As the cost of living crisis continues, most of us have had to review our spending habits to try and make ends meet.
When money is tight and there isn’t enough to pay for everything, including the essentials, then it can sometimes feel overwhelming.
We’ve gathered a few pointers help you feel more in control, and if things are getting really tight there are organisations that can help.
Set a realistic budget
To help cut costs and get control of your finances, a good starting point is to understand your budget.
You need to work out what you have coming in and going out each month. The results will show you what you have left each month to settle any debts or save.
For example, your essential outgoings are likely to include rent or mortgage payments, travel costs, food, electricity and gas and more.
A budgeting tool can help you calculate your finances, and they also offer advice on where you could cut costs. These are free to use online, such as this one from the Money Advice Service.
Also, the Money Advice Service has helpful advice on budgeting if you don’t have a steady income, which may be the case if you’re self-employed, on a zero hour contract or claiming Universal Credit.
Deal with utility bills
An energy crisis is upon us and according to recent research from the University of York, more than two-thirds of families in the UK will be in fuel poverty by January 20231.
One way to try and reduce our energy usage, could be to rethink how we use it. Martin Lewis, suggests ‘Heat the human, not the home’, one way start to reduce our heating bills.
We could apply this to cooking or washing as well, e.g. batch cook meals in advance, so you have several meals to freeze, instead of one.
Smart meters2 are also a useful tool to help monitor your energy usage, you should be able to request one directly from your energy supplier, although there are some exclusions to this. Find out more about exclusions
If you’re struggling to pay your gas or electric bills, which most of will be, then contact your suppliers to let them know. They are obliged to help you come to a solution.
This is far better than missing payments, which will affect your credit score, which could make it hard to get credit in future.
Similarly, if you can’t pay your water bill, speak to your supplier. Most water companies offer ways to help customers who talk to them about problems.
Find your local food bank
There has a been a huge increase in food banks recently, and they are there to help when it’s really needed. There are different types available, so check your local area. Sometimes you’ll need to be referred by someone such as a GP or social worker[1], or you may find there is an independent, local food bank which can help you without a referral – just contact them directly and they’ll be able to help.
Deal with arrears
If your debts are starting to pile up, then it’s important to prioritize what you pay back first, namely mortgage or rent arrears[2].
If you’re unable to pay your rent, it’s important to get in touch with your landlord to let them know the situation. You may be able to come to a payment arrangement that’ll help you to pay off your arrears.
If you’re struggling to pay your mortgage, then there are government schemes that offer help.
You may also be eligible for housing benefit.
Pay with cash
We all know credit cards can easily land you in debt. It can help to leave them at home when you go shopping. Instead, try taking out enough cash for your weekly shopping.
Some bank accounts allow you to put money aside for essentials in separate sub-accounts.
If you do use a credit card, set up a Direct Debit for the full monthly balance, or for as much as you can afford to repay.
If you’re falling behind with credit card payments, then contact your credit card provider to explain and tell them how much you can afford to pay each month. But remember that your priority should be to deal with any arrears first.
Check what benefits you’re entitled to
There are many benefits available, so it’s worth checking that you’re not missing out. If you're missing out on a benefit you're entitled to then you're not getting money that could make a real difference to your income.
Check whether you're eligible for any benefits on the UK government website.
Further resources
Moneysavingexpert an invaluable source for further advice and resources to help manage and save money.
Turn2us is a charitable organisation that can help you gain access to welfare benefits, charitable grants and other financial help.
[1] https://www.theguardian.com/society/2022/aug/17/two-thirds-of-uk-families-could-be-in-fuel-poverty-by-january-research-finds
[2] https://www.moneysavingexpert.com/utilities/smart-meters
[3] https://www.citizensadvice.org.uk/benefits/help-if-on-a-low-income/using-a-food-bank/.
https://www.citizensadvice.org.uk/debt-and-money/budgeting/budgeting/get-help-with-bills/
