save money for the future?
- do you want to be able to pay for your shopping by using a card?
You may also want to think about setting up a savings account, either for things like a new MP3 player, a holiday with your friends, or in case of emergency. Some of these are instant access, but the ones that offer a higher rate of interest usually take a while to get your money back – which may be a good thing!
Credit cards and store cards
When you're 18 and have a regular income, you can apply for a credit card or a store card. However, when you buy something using these cards, you are really just "borrowing" the money.
If you pay this back each month in full then you will not charged interest. However, if you only pay back the minimum payment the card company requires, your debt will reduce very slowly and you will end up paying interest. So you end up paying a lot more for your goods.
Why not budget for items you need and buy everything with cash or your current account debit card? Remember – there’s a lot in the old saying "If you haven’t got it, don’t spend it!"