Whatever is going on in your life, there are ways to make your income go further. Learn how to cut back on costs and see what extra help is available.
Living on a squeezed income
Understand your real financial situation
If you’ve lost control of your finances, creating a budget can help you get back on track. We all need to budget in our lives to have a better quality of life. Then, you won’t lose sleep, wondering how you’ll pay your bills.
Follow these steps to work out what you need to do
Work out how much you’re spending
Start by listing everything you spend. You’ll need to work out how much you spend on:
- household bills
- living costs, like clothes, school or work costs
- financial products, like insurance, bank charges or interest
- family and friends, this could include gifts and travel to events like weddings
- travel, car costs like fuel and MOT tests as well as public transport
- leisure, including TV subscriptions, meals out or other entertainment.
It’s also a good idea to get everyone in your family involved with keeping to a budget.
Sit down together and make a plan that you can all stick to.
Split your costs into wants and needs, and agree between you what you’ll each have to spend. If you can’t afford all your wants, decide what matters most to you or look at ways of cutting costs.
See our guide How to have a conversation about money
Find ways to cut the cost of your household bills
It can be difficult to increase the amount of money you have coming in, but you have much more control over what goes out.
On top of your mortgage or rent, some bills are essential and should be prioritised. These include:
- energy bills
- Council Tax (or Rates in Northern Ireland)
- broadband and mobile tariffs.
It’s worth checking with your existing provider that you're on the best tariff for your needs or shopping around to see if you can get a better deal. You can also check you’re paying the right amount for your Council Tax or Rates.
Cutting costs is easier than you think. Follow our tips in our guide How to save money on household bills
Use our Budget planner to help you get a true picture
To work out what exactly you have coming in, the essentials you need to cover each week or month and where there might be room to cut back, it's best to create a budget.
There are loads of tools, calculators and apps that can help you prepare a complete budget but just writing it down on a piece of paper is fine too.
You'll need an hour or two the first time to put in all the figures, but once you’ve done it, things will get easier.
Budget Planner
To help you manage your money, use our free and easy-to-use Budget Planner
Other ways to do a budget
You don’t need fancy spreadsheets, online planners or apps to do a budget.
You can use an exercise book, piggy bank or the jam-jar approach to keeping your money in separate pots to cover your bills and payments.
You can do it with real jam jars or find a bank account that allows you to do the same.
Remember though, a bank account will be safer than having lots of cash in the house.
Want to stay in control of how you spend your cash? Find out how in our guide Managing your money using saving pots
Join our Budgeting and Saving Facebook group
Get money-saving tips and support from a community of savers in our private Budgeting and Saving Facebook group.
In this group, we share ideas and support to help members on their savings journey. For example, you can post anonymously about a money issue you’re having and get opinions from other members on how to deal with your situation.
Join our Facebook group
Join our private Budgeting and Saving Facebook groupOpens in a new window for money-saving tips and support from a community of savers.
Stop and think about your pension contributions
Staying in a workplace pension is an easy way to save for your retirement, especially as your employer, in most cases, must contribute to it. But if you’re dealing with unmanageable debt, it might make sense to stop your contributions for now.
You can always re-join your employer’s workplace pension scheme later when you’ve got things under control. If your debts are a problem, read our guide How pension auto-enrolment works.
Remember, if you stop or reduce your pension contribution, you might be missing out on valuable retirement benefits. These include:
contributions your employer makes into your pension pot, so opting out is like turning down pay
tax relief (money that would have gone to the government as tax that goes into your pension pot instead)
benefits that your scheme might pay if you fall ill and are unable to continue working before reaching your retirement date, and
benefits the scheme might pay to your dependants if you were to die.
To find out what benefits you might lose, check the booklet about your pension scheme or ask your employer or the pension provider for a copy if you don’t have it.
Need more information on pensions?
Call us free on 0800 011 3797 or use our webchatOpens in a new window. One of our pension specialists will be happy to answer your questions.
Our help is impartial and free to use, whether that’s online or over the phone.
Opening times: Monday to Friday, 9am to 5pm. Closed on bank holidays.
Find ways to boost your income
If you’ve got little or no money left to make up the shortfall of higher living costs, find out about other sources of income and support available to help you manage your money.
Follow these steps to work out what you need to do
Use a benefits calculator to see how much you could get
If you’ve suffered an income shock or you’re living on a low income you might be entitled to benefits you didn’t know about.
Around £19 billion a year is unclaimed by people who are missing out.
Use our Benefits Calculator
If you’re living on a low income or have had an income shock, use our Benefits Calculator to quickly find out what you could be entitled to
Check if you could get a charitable grant
If you’re facing a severe income shock, many charities, professional, faith and other local organisations offer grants.
You don’t have to pay the money back. You can also search for grants if you have an illness or condition that needs extra financial support to manage.
You can check what you might be able to apply for, using the Turn2US Grants CheckerOpens in a new window
Check if you have insurance cover you’ve forgotten about
If you’re facing an income shock or an unexpected event like job loss, redundancy or illness, you might have insurance cover you didn’t know you had.
Accident, Sickness and Unemployment (ASU) cover or legal cover can sometimes be included as an add-on to mortgage agreements, packaged bank accounts or home or car insurance.
It’s always worth checking your existing policies. For example, you might get free legal advice if you’re being made redundant or lose your job.
Rent out your spare room
If you have a spare bedroom in your home, you might want to consider renting it out under the Rent a Room scheme, which lets you earn up to £7,500 a year in rental income without paying tax on it.
You don’t have to be a homeowner to take advantage of the scheme. If you’re renting you can also let out a room to a lodger, if your tenancy agreement allows you to do so.
If you’re on Universal Credit you can earn up to the £7,500 limit without it affecting your payment. This means it’s a great way to supplement your income.
Find out more in our guide Rent a Room scheme – how it works and tax rules
Find out how you can save money on household bills
Save money on household bills
Are you on the best deal or tariff for your needs? Could you save money by going online or paying in different ways? It doesn’t take long to check. Plus, find the help available if you’re struggling with your bills.
Follow these steps to work out what you need to do
Review your energy costs
Energy prices are very high. Many people are looking to find a cheaper deal, but it’s likely your supplier’s standard default tariff rate set at the energy price cap by regulator Ofgem will be the cheapest rate available. Experts have predicted that energy prices will start falling soon, so keep an eye out for better deals.
Claim all the benefits you’re entitled to (especially Pension Credit or Universal Credit) because these will passport you to further help, including Warm Home Discount worth £150 a yearOpens in a new window
Our guide Help if you heat your home using heating oil or liquefied petroleum gas has more information.
Find out what your supplier can do in our other page section Help paying your gas or electricity bill
Find ways to cut the cost of your household bills
Unlike gas and electricity, there’s no price cap to help control the cost of these types of fuel.
Use this checklist to help keep costs down:
- Compare prices and don’t be afraid to haggle.
- Consider joining or setting up an oil club to get further discounts.
- Ask about flexible payment options.
- Buy in the warmer months.
- Keep your tank well maintained.
- Install an efficient boiler.
- Claim grants to improve the energy efficiency of your home.
- Claim benefits to help pay for energy bills.
- The government has promised £200 of support for people who use these types of fuel.
- Qualifying households in Wales can claim a one-off £200 payment towards energy bills with the Wales fuel support scheme.
Also remember to claim all the benefits you’re entitled to (especially Pension Credit or Universal Credit) because these will passport you to further help, including Warm Home Discount worth £150 a yearOpens in a new window
For more information see our guide Help if you heat your home using heating oil or liquefied petroleum gas
Apply for energy efficiency grants
If you want to cut your power bills, you can go green and reduce the amount of energy you use.
If you check your Energy Performance Certificate (EPC) it should give you ways to improve your home efficiently and show how much difference it should make.
If you don’t know if you have an EPC or can’t find it, you can register and look up your property’s EPC on GOV.UKOpens in a new window
If the property is in Scotland you can look it up on the Scottish EPC registerOpens in a new window
You can find ideas for how to cut back on the energy you use on the Energy Saving Trust siteOpens in a new window
Some of the switches are really easy. For example, you could save £80 a year on your heating costs by just turning down the thermostat by one degree.
There might funding available to help you make your home more energy efficient. You could get help with paying for insulation or even a new boiler.
Check what energy-saving grants you could get in our guide How to pay for home improvements
Switch to a smart water meter
Usually, the bigger your home and the fewer people that live in it, the more likely you are to save money with a water meter.
To see if it’s right for you, you can use the water meter calculatorOpens in a new window on the Consumer Council for Water website. If it is right, your meter will be installed for free if you live in England or Wales. (Check with your water company if you live in Scotland). There are no water charges in Northern Ireland. You can also ask to switch if you’re renting.
A water meter might not be right for you if you have certain medical conditions. Contact your water supplier to see if you can sign up to the Priority Services Register. After you’ve signed up, they’ll be able to offer you extra help if you are struggling with bills but can’t get a water meter.
If your water supplier can’t provide you with a water meter because it’s too difficult or expensive to install, they have to offer you an alternative, so you don’t lose out.
This alternative is called an Assessed Charge. You can find out more about Assessed ChargesOpens in a new window on the Consumer Council for Water website.
If you’re on a water meter you can reduce your bill further by saving water. Check the Consumer Council for Water website and find your water company for tips and free water-saving gadgetsOpens in a new window
Find out more in our guide How to reduce your water bill
Ways to spend less on fuel costs
Fuel costs are currently very high if you rely on a vehicle as your main type of transport. You can’t do much about the cost of petrol at the pumps, but you can reduce your spend by cutting back how much you use.
Some tricks include keeping windows shut to increase aerodynamics, or driving more slowly, which can help fuel consumption.
The Money Saving Expert website has a step-by-step guide on how to keep costs downOpens in a new window
Ways to spend less on food
Food bills are the biggest expense for many people after covering their rent or mortgage.
There are lots of websites that can help you reduce food shopping bills. Here are some of the most popular ones:
Use a food bank if you’re facing an emergency
If you have no money to pay for food, you might be able to use a food bank. You usually can’t go directly to a food bank. Most will ask you to get a referral voucher from an organisation in your community first. Places where you can get a food bank voucher include:
- Citizens Advice
- your local council
- GP or health visitor
- support worker
- social worker
- Children’s Centre
- police.
If you think you need to use a food bank, follow these steps:
- Search online for food banks in your area and which local community organisations can organise a voucher for you.
- Or go direct to one of referral organisations listed above to see if they can give you a voucher and tell you where your nearest foodbank is.
- When you arrive at the referral organisation, they’ll ask for some basic information to find out your needs and check if you can get a voucher.
- If you qualify, the referral organisation will give you a voucher to take to the foodbank to exchange for food.
- If you need to use a food bank again, you’ll usually need to get another referral.
If you’re on a low income and can’t afford food or essentials, your local council might be able to help.
Search online using The Trussell Trust’s Find a food bank toolOpens in a new window
Help with phone and broadband costs
Phone and broadband are essential if you’re job seeking or even just want to find the best deals to help save you money, as online offers are often cheaper, and you can use comparison sites to check tariffs and prices.
To help you stay digitally connected, some providers offer low-cost plans if you’re getting certain income-related benefits, including:
- Universal Credit
- Jobseeker’s Allowance
- Pension Credit
- Employment and Support Allowance.
If you’re looking for work, you can apply through your work coach for a voucher to exchange for free broadband from connectivity provider TalkTalk.
The voucher allows you to get six months of TalkTalk’s Fibre 35 broadband service with no contract or credit check required. Data usage limits are uncapped (within the fair data usage limits).
Find out who offers low-cost tariffs and how providers can help you get on the best plan for your needs, in our other page section on Help if you’re struggling to pay your mobile phone, TV or broadband bills
Use our Bill prioritiser
Paying your bills on time when money is tight can be very worrying, especially if they’re starting to pile up. It can be hard to know which ones to deal with first.
You might start to feel tempted to put off dealing with them, perhaps because no-one is chasing you for payment now or maybe you’re not sure what will happen if you admit there’s a problem.
However, the consequences of not paying off some bills before others can be more serious. Dealing with things early will help you to avoid problem debt because there is lots of support out there.
If you’re struggling to make your repayments on time, you need to look at all your bills and split them into priority and non-priority payments.
So you can get back in control, our easy-to-use Bill prioritiser helps you to understand which ones to deal with first, who can support you and what to do to make sure you don’t miss a payment.
Find out more about what help you can get to pay for essential things
Help to pay for essential things
If your income has drastically reduced, for example, due to job loss or illness and you’re now getting Universal Credit or on a very low income, you might be able to get extra government help to support you.
Follow these steps to work out what you need to do
Check if you qualify for the Household Support Fund
If you live in England, get in touch with your local council to see if you can apply for the Household Support Fund which helps people struggling with everyday bills and expenses like:
- gas or electricity bills
- broadband or phone bills
- clothing
- essential transport costs such as repairing a car, buying a bicycle or paying for fuel.
You don’t have to be on means-tested benefits to apply for the Household Support Fund but you must be on a low income.
Get in touch with your local council to see if they have a welfare assistance scheme. You can also find help available in your areaOpens in a new window on the End Furniture Poverty website.
If you live in Wales, you can apply for help with essentials as part of the Discretionary Assistance FundOpens in a new window on the Welsh Government website. In both England and Wales these schemes have been extended to 2026 as part of the Autumn Budget 2024.
There are separate schemes available if you’re living in Scotland, or Northern Ireland.
- If you live in Scotland, find out more about the Scottish Welfare FundOpens in a new window
- If you live in Northern Ireland, find out more about changes to the Social FundOpens in a new window
Apply for Local Welfare Assistance
If you’re facing an emergency such as a broken washing machine or you need urgent help with food, clothing and energy bills and are vulnerable, there might be local help available. This is known as local welfare assistance.
If you apply, a decision as to whether to provide help and how much will be based on your individual situation.
If you live in England, contact your council to see if they have a welfare assistance schemeOpens in a new window. Find help available in your area on the End Furniture Poverty website.
If you live in Scotland, find out more about the Scottish Welfare FundOpens in a new window on the Scottish Government website.
If you live in Wales, find out more about the Discretionary Assistance FundOpens in a new window on the Welsh Government website.
If you live in Northern Ireland, find out more about Discretionary SupportOpens in a new window on the nidirect website.
Budgeting Advances if you're on Universal Credit
If you need help with paying for essentials like clothing, furniture, work costs or a rent deposit, you might be able to apply for an interest-free Budgeting Advance.
To get it, you must:
- have been getting Universal Credit for at least six months – unless you need the money to help you get a job or keep an existing job
- have earned less than £2,600 if you’re single (£3,600 if you’re in a couple) in the past six months
- not be paying off another Budgeting Advance.
Repayments usually come out of your next Universal Credit payment and you'll need to pay it back within 12 months (18 months in exceptional circumstances). Any savings can affect how much you get.
The minimum you can ask for is £100. The maximum amount is:
- £348 if you’re single
- £464 if you’re part of a couple
- £812 if you have children.
Find out more about Budgeting Advances and how to applyOpens in a new window on the Citizens Advice website
If you live in Northern Ireland, you can find out how to get a Budgeting AdvanceOpens in a new window on the nidirect website
Extra support if you’re working
If you’re employed, you might be able to increase your income by checking you’re being paid correctly or considering a side hustle. If you’re looking for work, there’s lots of financial support to help you get back on your feet.
Follow these steps to work out what you need to do
Check your payslip
If you’re employed, make sure you check your payslip to see you’re on the right tax code and being paid at or above the National Minimum Wage.
Your written payslip doesn’t have to be on paper – it can be sent to you by email or accessed through a website.
Find out more about tax codes in our guide Understanding your payslip
Check if you’re being paid correctly and find out what to do if you’re being paid less than you should be in our guide on National Minimum wage
Claim tax relief if you work from home
If you have to work at home for all or part of the week you might be able to claim tax relief on some of your expenses.
HMRC will accept backdated claims for up to four years. You will receive a lump sum payment for any successful backdated claims.
Check our other article page section on How to get emergency money from the government
Take on extra work
If you have the time, you might be able to earn money from another job, sometimes called a side hustle.
Before you take on extra work, you need to know what your rights are around working additional hours or for more than one employer. Also, how you deal with the extra tax and National Insurance you'll be paying.
Don't forget the impact it might have on any benefits you get or your pension contributions.
If you’re thinking of making some extra money read our guide Second job tax and pay
Find help if you’re struggling with money and mental health
Money and mental health
Prioritising mental health has never been more important than it is now. The rising costs of living has caused a mental health emergency. Remember, asking for help is not a sign of weakness – it’s the first step to getting control of your finances back.
Follow these steps to work out what you need to do
Understand how money affects your mental health
Money worries can affect your mental health and poor mental health can affect how you manage your money. It can happen to anyone, at any time and for any length of time.
These are some common ways your mental health can affect the way you deal with money:
- You might find it harder to make budgeting and spending decisions.
- To make yourself feel better, you might spend money you don't have on things you don’t need and then regret it later.
- You might feel anxious or stressed about talking on the phone, going to the bank or opening your bills.
- The symptoms of a mental illness might cause you to behave impulsively, like spending a lot of money all in one go.
Sorting things out when you’re feeling low or depressed might feel like an overwhelming task but it’s important to take things one step at a time.
If you think money issues are affecting your mental health, read our guide Money problems and mental wellbeing
Listen to Vicky's story
Worrying about money problems can affect your mental health and they really should not be ignored.
Vicky Eves, one of the participants in our Money and Mental Health video series, opens up about her struggles and why asking for help is OK and not a sign of weakness.
Watch and read Vicky’s story in our blog about Why asking for help is not a sign of weakness
Get help if you're struggling with your mental health
If you feel very low or are experiencing suicidal thoughts, you can call Samaritans free on 116 123Opens in a new window.
Samaritans provide non-judgemental listening services 24 hours a day, seven days a week, 365 days a year. Whatever you’re going through, a Samaritan will face it with you.
If you feel you are in danger of taking your own life, call emergency services on 999.
Some people experience a mental health crisis as a break with reality. They might see or hear things that aren’t there, or they might believe things that can't be true. This can sometimes mean they put themselves in danger. If you’re worried that someone you know is at risk of this or is in danger of taking their own life, you should call 999 immediately.
For more information on mental health and dealing with debt, read this booklet from MoneySavingExpertOpens in a new window