Before you look to make savings, you should check you're not paying too much tax and you're receiving all the benefits you're entitled to.
We’ve now looked at putting all your earnings and outgoings into a budget, keeping a spending diary, highlighting spending you could cut and thinking about the financial goals you want to achieve.
The next step is to make sure you are getting all the money you are entitled to. Here are some things you should spend some time checking if they’re relevant to you.
Check your tax code
If you’re working, your first port of call should be your tax code. The taxman can get these wrong. In fact, based on his experiences in the financial services industry, our writer Cliff D’Arcy estimates that up to half of us could be on the wrong tax code.
HMRC has a tax checker on its website.
Claim your benefits
It’s estimated that nine in ten UK households qualify for some kind of state benefit or tax credit. It’s also the biggest single area where we don’t claim everything we’re entitled to.
If you have children, there’s Child Benefit, although this is being withdrawn from higher-rate and additional rate taxpayers from 2013. This pays out £20.30 per week for your first child and £13.40 a week for any other children. But you need to claim it – the Government won’t hand it to you. You can find out more about how to claim at the HMRC website.
You may also be entitled to Child Tax Credits and the childcare element of the Working Tax Credit, depending on your income. The limit for families with children is currently £41,300, although there are exceptions, for example if you have a disability or have a large family.
If you’re on a low income, you could be eligible for Working Tax Credits.
Again, the responsibility for applying for them lies with you.
You can use the questionnaire on the HMRC website to see if you’re likely to qualify.
If you’re a pensioner with no savings, you may be entitled to Pension Credit on top of your State Pension, known as the Guarantee Credit. If you have a small amount of savings, you may be entitled to Savings Credit, which will boost your weekly income further.
You can get a Pension Credit estimate at the Directgov website.
More:
Big budget month day one: how to plan a budget
Big budget month day two: looking at your spending
Big budget month day three: setting your goals
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