An ‘overdraft’ is the amount of money you have agreed with your bank that you can take out when your balance is at £0. For example, if you have an overdraft limit of £100, this means you can take out up to £100 when you have no money in the account.
A mortgage is a loan you take out to buy property, if you did not have enough money to buy the house in full at the time of purchase. The lender (usually a bank or building society) holds the deeds of the house as a guarantee of payment until you have repaid the loan in full with interest, and you live in the house as if you fully owned it.
A pension is an arrangement to provide you with an income when you are no longer earning a regular income from employment, after you have retired.
The basic costs of running a home are: mortgage/rent, gas, electricity, water, Council Tax, house insurance (buildings) (needed for a mortgage), and food.
Direct Debit is an instruction from you to your bank or building society, authorising the organisation you want to pay to collect varying amounts from your account – but only if you’ve been given advanced notice of the amounts and dates of collection.
Almost anyone can have a Basic Bank Account. These are special accounts that allow you to pay wages, benefits and cheques into them free of charge, and allow you to set up direct debits – and you can’t take out more than is in there.
With Healthy Start, you get free vouchers every week to spend on milk, fresh and frozen fruit and vegetables, and infant formula milk. You can also get free vitamins. Find out more by calling their helpline on 0845 607 6823.
Your credit rating is an indicator to lending companies of how much financial risk you pose and how much profit they can make from you. A high score is better as it shows you have proven yourself to be responsible with money.
Child Maintenance is a mandatory payment paid by the parent who does not have day-to-day care of the child, payable weekly or monthly until the child is at least 16 years old. The money comes out of your wages or benefits before you receive them.
Money: distinguish between “needs” and “wants”. “Wants” is a new ‘phone, new clothes and eating out. “Needs” is electricity bills and food for the cupboard.