Sources of Income
When you leave care, depending on your circumstances, you will have several possible sources of income:
- Wages from a job
- Savings from your time in foster care
- Student loan
- Universal Credit (benefits)
- PIP payments (if disabled)
- Bursaries and grants
Savings
When you leave care, you will have access to savings that were made for you during that time. These savings can be very helpful when getting started in adult life – think carefully about what you could spend them on.
Some examples of how young adults have spend their savings include:
- Driving lessons and a car
- Household furnishings
- Training equipment
- Extra money while at university
If you were born between September 2002 and January 2011, there should be a Child Trust Fund in your name. These were set up by the government with an initial deposit. Even if no money was ever added, this money will be yours when you turn 18. As your social worker about your account, and if it is lost, contact the Share Foundation who can help you locate it.
Our advice is to keep some of your savings aside for unexpected costs and emergencies in the future.
Income
Finding a job or apprenticeship should be a priority when you leave care, unless you can’t work due to illness or disability.
You will be guaranteed at least the National Minimum Wage, but many employers will pay more than this, especially if you are in a permanent job.
If you find an apprenticeship, the wage might be low but you can also claim the government’s Apprenticeship Bursary, which is currently £3000
You can earn up to £12,570 each year before you start paying Income Tax and National Insurance. These payments are taken directly from your wage before you receive it. You should also start paying some money into a workplace pension scheme. Your employer will give you information about this.
Universal Credit and PIP
If you’re looking for work, studying (not university), on a low income or unable to work due to illness or disability, you can make a claim for Universal Credit (and Personal Independence Payments (PIP) if you have a disability.
Universal Credit helps to ensure you have a basic level of income, plus help with housing and childcare costs. It is ‘means-tested’, which means that the amount you get depends on how much income you have from other sources, including work and savings.
When you claim Universal Credit, you agree to certain responsibilities. These are unique to you and your circumstances, and are called the Claimant Commitment. This might include attending meetings, proving that you are looking for work, attending job interviews and accepting any job offers. If you don’t meet your commitment you can be ‘sanctioned’, which means that your money will reduce for a period of time. This will often lead to financial hardship, so we advise that you put any appointments in a diary/electronic calendar so you don’t forget them.
If you can work, you are expected to work. As a care leaver, the Job Centre will give you lots of help to find a suitable job.
PIP payments are not means-tested, but the amount you get depends upon your level of need, which will be assessed. You should apply if you need help to travel independently or look after yourself because of a disability.
For information about benefits and what you might be able to claim, visit the Turn2Us website.
Student Finance
If you are continuing with college courses, you may be able to get additional financial support from your college, as well as being able to claim Universal Credit. Speak with your college support team for details.
If you want to go to university, you can apply to Student Finance England for student loans. You cannot claim Universal Credit when at university.
Student Finance includes a loan to cover course tuition fees, which is paid directly to the university, and a maintenance loan to help you pay for living costs including accommodation and food. This is paid in 3 instalments during the year.
These loans are repaid after leaving university (even if you don’t complete your course), from your employment wages, once you earn over £25000 per year.
Some courses benefit from additional financial support such as the NHS Learning Support Fund
As a care leaver, you will get a Higher Education Bursary from your local authority. This is £2000 and is paid in instalments during your course. Universities also offer additional bursaries for care leavers. The amount varies between universities, and some include the costs of university accommodation. Find out more from the universities that you are interested in.
Expenses
As an independent adult, you will have monthly expenses, depending upon your circumstances.
For most people, these include:
- Rent (and maybe service charges) for their home
- Gas, electricity and water
- Internet, phone and TV subscriptions
- Bus/train fares
- Food
- Clothing
- Toiletries and cleaning products for the home
- Leisure/activities
Before you leave care, find out what you’re going to need to pay for, and what it’s likely to cost. Plan carefully and make sure that you put aside money for the essentials each time you get paid. This planning and careful money management is called budgeting…
Budgeting
Budgeting involves making sure that what you spend each month is not more than you have coming in. This can be hard when you’re on a low income.
Rent and service charges are always top priority, as not paying can lead to homelessness. If you receive help with rent from Universal Credit, ask that it be paid directly to your landlord. If you have to pay some of the rent from wages, pay this as soon as you get paid.
Put money aside each month for other essentials such as gas, electricity, water and food.
Before you move into your own home, practise managing a strict budget as it can take time to get it right. If you are Staying Put with your foster parent at 18, they will help you with this.
Avoiding Debt
When you’re on a low income, it can be easy to fall into debt by borrowing money through loans and credit cards, or not paying bills.
Always make sure you pay your rent and other bills as soon as you get paid, and avoid credit cards. Shops often offer payment cards or online ‘pay monthly’ arrangements which can be attractive but are risky if you are on a low income and might not be able to make the repayments.
Be careful with mobile phone contracts. They are easy to get, but can’t be cancelled if your financial situation changes and you can’t afford the repayments.
If you do find yourself in financial difficulty, and can’t make debt repayments, contact the Step Change charity for advice and assistance.
For help with everything to do with money, visit Money Helper.
