Juliette Flach, CAP’s Policy and Public Affairs Manager, discusses the benefit of budgeting but also the challenge that for some, their deficit budget means that no amount of budgeting skills will make the equation add up.
My work involves helping politicians and policymakers make informed decisions to address UK poverty. When I raise the topic of people’s financial difficulty in the UK, this can lead to questions about the role of budgeting to help improve people’s finances. And for some, improving their budgeting skills is indeed a positive way forward.
Our latest polling conducted in December 2024 by Opinium revealed that 25% of UK adults say they would like help with budgeting.
13.8 million
people in the UK would like help with budgeting.
CAP has a long history of helping adults to become more financially confident.
Being one of the largest providers of free financial education for adults, we know the real value that can come from our money management courses and life skills groups.
The sessions can not only bring financial benefits, but also help people to develop confidence and reduce the anxiety they feel about their finances.
With the new year starting, CAP’s free financial education can be a great opportunity for people to achieve their New Year’s resolution of ‘learning how to budget’ and in the process potentially also tick ‘become more confident’, ‘make new friends’ and ‘start saving’ off the resolution list at the same time!
It is a delight to share with parliamentarians about the positive experiences that people have had through CAP’s money management and life skills groups. It is great to discuss the value of community-based free support and the importance of helping people to have autonomy and choice over their finances.
But sadly, budgeting can only go so far. For some, the underlying issue is not having a liveable income.
11.6 million
people in the UK report having a deficit budget.
When someone faces a deficit budget, it means that their income from wages, social security, or a combination, is not high enough to cover the costs of essentials. This means that even with the best budgeting skills their budget won’t balance.
This is a point I bring up in any discussion with parliamentarians of the value of budgeting. This does not belittle the value of teaching budgeting, but instead highlights that budgeting is not the root of the issue for everyone. People just don’t have enough coming in to cover the costs of essential expenditures.
Around half of CAP clients are facing deficit budgets, despite going through a debt advice journey that has included a financial statement and CAP’s support.
The issue can’t be ignored. People’s wages and social security are too low, and the costs of essentials are too high for the financial equation to add up.
Facing a deficit budget can have a number of effects including mental and physical health implications; it leaves people with impossible positions where they have to borrow, go without, and turn to charities just to survive. We explored the depth and breadth of the issue of deficit budgets in our latest research, which you can find here.
17.7 million people
in the UK face daily anxiety about their finances.
Whether linked to a lack of confidence budgeting, or a deficit budget, around one in every three people you walk past in the street will be facing daily worries about their finances.
Financial worries are a burden people are carrying and are a cage that people become trapped in. At CAP, we will continue to help relieve this weight from people’s shoulders by offering free, non-judgmental support to develop financial confidence and receive help if they are facing problem debt.
But we are also working hard to break down the walls of the prison of debt and poverty through systemic change, acknowledging that for some, the problem is not simply poor budgeting, but rather a deficit budget.
You can find out more about what CAP is campaigning for on this, and join our campaigning community here.
