No matter how sensible a young person is with money or how well they budget, there are likely to be times when there is just not enough coming in to cover their outgoings.
Emergencies happen for all sorts of reasons – losing a job, being suddenly unable to work, unexpected costs and delays in benefit payments are common. The very nature of an emergency means it is unanticipated and someone who is just about managing can suddenly find themselves without sufficient money for rent, food or transport costs. The situation becomes even more desperate when there are children involved.
Sometimes, family and friends will be able to help – though it should always be clear whether the money is a gift or a loan. If it is a loan, it’s important to agree how it will be paid back and by when and put it in writing.
If the emergency is a one-off and the young person can afford it, they might consider taking out a short-term loan. Credit unions are one of the cheapest ways to borrow money; however, you usually need to have saved with one before you can take out a loan.
For those who don’t have family and friends to turn to – and are not in a situation where they can borrow cheaply – there may be some emergency financial help available depending on your circumstances.
The Discretionary Assistance Fund (DAF) provides one-off assistance to individuals over 16 who need urgent financial help. There are two types of support (both are non-repayable):
- Emergency Assistance Payments (EAP) – there must be an immediate threat to someone’s health or well-being, e.g. due to a fire, flood or other emergency. The grant is awarded within 24 hours and supports someone for a few days to help them get back on their feet.
- Individual Assistance Payments (IAP) – only available to those on income-based benefits. It can help with one-off costs like a cooker or washing machine, or curtains, beds and bedding. Applications take up to 10 days.
DAF payments are only available to people with no other means of getting the money they need and are not intended to be ongoing. Young people who have been sanctioned by the DWP cannot apply. Freephone: 0800 859 5924 or apply online.
Many charities will provide one-off assistance in an emergency, although most have specific criteria in terms of age, circumstances, etc.
Turn2Us lists charities providing emergency, short-term and longer-term support for people who are struggling financially, perhaps as a result of redundancy or bereavement. Grants, loans, vouchers or practical help may be available.
Universities and colleges usually have hardship funds which act as a safety net for students whose circumstances change during their studies.
Young people in desperate financial situations may also be eligible for practical support, including the provision of housing and food.
The nature of the help available to depends on their circumstances, e.g. young people under 18, care leavers under 21, pregnant women and those with dependent children living with them have different rights to housing if they are homeless or at risk of becoming homeless.
Social services have a duty of care to children and young people who are at risk of harm and may be able to help with emergency accommodation and food.
There are food banks throughout Wales providing food parcels to people who would otherwise not eat. Most are run by the Trussell Trust but there are some church-led food banks. To get a food parcel, you need a food voucher from a local agency, e.g. social services, Citizens Advice, housing officers. You can’t just turn up.
What to avoid
When someone is struggling to cover household expenses, it is all too easy to be lured by payday loans, rent-to-own contracts and loan sharks.
Payday loans are legal but can work out very expensive.
Rent-to-own is an expensive way of buying household goods – cookers, washing machines, beds – which targets low-income families. Payments are made weekly, with the overall cost several times higher than the original price.
Loan sharks are never the answer. They operate illegally and charge sky-high interest rates. While they may start off friendly enough, they can get nasty if payments are missed. If there is a loan shark operating in your area, report them on 0300 123 3311 (24 hours). Calls are confidential.
Money Made Clear Wales explains financial matters including loans and borrowing, bank accounts and financial emergencies in simple terms.
Citizens Advice offers advice about benefits, debt and borrowing.