Learning how to budget

Can you imagine how it feels to not be able to make end meets? You may get sleepless nights, especially when it becomes a structural problem. Unfortunately, this happens to many people.

Budget coach helps Rabobank customers to stand on their own two feet financially

When a person is having trouble to cover recurring expenses, this can lead to a big financial problem. People who experience this may feel as if they were caught in a vicious circle. When a Rabobank customer is involved, the bank attempts to find a solution in collaboration with the customer. Sometimes, the assistance of a budget coach can help a great deal.

Ingrid Folkerts who works at Rabobank Zuid- en Oost-Groningen helps clients to deal with this issue in her daily work. She recalls the example of a husband and wife in their fifties. The man is employed, but his wife has been declared incapacitated for work due to her illness. While they don’t live beyond their means, they still cannot manage to make ends meet at the end of the month,' says Folkerts. 'The wife has high healthcare expenses. So an increase in the deductible of several hundred euros a year leaves a gap in their finances that is extremely difficult to close.'

'They were doing their absolute best, but their efforts were apparently not good enough.'

Coach is independent

When customers fail to pay their mortgage instalments, Rabobank will contact them. That is also what happened in this particular situation. 'It quickly became clear that they were doing their absolute best to stay afloat, but that all their efforts were apparently not good enough to turn the situation around. They were having quite a tough time.'

Folkerts suggested engaging a budget coach. The coach is an independent adviser who is not employed by Rabobank. Whatever the customer and the coach discuss remains between them, and the coach will only report to the bank with the customer’s consent.

The budget coach goes through the finances with the customer and provides several pointers that will help them to get back on track. The advisory session will be followed by an evaluation, no more than three months later. The bank covers the costs of both sessions, which are meant to help customer to regain control on his or her spending.

Learning to think long-term

Lida Buis of Budgetcoach.nl, which carries out the coaching sessions for Rabobank, explains how this works in practice: 'The budget coach teaches people how prioritise so that they can balance their income and expenditure. This often requires the customer to make tough choices and it can be quite an emotional process. That is one of the most difficult aspects of budgeting. We usually start with paying the mortgage, health insurance and the energy bills. The customer then makes an inventory of their spending and puts aside a set weekly amount for household expenses.'

Cutting costs

'Gaining insight into income and expenditure is crucial,' says Buis. 'Additionally, to see where you can save money. In some cases, people may have double funeral or life insurance policies. A less expensive energy contract can also save tens of euros a month. You can also learn to lower your grocery bills by, for example, buying store brands rather than A brands. Moreover, you can buy cheaper cold cuts and look for special offers. These are simple tips that can add up to major savings. We also look at the possibility to generate additional income through work or benefits. The toughest task is eliminating costs such as magazine subscriptions and cigarettes. These people don’t have an easy life and smoking is a form of relaxation for them. But we still bring it up because it can save a lot of money each month.'

'A sense of calm has been restored in their family.'

Conditions for success

There are conditions attached to participating in the budget coach process that increase the chance of success. First, the participants must have an income derived from employment or social benefits. Their income must not be too low to cover the fixed living expenses because smarter budgeting alone cannot solve a structural lack of income. The participants must also not have any addiction problems, such as gambling, because specialised counsellors are needed to tackle these issues. The customer does have to have a mortgage and be willing to participate on a voluntary basis.

Ingrid Folkerts is happy that the couple has regained a handle on their financial situation. 'The lady called me eight weeks later to tell me how happy she was that I proposed working with a budget coach and that it had really helped her. It truly touches you when you hear that. It is of course important for the bank that the overdue payments are taken care of, but for me it is equally important to enable people to once again look to the future with confidence. It is wonderful to see that a sense of calm has been restored in their family.'

In 2014, more than 900 Rabobank customers get assistance from a budget coach.

Note: This article does not concern the persons who are featured in the photograph.