How to budget your income to ease cost of living pressures
A strict ‘financial diet’ can make you feel more in control of your money
Many of us are concerned about the rising cost of food and fuel. At Citizens Advice Portsmouth, we are here to help you.
Jane contacted us recently about her concerns on how the rise in the cost of living will impact her family.
She said: ‘I am a single parent, with two young children. I am already struggling to stay on top of my household bills; my weekly food shop isn’t stretching as far anymore and now my energy bill is going up too. What can I do to stop my finances spiralling out of control?’
We advised Jane that it’s always worth checking if there are benefits you don’t know about that you’re eligible for, including support with your energy costs and living costs. On the Citizens Advice website there’s a benefits calculator, advice on how to reduce living costs and information on other ways to increase your income. There’s also emergency support that you may have access to, such as food bank vouchers or fuel vouchers. You could contact your local council to see if they could also offer support.
If you’re struggling to stay on top of bills, it’s really important to understand what money you have coming in and going out each month. Citizens Advice has a budgeting tool on its website that can help with this. The first step you should take when trying to reduce your cost of living, is to get on a strict personal budget or ‘financial diet’. If you want to actually see the benefits of budgeting take effect in your finances, you need to make it a daily habit, like getting in the habit of going to the gym every day and learning to avoid unhealthy foods. A budget can help you feel more in control of your finances and make it easier to save money for your goals. Here are a few steps you can take to create your budget:
Calculate your net income - your take-home pay
Track your spending tracking and categorising your expenses can help you determine what you are spending the most money on and where it might be easiest to save.
Set realistic goals
Short-term goals should take around one to three years to achieve and might include things like setting up an emergency fund or paying down credit card debt.
Make a plan - consider setting specific spending limits
If you’re already behind on bills, prioritise paying your rent or mortgage, plus energy bills and Council Tax first. Not paying these bills has the most serious consequences. You should speak to the person or company you owe money to, to see if they can help you repay your bills sustainably.
We know that times are incredibly tough but Citizens Advice Portsmouth can help you find a way forward.