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How to budget on zero hour contracts
Published 3 May 2015 by Hayley Cox
Use our tips to help you budget when you’re on a zero hour contract
If you’ve been keeping up to date with the news, you’ll have heard lots of information about zero hours contracts. Some big name employers, including retailers, fast food outlets and local councils are being criticised for having large numbers of staff on zero hours. In fact, last summer, it was reported that UK firms are employing 1.8 million workers in this way, leaving a lot of people in the precarious position of not knowing whether they’ll have shifts – and money – that week or not, which makes it incredibly difficult to budget.
And variable incomes are not the only problem with zero hour contracts: many of us take sick pay and paid holidays for granted, but these are not usually available for staff on zero hour contracts.
What’s the problem with a zero hour contract?
Some weeks you could end up with fulltime hours and other weeks you’ll have none. Even if you are allocated shifts, they can be cancelled at the last minute if the employer decides they don’t need you. Or your employer may call you in, ask you to work a couple of hours to cover a busy period, then clock you off for an hour or two (leaving you sitting around unpaid) then ask you to work again later in the day. This, as we’ve already mentioned, can become a budgeting nightmare – you’ll calculate your budget on what you think you’ll be getting in the coming week, only to find that most of your shifts are cancelled and you’ll have nothing.
Whilst some people say they like the flexibility, and it’s true that zero hour contracts do give you lots of that, if you need a regular amount of money coming into your household to pay the bills every month, not knowing how much you’ll be getting can be really stressful.
So how can you budget when you’re not sure what you’ll be getting?
This is a tricky question to answer and there’s not a really good answer to give. The best advice we can offer is that you try, and we know it’s hard, to build up a little bit of a safety net for yourself. Most advice says that you should have three times your monthly wage squirreled away somewhere to use in the lean times. But, if you‘re on a zero hour contract, this amount will vary from week to week.
Build a savings pot – we suggest that you work out the minimum you’ll need to cover your essential bills for a month. Then try to save up three times that amount, rather than three times your wages. This way, if you have a couple of weeks when you have no hours, you’ve still got money to live on.
Don’t forget to check if you’re eligible for benefits – you may already be in receipt of benefits, but if you’re not, it’s worth checking to see if you’re missing out on anything. This benefit checker can give you a quick idea if you’re eligible.
See if you can apply for grants for energy – if you struggle to pay your energy bills, you should contact your supplier to see if there’s anything they can do to help you. Turn2us are an organisation who’ll help you check to see if you can claim any grants or discounts, like the Warm Home Discount or help from energy company charitable trusts that you can apply for. Reducing your monthly essential costs should help make it easier to cope if your income goes up and down.