Top of main content

How to manage on a reduced income

It’s never easy making do with less money. Whether it’s temporary or permanent, managing on a reduced income can be difficult and stressful.

Here are some tips on how to take stock and make a plan to help you stay in control of your finances.

How to make a budget on a reduced income

If you find yourself on a reduced income, the best place to start is by creating a budget. This will help you clearly see what money you have regularly coming in and going out.

You can use our budget planner to help you.

If you prefer, you can do it with a pen and paper. The important thing is to get an accurate record of your monthly income and outgoings.

Remember to include the following in your outgoings:

  • rent or mortgage
  • electricity, gas and water bills
  • subscriptions, such as streaming services
  • shopping for food and clothing
  • travel costs and commuting
  • leisure spending, for example going out and holidays

Once you’ve set your budget, make sure you track your spending carefully. If you’re an HSBC customer, you can use the Balance After Bills feature in our mobile banking app. Device restrictions apply.

It shows you how much you could have left for the month ahead – once regular standing orders and Direct Debits are taken into account. This is only an indication of what you could have left. You should always try to make sure you have enough funds to pay your bills.

Review your spending

Much of your spending will probably fall into the category of essential living costs, but there may also be areas where you can cut back. One way to find out is to split your spending into 'needs' and 'wants'.

Things like your rent or mortgage and utilities bills would be ‘needs’, whereas eating out and weekends away would be ‘wants’.

That’s not to say you can’t have any little luxuries, but this is where you could potentially trim your monthly spending.

If you have debts and are worried about missing payments because of your reduced income, it’s a good idea to get in touch with the people you owe money to as soon as possible. 

If you’re an HSBC customer, you can find out where to get support here.

Look for ways to cut back

Even when it comes to ‘needs’, such as food shopping, there are ways to make your money go further.

Planning ahead before you go to the supermarket, or making a list online, can be a good way of reducing what you spend on food.

You could also look into ways of saving money on energy. Switching energy supplier is one of the most straightforward ways you might be able to do this. 

Ofgem (the Office of Gas and Electricity Markets) has a list of accredited price comparison websites to help you shop around for the best deal.

Other everyday energy saving ideas include fitting electrical devices with timers and dimmer switches, using low-energy light bulbs and getting a smart thermostat. A smart meter could help you understand exactly how much gas and electricity you’re using.

It’s worth reviewing your subscriptions and other bills too. Check if there’s anything you could get cheaper with another provider or could go without altogether. 

If you’re affected by rising living costs, we’ve put together some ideas on ways you may be able to cut back on your spending.

Make sure you’re not missing out on benefits

Government benefits and allowances worth more than £15 billion are going unclaimed every year, according to the charity entitledto.

Many families don't realise they could qualify for things like Child Tax Credit, Housing Benefit, Job Seeker’s Allowance and Council Tax Support. 

You can use our calculator to find out if you’re eligible for unclaimed benefits.

Consider ways to boost your income

One way you might be able to bring in some extra money would be to sell items you no longer need, such as clothes, books and IT equipment. If you’ve had a drastic drop in income, for example if you’ve lost your job, this might only go a small way towards making up the gap – but it could still be worth thinking about. 

There are plenty of websites where you can sell second-hand items. Some will even buy specific items from you, like old mobile phones, laptops or DVDs.

If you have a talent – whether it’s crafts, baking or something completely different – you could also think about making things to sell online or at local markets. But check first whether you need to comply with any health and safety regulations.

Where to get support if you need it

We can provide support if you’re concerned your mental health is affecting the way you manage your money.

We also have a team of specialists on hand to help you if you’re worried about your finances because you’ve lost your job.