There are many reasons people may feel the need to start budgeting. Whether it’s about wanting to save up for a holiday, pay off debts, or simply balance out outgoings and income. Budgeting is the first step to taking control of finances. Setting up a budget means that you are less likely to end up in debt or get caught out with unexpected costs. This helps to alleviate financial concerns, and give you a piece of mind about your spending habits.
Take a look at the following steps to help you started:
- Calculate your total outgoings – Looking at your household bills, receipts and bank statements you can work out your total spendings.
- Calculate your total income. This can be done by adding your wages with any extra income, from savings, property or investment.
- Subtract your outgoings from your income, making sure that you’re not spending more than you’re earning.
Now that you’ve identified your spending patterns, you can look at how to improve your finances. Spending can be divided into ‘Needs’ and ‘Options’. Needs include food, electricity, rent and everyday living expenses. Optional spendings are those expenses that can be lived without. Examples of optional expenses including cinema tickets, holidays, and restaurant meals. Although it would seem like the easier option to cut out optional expenses, there are savings that can be made from reducing living costs too. This includes saving on water, electricity, food, or even travel if there is an option to cycle/walk to work. The optional expenses do not need to be eliminated all together, but can be reduced, i.e. eating at a restaurant once a week instead of 2-3 times.
When implementing changes, a spending diary can be kept, to track expenses, reflect on progress, and make changes if needed. With effective budgeting you can avoid unnecessary spending, which can build up over time, leaving you with savings that you may not have otherwise had.
In today’s day and age, two of the most common types of learning include classroom based and distance learning. Classroom learning is the traditional approach to learning, which most people are familiar with from school and college. In comparison, distance learning is a form of education where learning is separated by space, such as online learning. Below is a table highlighting the advantages and disadvantages of classroom and distance learning:
Many training providers offer a blended learning approach, incorporating distance and classroom-based learning. This aims to minimise the disadvantages and enhance the benefits of both approaches. The above table shows general pros and cons of both forms of education, but something else that needs to be considered is an individual’s learning style. It is recognised that learning styles vary dramatically, what suits one person may not suit another. Some learners may get bored and frustrated in a traditional classroom environment, whilst others may feel isolated with distance learning. Certain students learn better with visual means, others with auditory means, and some prefer a hands-on approach. It is beneficial for students to recognise their learning style so they understand how best to study.
Deciding on whether to chose a classroom-based or distance course depends on a range of factors. This includes personal circumstances, outside commitments, and learning styles. Having looked at the advantages and disadvantages of both approaches, learners must decide the most effective route to suit their individual needs.
Questions and Answers on Payday loans
How do payday loans work?
Typically someone will borrow a few hundred pounds from a payday loan firm for a short time, to tide them over until they receive their next wage or salary cheque. The borrower will usually offer a post-dated cheque to the lender to cover the eventual repayment of the money borrowed, plus interest. The cash is often emergency borrowing to pay an urgent unexpected bill, or rent or utility bills.
How many people use them?
There are no official figures on how many people use this sort of borrowing. But Consumer Focus estimated last year that 1.2 million people took out 4.1 million loans in 2009.
Who uses them?
The OFT found that the typical borrower of a payday loan was “more likely to be a young male, earning more than £1,000 monthly, and in rented accommodation. Many are unmarried with no children”. But the borrowers are not normally unemployed or without a bank account. They sometimes see the short-term loan as a sensible alternative to running up an unauthorised bank overdraft.
How many firms offer them?
The OFT said in November 2012 that there were about 240 payday loan firms altogether in the UK, with the top 50 accounting for most of the lending.
Its previous research suggested there were about 2,000 High Street payday loan shops, some of which are part of large national chains, such as The Money Shop. Some were also pawnbrokers as well, operating out of the same premises. There were also thought to be more than 100 online firms offering cash too, which were much more expensive.
Are they regulated?
Yes. Any lender, whether it be a big High Street bank or a one-outlet payday loan shop needs a consumer credit licence from the Office of Fair Trading (OFT).
What is the problem?
The loans are very expensive with very high rates of interest. But in the eyes of the borrower that is often not relevant. What matters is the cash cost of repaying the loan. That can be acceptable to the borrower if the payday loan is more convenient than an overdraft, or some other sort of arranged loan, and is taken for just a few days. The problem for a borrower starts to build up quickly if they cannot in fact repay the loan as planned, and it gets extended, or rolled over. The interest then builds up rapidly and can soon swamp the size of the original loan.
Should anything be done?
Despite the negative publicity surrounding payday loan firms, the OFT said in 2010 that these and other high-cost credit businesses – such as pawn brokers or home-credit lenders – should not have their interest charges restricted. It concluded that they provided a useful service for some people who would not otherwise be able to borrow legitimately and who might thus be forced to borrow from illegal loan sharks.
But it changed its mind in its November 2012 report specifically on payday lenders. It referred the industry to the Competition Commission and has told individual lenders to improve how they deal with customers. The Consumer Finance Association, a trade body representing some payday lenders, says some of the biggest firms have signed up to a code of conduct.
However, the government has proposed going further with a cap on payday loan interest rates and charges. The regulator, the Financial Conduct Authority, will make recommendations on how this should work. Previously the government had said such a cap was not needed. Do you take out Payday loans? Do you agree with a cap on Payday lending?
[Adapted from a BBC Business report on payday lending]
At All Inclusive training our motto is ‘Empowering people with Practical Financial Knowledge’. We strongly believe in empowering women to reach their full potential, as we realise that providing education and training to women indirectly empowers their whole family. We provide the option of classroom based or distance learning, which would suit women that may have other family commitments.
We hope that our students leave their training feeling empowered and ready to progress in the world of work with the new-found skills they’ve acquired. All Inclusive have guided a number of women into jobs via Employability courses, which helps them with CV writing and interview skills. Delivered in partnership with HSBC Bank, Barclays Bank, Morgan Stanley and our pool of locally based employers, we support women into work experience at local companies through our work placement programme.
Some women may wish to work on a part-time basis to continue with family commitments. With an accountancy qualification women have the flexibility of being self employed and doing the accounts for small organisations on a part-time basis.
Women also have the option of working full time after finishing their course. Even in today’s day and age many large corporations only have male senior executives, with only five female bosses in the FTSE 100. We hope to empower and educate women so they can move up the career ladder in roles of higher positioning, so that one day the gender gap can be closed once and for all!