How to budget on a low income

Managing your money on a low income takes careful organisation – here are a few positive steps you can take to make it easier.

Work out your budget

First of all, you have to know what money is coming in, what’s going out and when. Making a budget gives you a clear picture of where your money goes, and shows you where you might have a chance to save money. It will also help you see whether you are living within your means.

Work out how much money you have coming in and what you’re spending it on with our Budget planner.

For further guidance on budgeting and money management read our Beginner’s guide to managing your money.

Find out How to stick to a budget and save money.

Look at ways to cut costs and shop smartly

It can be difficult to change the amount of money you have coming in – but you have much more control over what goes out. Your budget will help you see if there’s anything you can easily cut back on, or shop around for a better deal.

As a first quick and easy step, use our Quick cash finder to see how you can save by cutting out non-essentials. This isn’t to say that you shouldn’t enjoy treats, but you might be surprised at how much small things, such as a daily coffee, add up to!

Saving money around the home and when out

Follow the links below for more tips on how to cut your costs.


Energy saving grants if you’re on a low income

If you make your home more energy efficient you’ll be able to save money on gas and electricity. If you’re on a low income you can often get an energy efficiency grant to help with the costs.

Find out about energy saving grants on the Energy Saving Trust website.

Holidays for less

If you want to get away, it pays to shop around. There are huge savings to be made if you do your homework. For money saving tips when booking a holiday see our guide below.

Claim all the benefits you’re entitled to

It’s easier than you might think to check that you’re getting all the benefits you’re entitled to if you’re on a low income.

Some benefits are one-off payments to help with a particular set of circumstances like cold weather. Others, such as Income Support, top up your regular income. A careful check can make sure you’re getting everything you should.

Follow the link below for an overview of what’s available and to link to more information.

Emergency borrowing to make ends meet

In some circumstances, you might be able to get an interest-free government loan to help you make ends meet at a difficult time.

Budgeting Loans

If you’re on a low income and claiming benefits you may be able to get an interest-free Budgeting Loan from the Social Fund. This can help with things like:

  • Furniture or household equipment
  • Clothing or footwear
  • Advance rent or removal expenses for a new home
  • Travelling expenses
  • Money to help you look for or start work
  • Improving, maintaining or securing your home

From April 2013 onwards, as people are moved onto Universal Credit, Budgeting Loans will be replaced by a new system of Budgeting Advances.

If you’re not yet getting Universal Credit you can still claim Budgeting Loans.

Other loans

Be very careful of other kinds of borrowing. Things like payday loans, log book loans and doorstep lending can seem like an easy solution, but can make a bad situation worse.

They’re often a very expensive way of borrowing money, so always try to find other ways to borrow. Ask your family if they can help, or consider joining a credit union. Credit Unions are set up to offer banking services to people who would otherwise find them difficult to get. Follow the links below to find out more.

Alternatives to payday loans

This article is provided by the Money Advice Service.

Money Advice Service

Budgeting and taking control

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