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Making a Budget

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Introduction

This article is about helping individuals with developmental disabilities make budgets. People need to make budgets so that they have enough money for:

  • Needs – things they need in order to survive
  • Wants – things they would like to have

This article will help direct support professionals talk to individuals about how to budget money and save for something special.

This article will also give direct support professionals information on how to help individuals follow their budgets, and how to help individuals if their money runs out.

There is a Resources section at the end of this article. You will find links to several worksheets that you can use to help individuals develop their budgets.

Why are budgets an issue for people with developmental disabilities?

Budgets are an issue for everyone! We all need to balance the amount of money we receive with the amount of money we spend.

Often individuals with developmental disabilities have a very low monthly income. Most adults with developmental disabilities rely upon Supplemental Security Income (SSI) SSI for rent and food. The Personal and Incidental Needs Allowance (P&I) is used for clothes and the extras we all like. Many individuals do not earn any money. Others earn a small amount of money from work.

It is important that individuals learn how to budget their money. Those who do not budget their money might not have enough to last through the month. People who live in a licensed home have their room and food paid for by SSI and their regional center. Those who live in their own homes or apartments are in charge of paying their own bills and therefore need to be very careful about watching how they spend their money.

How do you explain the difference between a need and a want?

We all have needs and wants. Our needs are the things that help us get through each day. Here are some things everyone needs:

  • Food
  • A place to live
  • Clothes

Our wants are the things that make life more fun. Here are some things people want:

  • To take a trip
  • To go out to dinner
  • To buy a music CD

It’s important to have all of your basic needs met. However, it’s also important to have some of your basic wants. This is what makes life worth living. The thing to remember in talking to people about money: Needs Come First, Wants Come Second

What are the responsibilities of the Direct Support Professional (DSP)?

It is the responsibility of the DSP to:

  • Help individuals to learn about budgeting their money;
  • Provide ideas about how to stick to a budget; and
  • Give advice about what to do if someone runs out of money.

How do you talk to the people you support about the need for a budget?

You may say something like:

A budget helps you get the things you need. It also helps you save for the things you want.

You can also tell people that:

  • Needs and wants cost money.
  • Sometimes we do not have enough money for everything we need and want.
  • We may have to change the way we spend money so that we have enough money to pay for our needs and our wants.
  • We might have to wait and save money to get something we really want.

How do you help someone you support write a budget?

The most complicated kind of budget to work out is a budget for someone who lives at home or in their own apartment. Let's talk about that kind of budget first.

Budgets for People Who Live at Home or in Their Own Apartment

To help the person you are supporting understand how to budget, sit down with them and figure out the following things:

  • How much money they get, and when they get it
  • What they plan to spend their money on (both needs and wants)
  • When they plan to spend their money (for example, the first of the month for rent, the 15th of the month for a phone bill, the 22nd of the month for a regular night out with friends, and so on).

Follow these three steps.

Step 1: At the top of a piece of paper, list all sources of income (SSI, employment, etc.). Add these numbers together to get the person's total income.

Step 2: Below total income, list all the person's expenses. An expense can be a bill (like rent or electricity or phone service), a purchase (like groceries or clothing or movie tickets), or money put into savings. Add these expenses up to get the person's total expenses.

Total income should be equal to or greater than total expenses. This means that the budget is balanced. The amount of money coming in (from SSI and other kinds of income) should balance the amount of money going out (for expenses).

The first time you help someone to make a budget, you may find that it does not balance. The person you are supporting may think that they can spend more money than they take in. That probably means that their spending habits do not match their spending needs. Maybe they are running out of money at the end of the month and not buying enough groceries. Maybe they are ignoring bills that they have to pay early in the month so they can afford other things they want to spend money on. In either case, the person has a cash flow problem – they don't have enough money to cover all their expenses, so they are cutting corners.

If the person has a cash flow problem, you need to help them figure out just why they are having problems. One way to do this is to help them track their income and expenses for a full month. Follow these three steps:

Step 1: Ask them to save copies of the following for one month:

  • Every check they receive
  • Every bill they receive, along with proof that it was paid (for example, a canceled check or a receipt)
  • A receipt for every purchase they make
  • For small purchases that do not include a receipt (for example, purchases from a vending machine), ask them to write down what they spent, or keep track of the number of times they made that kind of purchase.

Step 2: At the end of the month, take a sheet of paper and make the following columns:

  • Date
  • Source of income (for example, SSI, P&I, work)
  • Kind of purchase (for example, groceries, clothes, going out to eat)
  • Amount

Step 3: Go through this list and ask the following questions:

  • Did they pay every bill they were supposed to pay?
  • Did they always have enough money to cover their expenses?
  • Did they save any money for emergencies?
  • Did their spending patterns change over the course of the month? For example, did they spend a lot less on groceries at the end of the month than they did at the start of the month?

If the answer to Question 1, 2, or 3 is "no," there is a problem. If the answer to Question 4 is "yes," there is a problem. You need to have a conversation with the person you are supporting about how to change their spending habits.

Some things to think about when you help someone to write a budget:

  • They cannot spend more money than they take in.
  • They can change what they spend their money on, especially when it comes to wants.
  • They should try to save a little each month. It is important to have some money saved up in case of an emergency. This is called a “reserve fund.”
  • They can also save money if they want to buy something that costs more than they have in one month. First they should save for things they really need. Then they can save for things they want.

The above information and a budget worksheet can be found in the accompanying document, "A Budget for a Month if You Live in Your Own Home or Apartment." You can use this document to help the people you support make their own budgets.

Budgets for People Who Live in a Licensed Home

People who live in a licensed home have their basic needs met for them. Their room and food is paid by their SSI and an extra payment from their regional center. People who live in licensed homes must still budget to pay for things that the licensed home does not provide (for example, a cell phone, clothing, or regular trips to the movies).

Because licensed homes provide food and shelter, a person who lives in a licensed home is much less likely to run into serious trouble with their budget compared to someone who lives at home or in their own apartment. But they still need to budget so that they can save for some things they need (like clothing) and some things they want (like music CDs).

Follow the steps outlined above for someone who lives at home or in their own apartment. First check to see if their budget is balanced. If you find that their budget is not balanced, ask them to track their income and expenses for a month, as described above.

For someone who lives in a licensed home, your main task will be to help them figure out how to pay for things that the home does not provide. That includes things they want. For example, if they would like to buy a CD player, you should help them think about how they can trim some of their expenses so that they can save up for it. Maybe they could eat out less often, or not go to the movies for a little while.

Some things to think about when you help someone to write a budget:

  • They cannot spend more money than they take in.
  • They can change what they spend their money on, especially when it comes to wants.
  • They should save a little money money each month in a “reserve fund.”
  • They can also save for things that cost more money than they have in one month. First they should save for things they really need. Then they can save for things they want.

The above information and a budget worksheet can be found in the accompanying document, "A Budget for a Month If You Live In a Licensed Home." You can use this document to help the people you support make their own budgets.

How to stick to a budget and what to do if the money runs out

  • Some suggestions for helping people you support stick to a budget:
  • Suggest they put money in different envelopes at the beginning of each month. Write what the money is for on the envelope (food, going out to dinner, saving for a trip).
  • Go with them to open a savings account at the bank. They can put in a little each month in case of an emergency, or to save for a goal.
  • Each time they want to buy something, suggest that they ask themselves if it’s a need or a want. If it’s a want, can they do without it for now?
  • Help them write the goal on a small piece of paper and put it in their wallet. They can look at it each time they want to buy something else.

If money runs out:

People will need to wait until they have money again to buy something they need or want.

If the individual you support is living in a licensed home where their room and food are paid, they will need to carefully plan their purchases. Most of their needs are provided or purchased by the home. But they will need to budget for their “wants”.

You can suggest looking at the budget again to see where it can be changed. That may help people avoid the same problem in the future. Maybe it will mean eating out less, buying fewer coffee drinks, or buying new clothes less often.

If someone is living on his or her own, meeting basic needs can be a serious problem. You can help them locate resources, including social service agencies, that might help. If they can’t buy food, you can help them find and get to a local food bank. If they are having trouble with rent, you may need to support the person to talk to the landlord or apply for subsidized housing resources such as Section 8. They may also need to think about moving into a less expensive place, such as a shared apartment or house.

If someone is living on his or her own and continues to have problems budgeting for basic needs, you may need to suggest something different. The individual should talk to his or her regional center service coordinator for assistance.

Additional Resources

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PDF icon FA_Budgeting_English_UPDATED_081216.pdf425.57 KB
Last updated on Thu, 04/01/2010 - 17:49