Basic brush up
Distance learning ongoing training module
June 2012
Introduction
You may have worked as a budget adviser for a long time. This module is an opportunity for you to
take a step back from the pressures of real-life budgeting situations and review and revise some of
the basic skills you use every day.
You will need a calculator and a pencil and rubber.
This module should take approx 3 hours to complete.
Where there are questions, try to complete the lines with bullet points, then turn to page 26 to
check your answers and on the extra lines add any points that you missed.
Objectives for the module:
1. Identify the circumstances that bring clients to budgeting services.
2. Identify the elements of a typical ongoing budgeting sequence.
3. Identify and demonstrate the use of the debt schedule.
 Purpose of the debt schedule.
 Elements of the debt schedule.
 Secured and unsecured debt.
 Prioritisation of debt.
 Dealing with debt.
 Use of the debt schedule.
4. Identify and demonstrate the long term use of the cashflow.
 Purpose of the cashflow.
 Elements of the cashflow.
 Use of the cashflow.
 Use of the cashflow with clients.
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Aim
Budget advisers undertake far more tasks with their clients than could ever be covered in one
ongoing training module. In this module you will look briefly at the usual sequence of tasks you face
when working with a client and then you will work in some depth on the use of two of the key tools
used in budgeting: the debt schedule and the cashflow. You will work through a scenario to revise
your skills in the use of these tools.
What are some of the core skills of a budget adviser?
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While all of these things are of great importance in the work you do, the focus of this module is on
technical skills.
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Objective 1: Identify the circumstances that
bring clients to budgeting services
In your experience what brings clients to seek help from budgeting services? What gets them in
the door?
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What are some typical crises?
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Clients come to us as a result of their own action or inaction but no matter what brings people to our
services we must be non-judgmental and follow certain basic procedures when first dealing with
clients.
A crisis normally has to be dealt with first. Before you take any steps on the client’s behalf with a
third party you must have the Budgeting Agreement / Privacy Waiver signed. It defines your
relationship with the client and justifies your standing as a legitimate advocate.
What is our first objective when dealing with creditors?
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Why mustn’t we make promises?
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Do not make commitments to creditors beyond getting back to them – you do not have the
authority to do more than this and at this stage you do not have enough information to be able to
make any assessment of what your client is able to pay or offer.
Some people only want help with the crises and will not stay with the service beyond that time.
However the work that you have already done for them should allow many to see the benefit to
them in continuing the process.
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Objective 2 – Identify the elements of a typical
ongoing budgeting sequence
When we have been doing things for a long time we sometimes develop quirks and idiosyncrasies in
the way we operate. Often these do not get in the way of producing satisfactory results for our
clients but within the NZFFBS we have established procedures that have been developed and refined
over 40 years. These procedures are tried and tested and they have been shown to be effective for
most clients most of the time. They are what our basic training is based on and they are at the heart
of the Handbook: Guidelines for Budget Advisers. They are also what the Code of Ethics and our
assurances to clients are based on. (If you don’t already have this Handbook your service can request
one from the NZFFBS National Office.)
Budget advisers work hard to treat every client as an individual but it is important that we all share a
common understanding of these processes so that our clients and the people who refer our clients
to us can be confident of the consistency of the quality of service we are offering around the
country.
As we know from so many aspects of our lives - be it in baking a cake, running an election or growing
tomatoes - following a particular, well-established sequence of steps is more likely to result in a
successful outcome than some random approach to the task.
So it is with budgeting. Let’s start by identifying what that sequence is. Number the following
statements in order from 1 to 10:
 = balanced budget or small surplus
 - basic expenses ie essential living costs
 debts – list, prioritise, make repayment plan
 encourage, educate, monitor
 + income (find it all!)
 interim short term cashflow
 long term (12 month) cashflow
 - other monthly and annual expenses (draw up budget worksheet)
 = smaller surplus or deficit
 = surplus which can be used to address crisis
Check your answer on page 26.
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A tested and reliable basic sequence for helping our clients looks something like this:
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Often clients come to us with a crisis or urgent situation, but before we can help them with
that crisis we need to establish what resources they have available to deal with it. In the first
instance we need to find out:
o What the total income is
o What the essential living costs are – food, rent, power etc
o We have to establish whether there is a surplus available to assist clients to manage
urgent issues like threats of power disconnection or repossession of essential
household goods.
Once we have dealt with the immediate situation we can take more time to consider other
monthly and annual expenses and to draw up a comprehensive budget worksheet.
This leaves us with a smaller surplus or sometimes a deficit. We then need to revise
expenses and if possible, look to increase income.
At this point an adviser might draw up an interim, short term cashflow forecast – if possible
showing how to deal with outstanding client debt.
The debt schedule will often develop alongside these other tasks. Once you feel you have
most of the information about the clients’ debts you can work with them to prioritise and
make repayment plans using the budget surplus.
Eventually we arrive at a balanced budget - or even a small surplus.
Once we have a clearer overall picture we are able to develop a long-term (12 month)
cashflow.
Right from the start we will want to encourage and move on to educate the client.
We monitor the situation and assist the client to move to independence.
Why is it important that we follow a consistent way of doing things within budgeting services?
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So in summary:
When the client makes contact with the service we:
 Gather and record information from the client.
 Help the client develop a budget and deal with debt.
 Help the client set up procedures for maintaining the budget plan.
 Educate the client towards independence.
 Offer support until the service is concluded.
The order given above is not set in concrete but all these things must be covered at some point in
the process of helping our ongoing clients move to independence.
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Objective 3 - Identify and demonstrate the use
of the debt schedule
3.1
Identify the purpose of the debt schedule
What are the uses of the NZFFBS debt schedule form?
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The debt schedule records all of the client’s debt.
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It helps to clarify the problems and can then be used to decide on the best means to repay
the debt fairly.
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It assists the adviser and the client to work together to prioritise the debt.
In order to make the most effective use of the debt schedule you need to gather as much
information as possible in as concrete and verifiable a manner as possible.
Many debts are caused by things which are beyond the control of the client. Budget advisers need to
be non-judgemental when helping clients to deal with debt.
3.2
Identify the elements of the debt schedule
The NZFFBS debt schedule consists of:
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List of all creditors and their contact details. The value of putting as much detail as possible
in this column is:
o Useful to gather all information in the same place
o Can make the job of contacting creditors more straight forward, although you often
need additional information contained on invoices and statements themselves
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A column to list and total all debt. The reasons for totalling debt are:
o Contributes to the overall picture of the individual client’s situation.
o Total client debt is an important statistic collected by the NZFFBS and is used to
assist in submissions relating to government policy, in information provided to the
media and to form our own policies and processes.
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3.3
Identify the difference between secured and unsecured debt
The first of these three columns - labelled ‘security’ - allows you to distinguish between secured and
unsecured debt.
What is secured debt?
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Can you give some examples of types of debt that are secured?
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Please note that the Credit Contracts and Consumer Finance Act 2003 (which came into effect on 1
April 2005) has replaced the term Hire Purchase with Credit Sale. As it seems likely that people will
continue to use the term Hire Purchase or HP for a considerable time both terms have been included
here, but note that the correct legal term for this is now Credit Sale.
When clients buy goods such as cars or electronic equipment as a Credit Sale (on Hire Purchase) the
financing of that purchase is usually done through a finance company, not the retailer of the goods.
When a consumer borrows money from a finance company to buy goods it is usual for them to have
to list some of their possessions as security for the loan. If the consumer is unable to meet the
payments on the goods they may have the goods themselves, and any other goods listed as security,
repossessed.
Credit is a complex part of the law. You should use the consumer rights manual in your budgeting
service office and if that does not answer your questions ring the Ministry of Consumer Affairs
Hotline.
The information gathered about secured and unsecured debt might help the adviser to help the
client when prioritising debt - secured debt may have a higher priority because of the consequences
(repossession of essential or valued goods)
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Going back to the debt schedule form itself:
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The second of the three columns is labelled ‘Creditor’ and allows you to investigate and
record who the debt is owed to. Working with the client to analyse the debt in this way
might help to identify patterns of debt and particular areas of concern - and possible action.
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The third new column looks at ‘Type’. This elaborates further on the kind of debt incurred to
each particular creditor.
Arrears
The debt schedule form asks you to record information about debt that is in arrears.
What is the difference between current debt and debt that is in arrears?
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A debt is in arrears when the due date for payment is past. Often clients will have a debt (such as a
phone bill) which is only partly in arrears – the rest of the bill may not be due for some days or
weeks.
It is important to use this column in the debt schedule to separate the overdue from the total debt
as overdue debt generally needs to be given priority over other debt.
Repayments
Here you list the amount being paid on regular repayments of debt and in the next column you note
the frequency of those repayments – weekly, monthly etc.
Because the debt schedule is a document which gives a snapshot of how things are at a particular
time the repayments column should only list repayments that are actually being made. Repayments
that should be being made but are not, can be noted in the comments.
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Comments
This column gives the opportunity to include other pertinent information
What kind of information would you include in this column?
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3.4
Clarify the prioritisation of debt
The debt schedule includes a column for the prioritisation of debt.
All individuals have personal priorities which are affected by their personalities, the circumstances of
their lives and the needs and priorities of their families. These things need to be considered when
prioritising debt.
What is your role in the prioritisation of debt?
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It is essential that the client should be involved in the prioritisation of debt. Clients whose own
needs and priorities are valued and respected by the adviser are much more likely to make the
commitment to work to deal with the financial challenges of their situation.
Debts must be prioritised before attempting to work out a debt repayment plan.
While considering the clients own priorities is essential, what would you encourage them to
consider when assisting them to prioritise debt?
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Debt Prioritisation
Urgent debts:
 Are for basic essentials
 Are overdue and action is being initiated
 Carry the greatest penalties
 Are likely to cause further hardship
We should:
 Keep paying debts to avoid penalties, arrears and legal action
 Take care of medical bills etc
 Prioritise debts important to the family
 Deal with small debts
 Deal with old debts
As all budget advisers know the key things here are to deal first with debts that are urgent and have
significant consequences for the family.
Advisers need to work with clients to analyse the importance and urgency of each debt.
3.5
Understand methods for dealing with debt
Once debts are listed and classified we must make a plan to repay them. How to deal with the debt
will depend on: the amount of debt, the type and status of the debt, the circumstances of the client.
Very briefly, what are the four main options for repaying debt?
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Of course debt repayment cannot happen until a budget surplus is available - looking at how to help
individual clients to create that surplus is always a challenge but it is not something we are able to
deal with in this module.
3.6
Demonstrate the use of the debt schedule
Read Aleesha’s background information and part one of her journey.
Complete the debt schedule and put it in the envelope for posting to your Tutor.
The key points on page 14 will help you.
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Aleesha’s background information
It is Monday 16 April. Aleesha Gray’s mother has suggested she come to your budgeting service for
some help.
Aleesha is 20 and has one child, Destiny, who is nine months old. Aleesha has never lived with
Destiny’s father and he plays no part in their lives but he pays child support and his mother lives in a
nearby Christchurch suburb and is keen to be involved with her grand-daughter.
About six months ago Aleesha and Destiny moved from her family home and into a flat with a
girlfriend, Chantal. For the first few months things went well and Aleesha managed to get by on her
benefit and enjoyed her new-found independence.
Recently she and Chantal had a major falling-out and Chantal moved out without notice. Chantal had
been responsible for paying the bills and Aleesha has now discovered that the last fortnight’s rent
was not paid and that the power bill is overdue. She has received a final demand from the power
company and the landlord Bob Blue, while reasonably sympathetic, wants to know when she can do
something about repaying the outstanding rent.
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Aleesha’s journey
You have spent an hour with Aleesha and you have taken note of the following information:
 Aleesha’s spending is outlined on the draft budget form attached to this scenario. She does
not have a car and spends about $12p/w on public transport. She does not smoke but likes
to have a night out with her friends and usually allows herself about $30 a week for this and
other personal expenses. Destiny’s grandmothers are both happy to babysit for her when
they can so she does not have childcare costs. Her dog, Fang, costs about $10.00 per week
to feed.
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Rent on the flat is $165 per week and it is two weeks overdue.
The overdue power bill (Watts Energy) is $78.43 – the new bill is for $71.35 and is due on
April 26.
Some months ago Aleesha borrowed $200 from her ex-boyfriend’s mother to buy clothes
and a buggy for Destiny. She is repaying $10 per week and still has $60 to pay. She does not
like owing this money and is determined to keep up these payments.
She has some household goods on ‘Credit Sale’ (previously known as HP) from LV Smiths and
still owes $980. She is paying $50 per month on this and has managed to keep up the
payments so far.
Aleesha fell in love with a pair of shoes in a city shop a few weeks ago and put them on
layby. They cost $139 and she is paying $10 a week. She has $90 left to pay.
Aleesha has a credit card which is at its limit of $2000. She did not make the minimum
payment of $60 (3%) last month and has received a letter from the bank threatening action
if she does not pay immediately.
The attached draft budget (Handout 1) reflects her current situation.
Because she no longer has a flatmate to pay half the bills it shows that she has a weekly deficit of
$78.70.
Your supervisor has asked you to now draw up a debt schedule for Aleesha. You do not have to try
and balance the budget or to make plans for debt repayment. You are simply to establish the
position based on the information Aleesha has give you.
Please do this, using the Bud207T form. Please complete all columns on the on the form and include
the totals. Only use the space for comments as you think necessary.
NB. For the purposes of this exercise do not attempt to calculate extra interest charges she will have
incurred on the credit card.
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It is essential to record the total debt. This is one of the statistics that NZFFBS require services to
provide.
Only the Credit Sale debt is secured. Although Aleesha will have paid a bond for the flat and may also
have been required to do so by the power company these are not considered to be secured debts.
The layby should be included on the debt schedule. However, if Aleesha decides to stop paying the
layby she can simply cancel it and is entitled to receive a cash refund from which the shoe shop can
deduct ‘selling costs’ and (in some cases) ‘loss in value’. (Refer to the MCA Clients Rights handbook
for Budget Advisory Services for more information about layby.)
Only the overdue parts of the power bill ($78.43) the Visa ($60) and the rent are in arrears.
At this stage no figure should be put in the ‘repayment rate’ column for the Visa as Aleesha is not
currently making payments. For the same reason, advisers will see that this sum does not appear on
the draft budget.
Watts Energy is clearly the first priority for payment. Aleesha herself is very keen to clear the debt to
‘Grandma’ so this debt should perhaps be given a higher priority than you might otherwise
recommend. Some people might claim that the debt to Grandma should not appear on the debt
schedule at all. However there are always consequences of not considering family debt even if they
are not financial ones.
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Objective 4 – Identify and demonstrate the use
of the cashflow forecast
4.1
Identify the purpose of the cashflow
What is a cashflow? That’s right - it is a forecast of income and expenditure showing surpluses or
deficits as they are likely to occur.
Why is the cashflow a useful tool for budget advisers to use with our clients?
_______________________________________________
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(Other ways of presenting to clients the information contained in a cashflow will be considered
later.)
In the first instance the cashflow can often be used as a short term tool to help clients see their way
out of a crisis situation.
The cashflow also provides the budget adviser and the client with a way of looking at the long term
picture. It predicts hard times in advance but at the same time it offers the possibility of the light at
the end of the tunnel by allowing us to plan for those times and deal with them. The cashflow is
about consequences.
When used properly it is a flexible tool for working with clients – offering opportunities to teach,
encourage, and to help the development of self-discipline.
The cashflow differs from the budget worksheet in that the worksheet tells advisers where the client
is at present – a cashflow tells us what to expect at any point in the year ahead.
4.2
Identify the elements of the cashflow
Look at the cashflow form. The cashflow is essentially a very simple form. It contains:
 A column representing each pay period
 A list of all predicted income
 A list of all planned/required expenditure
 A way/place to record surpluses/deficits – cash assets available
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4.3
Demonstrate the correct use of the cashflow
You are now going to prepare a cashflow for Aleesha and in doing that to check that we all have a
similar understanding of the processes we use in the preparation of cashflows for our clients.
It is now Monday 7 May 20XX.
Aleesha is a model client!
You have helped her sort out many of her immediate problems and are now ready to draft a long
term cashflow to help her to see her way out of the current situation she is in and beyond that to
greater control and stability.
Aleesha decided not to get another flatmate and she is entitled to an accommodation supplement as
the rent for the flat is well over the threshold for her.
She is keen to study to be an early childhood teacher when Destiny is a little older. She approached
Barnardos some time ago and is now working as a caregiver through their KidStart programme to
gain some experience and make a little extra money. Initially she is looking after a child in her home
for 13 hours a week – she hopes this will increase in a few months. Most of the money she receives
for this work is paid as a tax free allowance and therefore it does not affect her benefit.
Aleesha has agreed that she can trim some of her costs in the medium term and will reduce her food
and grocery shopping, her personal cash and her spending on clothing and shoes although she wants
to finish paying off the layby. Her father has got her a load of firewood to get her through the start
of the winter.
Details are below.
You have produced a revised budget for her as shown in Handout 2 which now shows a weekly
surplus.
Aleesha’s cashflow information
 It is Monday 7 May – benefit day (paid weekly).
 Aleesha has $15.40 in the bank.
 Aleesha was working before Destiny was born. A tax return of $112 will be paid into her
account on May 20.
 Aleesha has not got another flatmate. She is now receiving an accommodation supplement
of $55.40 per week. This is paid weekly at the same time as her Benefit.
 Aleesha receives $263.78 per week Benefit payment. Added to this is $82 family tax credit.
 Aleesha has still got $330 rent arrears to pay. The landlord is expecting at least half by the
14th May and the rest the following fortnight.
 Aleesha has paid the arrears to the power company. She is now on a ‘smooth-pay’ plan and
her monthly payments are $73.00. Payments are by AP on the 25th of the month.
 It is Aleesha’s mother’s 50th birthday on June 13. She would like to contribute $30 to a
family gift. Destiny is one on 3 July – Aleesha wants $30 to spend on her too.
 Aleesha still owes ‘Grandma’ $30. She wants to continue to pay it off at $10 per week.
 Aleesha’s Barnardos work pays $4.00 per hour for 13 hours per week. It is paid largely as a
tax-free allowance. She will be paid fortnightly and the first payment (for a full fortnight) is
on May 14th.
 Aleesha has paid the arrears on the Visa bill. The next minimum payment ($60.00) is due on
the 2nd of the month. She has agreed not to use her credit card except in emergencies.
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Dog registration of $52 is due 30th June. If it is not paid by then it will rise to $75.
Aleesha needs firewood before the end of July. This will cost $200.
Credit Sale payments ($50.00) are deducted from her account on the 18th of each month.
Bank fees ($9.00) are deducted on the 7th of each month.
Aleesha still has six ($10.00) weekly payments to make on her layby for her shoes.
Aleesha pays her contents insurance every six months. She will have to pay $114.50 on June
5.
Aleesha tops her cellphone up when she needs to – usually $30 about once a month. She
last topped it up on April 21st.
Aleesha’s health is good. She sees the doctor once or twice a year for herself and Destiny’s
medical care is free. The budget worksheet shows Aleesha’s medical expenses are about
$100 per year.
Aleesha is now spending $100 per week on food and general housekeeping.
Aleesha is allowing herself $15.00 personal cash per week.
It costs Aleesha about $10.00 per week to feed Fang.
Aleesha needs glasses. There is a $199 ‘package deal’ available at the local optometrist. She
is keen to get them as soon as she can afford to.
Aleesha spends $12.00 a week on transport.
Rent is $330 per fortnight and is next due on 15 May.
Draw up the cashflow for 12 weeks on the blank cashflow form using the following steps:
Insert the dates.
 The dates on the cashflow should generally reflect the day that the main income is paid.
 Choice of whether cashflow is drawn up weekly, fortnightly or monthly is likely to be
determined in the first instance by what the client’s pay periods are.
 Aleesha’s main source of income is the benefit which is paid weekly – therefore the cashflow
we do for her should be weekly
 In general we enter income first onto the cashflow. But even before that – and importantly –
every cashflow will have an opening balance…
Enter the opening balance.
Enter the regular income.
 Most of our clients are unlikely to know the specifics of how their total benefit is made up. It
is perfectly acceptable to simply put all these elements together onto a single line. If it is
feasible to separate some of it out it can be helpful to see (for example) what portion of the
benefit would be affected if Aleesha got a new flatmate.
 If, as is sometimes the case, the accommodation supplement was paid fortnightly it must be
shown fortnightly on the cashflow.
 Aleesha’s income from the childcare she does is paid fortnightly. The cashflow must reflect
this.
What could the consequences be of showing the Barnardos income weekly rather fortnightly?
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Many of our clients do not have any overdraft facilities and cannot afford the consequences
of bounced cheques, automatic payments that don’t go through etc. For this reason, income
must be shown as it is actually paid.
Enter any other income that Aleesha has.
 Theoretically we could enter it on the 14th as the 20th is in that week but in practice this
income would be better entered in the cashflow on May 21 as it is not available until the
20th. If it were shown in the cashflow on 14 May it could cause Aleesha to go into overdraft
and for APs etc not to go through.
At some point you will enter information incorrectly into the cashflow.
The cashflow is a living, working document and as such it has to be easy to change. For this reason
you should always work in pencil or on a computer spreadsheet.
Now that we have dealt with the income let’s turn to Aleesha’s expenditure.
Enter the regular weekly outgoings.
Why should we separate out pet food, fares and personal cash from household expenses?
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By entering these items separately we give the client better control of their own spending
and provide a more refined tool to make adjustments to spending if there are shortfalls in
any particular week.
There are two payments that Aleesha is making weekly at present that will not continue for the 12
weeks. Enter them in the correct weeks.
Enter the fortnightly and monthly expenses in the correct weeks.
Enter any annual or one off expenses that you know are going to occur in this 12 week period.
 These items which come up occasionally must be entered onto the cashflow correctly.
Because the cashflow sets out to predict, as accurately as possible, the client’s actual income
and expenditure it is wrong to simply take (for example) an annual amount from the budget
worksheet, divide it by 52 and enter that figure into the cashflow each week.
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So how should we deal with some more unpredictable expenses – medical costs for example?
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Some people like to estimate when expenses such as medical expenses might occur and enter
amounts on to the cashflow, but for this exercise we will not use that method.
 One way to think of the cashflow is as a bank statement ‘in advance’. Averaging out items in
the budget worksheet on a weekly basis is wrong, but at the same time, consideration must
be given to all regular and irregular annual costs in the draft budget.
Add medical and leave a blank line. Add any other items that should be listed with a blank line.
 When drawing up a cashflow for a client we need to be mindful of the future and take into
consideration their dreams and aspirations.
You have now entered all the information you have into the cashflow but you have not done any
addition and subtraction. While you have been told that Aleesha now has a small weekly budget
surplus overall you do not know whether she has sufficient funds to meet her costs on a weekly
basis. Let us look and see whether Aleesha is going to be able to pay the rent arrears in the week of
May 14?
Add the first week’s income and the initial balance to get “Total funds”
Add the first week’s expenses to get “Total expenses”
Subtract “Total expenses” from “Total funds” to get “Balance”
Transfer “Balance” from end of week 1 to “Bal brought fwd” at beginning of week 2
Repeat the procedure
Check your answer with the model answer on page 25.
On this occasion Aleesha can pay the rent arrears. What could you and Aleesha have done if the
result had been a deficit of $53.00 rather than the surplus she has?
_______________________________________________
_______________________________________________
_______________________________________________
_______________________________________________
Some combination of all these things is a possibility. It is important though that the priorities of the
client are given consideration in making any cuts and changes. Putting off paying Grandma might
seem an obvious thing to do but Aleesha is very keen to finish paying that debt and she must ‘buy in’
to decisions that are made if she is going to remain committed to improving her situation.
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We talked earlier about a cashflow offering light at the end of the tunnel.
Complete the cashflow for Aleesha for 12 weeks, putting in the $199 for glasses if/when she can
afford them, and put it in the envelope for posting to your Tutor.
Based on this cashflow what are Aleesha’s prospects of getting glasses and of being more
financially secure?
_______________________________________________
_______________________________________________
_______________________________________________
_______________________________________________
While Aleesha’s future situation does not look altogether rosy the cashflow gives her a very clear
idea of where she is and where she is likely to be unless she is able to take steps to improve her own
situation. It is important to complete a cashflow for a twelve month period in order to give a full
picture for the client to work with.
4.4
Discuss ways to use the cashflow effectively with clients
As we observed before, Aleesha is a model client. She is self-motivated and she would have no
difficulty understanding and working with a cashflow.
The majority of clients are able to understand the principles of the cashflow if advisers take the time
to talk it through with them.
As we have seen, the cashflow can be a way of empowering and educating clients by helping to
show them the consequences of their spending. It allows them to make decisions about what is
important and to plan how to deal with times when a shortfall can be foreseen.
A cashflow must be seen as a living, flexible document. The increasing use of computer spreadsheets
to produce cashflows for clients (and, where possible, for clients to produce them for themselves)
enhances that flexibility.
For some people however, the big picture of the cashflow is difficult to grasp.
What are some of the ways that you have found to present the information contained in the
cashflow to clients who have difficulty understanding the big picture?
_______________________________________________
_______________________________________________
_______________________________________________
_______________________________________________
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There are a lot of ways that the information contained in the cashflow can be presented to the
client. Even if clients themselves are not able to understand the big picture of the cashflow it
remains an essential tool for the budget adviser to help clients over an extended period of time.
Once most clients have a budget that has a surplus and you can see that they are managing it
satisfactorily you should formally close the client case.
What are the steps you would take to close the client case?
_______________________________________________
_______________________________________________
_______________________________________________
_______________________________________________
_______________________________________________
_______________________________________________
_______________________________________________
_______________________________________________
It is important to do all these things and to take the opportunity to reflect on the work you have
done with the client. If there are things that concerned you or that you felt were particularly
successful take the time to discuss and share these with other advisers or with your Co-ordinator.
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Conclusion
Key point summary

A range of issues bring people to seek help from budgeting services. We must follow
recognised procedures to assist them to deal with any crises and move towards stability and
control of their financial situation.

We must never make commitments to creditors before the client has signed the budgeting
agreement or before we have completed a budget and have a clear picture of what the
client is able to offer.

We use the debt schedule to record all debt and the current status of that debt. This should
be completed before any debt repayment plan is developed.

Clients themselves, supported and guided by the adviser, must be primarily responsible for
decisions about the prioritisation of debt.

The cashflow is a flexible tool which allows advisers and clients to forecast and plan for both
the medium and the long term.
Closure
Complete the assignment on the next page (you can look back at your notes) and put it in the
envelope.
Complete the T7 evaluation form and put it in the envelope.
Post the envelope to your Tutor – with the completed module, debt schedule, cashflow, assignment
sheet and the T7 form.
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Final assignment
1. An initial phone call from a budget adviser to a client’s creditor can gain more
_______________.
2. What kind (or type as it is defined on the NZFFBS Debt Schedule) of debt is a Credit Sale/HP?
_______________
3. Debt arrears are debts that are _______________.
4. Is layby a debt? _______________
5. Should debts that are not currently being paid be shown on the initial draft budget?
_______________
6. If the main income earner in a family is paid fortnightly their cashflow should be
_______________.
7. How should costs such as insurance be entered on the cashflow?
______________________________
8. A revised budget shows $260 per year for medical expenses. Should this be entered at $5 a
week on the cashflow? _______________
9. Our ultimate aim as budget advisers is to support and educate our clients towards
_______________.
10. Who is primarily responsible for decisions about the prioritisation of debt?
_______________
11. Debt repayment cannot occur until there is a budget _______________.
12. A cashflow tells us what to expect at any point in the _______________.
13. Before you can take any steps on the client’s behalf with a third party the client must sign
the ______________________________.
14. If a VISA debt has been around $1200 for several months and only the minimum payment of
$60 is paid each month, how much is in arrears? _______________
15. A cashflow must be seen as a document that is living and _______________ .
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Aleesha’s cashflow – first two weeks
Week of:
Balance brought forward
Income
Benefit
Family Tax Credit
Accommodation
Barnardos
Other
Total funds
Expenditure
Food/household
Pet food
Fares
Personal cash
Grandma
Shoes (layby)
Rent
Bank fees
Power
Phone
Credit sale
VISA
Insurance
Dog registration
Gifts
Firewood
Glasses
Medical
Vet fees
Savings
Other
7-May
14-May
15.40
250.58
263.78
82.00
55.40
263.78
82.00
55.40
104.00
416.58
755.76
100.00
10.00
12.00
15.00
10.00
10.00
100.00
10.00
12.00
15.00
10.00
10.00
495.00
9.00
50.00
Total Expenditure
166.00
702.00
Balance
250.58
53.76
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Suggested Answers
What are the core skills of a budget adviser?
 listening
 communicating effectively with clients
 advocacy
 dealing with creditors
 educating clients
 drafting a budget, debt schedule and cashflow
In your experience what brings clients to seek help from budget services? What gets them
in the door?
 referral from another agency
 referral from family or friends
 self referral – wanting to take control of own circumstances
 a crisis or urgent problem
What are the typical types of crises?
 threats of power disconnection
 eviction
 no food
 debt or repossession
What is our first objective when dealing with creditors?
 to buy time
Why mustn’t we make promises?
 we don’t have the authority to do so
 we don’t have the information to base them on
Budgeting sequence order on page 6 is: 8, 2, 7, 10, 1, 6, 9, 4, 5, 3
Why is it important that we follow a consistent way of doing things within budgeting services?
 clients and advisers move
 to maintain credibility with the agencies we deal with on behalf of our clients
 to ensure that clients get the level of service they are entitled to
What are the uses of the Federation debt schedule form?
 listing the debt
 help to get the full story
 having all the information in the one place
 helping the adviser and the client to prioritise debt
What is secured debt?
 Secured debt means the client can lose the goods and other property if they don’t meet
their commitment to pay
 A finance company has ‘security’ over the debt
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Can you give some examples of types of debt that are secured?
 Car purchases (where a loan is involved)
 Goods bought on HP (now known as Credit Sale)
What is the difference between current debt and debt that is in arrears?
 a debt is in arrears when it is overdue for payment
 a current debt is a debt or a bill that you have, but which is not yet due to be paid
What kind of information would you include in this column?
 payments that should be happening but are not
 action to recover debt that is threatened or underway
 particular concerns or priorities of the client
What is your role in the prioritisation of debt?
 pointing out the consequences – “if you do this, then that is likely to happen”
 helping the client to make sensible decisions
While considering the clients own priorities is essential what would you encourage them to
consider when assisting them to prioritise debt
 debts with consequences – penalties or legal action
 debts for essentials such as electricity
Very briefly, what are the four main options for repaying debt?
 lump sum repayments
 progressive repayments (several lump sums or pro-rata)
 modifying debt (negotiating with creditors)
 court ordered repayments (if no better alternatives)
Why is the cashflow a useful tool for budget advisers to use with our clients?
 A way to help the client see their way through a crisis
 A long term picture
 A good way of helping to educate and empower clients
 Helps planning – for debt repayment and beyond

The dates are 7 May, 14 May, 21 May, 28 May, 4 June, 11 June, 18 June, 25 June, 2 July, 9
July, 16 July, 23 July

The opening balance is $15.40

The regular income is:
o core benefit - $263.78 weekly
o family support - $82.00 weekly
o accommodation supplement – $55.40 weekly
o Barnardos – $104.00 fortnightly commencing 14 May
What could the consequences be of showing the Barnardos income weekly rather fortnightly?
 It leads to an incorrect total of actual available funds in each week
 It could cause the client to go into overdraft
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
The other income is a tax return of $112.00 to be paid on 20 May.

The regular weekly outgoings are
o food/household - $100.00
o pet food - $10.00
o fares - $12.00
o personal cash - $15.00
Why should we separate out pet food, fares and personal cash from household expenses?
 it helps to see where the money is actually going
 it is easier to make adjustments

The other two weekly payments are
 Grandma loan - $10 pw for 3 weeks only
 Shoe layby - $10 pw for 6 weeks only

Fortnightly and monthly expenses are
o Rent: $330 per fortnight – next due 15 May (enter week of 14 May, 28 May, 11 June,
25 June, 9 July, 23 July)
o Bank fees: $9.00 per month on the 7th. (enter week of 7 May, 4 June and 2 July)
o Power: $73.00 – the 25th of each month (enter week of 21 May, 25 June, 23 July)
o Phone: $30.00 – per month as needed – some flexibility as to the placement
(possibly enter May 21, June 18, July 16)
o Credit sale $50 per month on the 18th (enter weeks of 14 May, 18 June and 16 July)
o Visa repayments: $60 per month on 2nd of the month (enter on 28 May and 2 July)

Annual or one-off costs that Aleesha can anticipate:
o Rent arrears: $330.00 first payment due on 15 May (enter week of 14 May – either
enter on the ‘rent’ line or ‘other’) and second two weeks later.
o Insurance: every 6 months $114.50 due on June 5 (enter June 4)
o Dog registration: $52.00 before 30 June (enter by week of 25 June)
o Present for Mum: $30.00 (enter week of 11 June)
o Present for Destiny: $30.00 (enter week of 2 July)
o Firewood: $200.00 - enter anywhere appropriate before end of July
o Glasses: $199 – but we cannot enter this yet as we don’t know when/if Aleesha will
be able to afford glasses
So how should we deal with some more unpredictable expenses – medical costs for example?
 Aleesha’s annual budgeted amount for medical costs is $100
 A line should be allocated for this on the cashflow
 Vet fees is the only other item listed on the revised budget sheet that we need to enter with
a blank line
 We may choose to add such things as “savings” or “other”
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On this occasion Aleesha can pay the rent arrears. What could you and Aleesha have done if the
result had been a deficit of $53.00 rather than the surplus she has?
 reduced her personal cash for the week
 not paid Grandma for a week
 tried to negotiate with the landlord for an extension for a portion of the arrears
 not made the layby payment that week
 tried to reduce household expenditure for the week
Based on this cashflow what are Aleesha’s prospects of getting glasses and of being more
financially secure?
 it still looks tight for her
 glasses will really stretch things
 she is managing but not progressing much
 it shows her that she needs to further increase her income if she is to have more freedom to
spend
 the picture it gives is not altogether positive – but it is clear
 it is only for 12 weeks and it would be good to see it projected further forward
What are some of the ways that you have found to present the information contained in the
cashflow to clients who have difficulty understanding the big picture?
 using a notebook and entering the information from the cashflow a week at a time
 entering the actual expenditure alongside the projected and analysing/discussing the
differences with the client
 having a set-aside account to allow clients to ‘save’ for less regular outgoings rather than
building up large surpluses (Kiwibank’s Bill-blaster account makes having such an account
affordable for many clients)
What are the steps you would take to close the client case?
 make an agreement with client to end the case
 offer the client the opportunity to come back if they need further help or just to ‘check in’
 return all personal financial documents to the client
 Advise the service co-ordinator of the finish date and ideally have a debrief session
 advise creditors that you are no longer working with the client (Bud 105)
 complete all administrative requirements of the Federation and the service
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