Key points
- List all income, including benefits
- List essential costs first
- Cover priority debts next
- Share what's left fairly between other creditors
- Review your budget every month
Step 1: Add up your income
Include wages after tax, benefits, pensions, maintenance and any regular help from family. Use monthly figures.
Step 2: List essential spending
Rent or mortgage, council tax, energy, water, food, travel, phone and internet, childcare and insurance. Use bank statements to get realistic figures.
Step 3: Pay priority debts
Add any arrears payments for priority debts such as rent, council tax and energy.
Step 4: Work out what's left
Take your spending from your income. What's left can go towards non-priority debts like cards and loans, shared fairly between them.
Step 5: Look for savings and extra income
- Check you're on the best energy and phone deals.
- Ask about social tariffs for broadband and water.
- Run a benefits check.
Try our debt-to-income calculator to see how much of your pay goes on debt.
Frequently asked questions
What should come first in a budget?
Essential living costs, then priority debts like rent, council tax and energy.
What if my budget shows I can't afford my debts?
That's a sign to get debt advice. A solution may be able to reduce or freeze what you pay.
Do creditors accept budgets?
Many creditors accept offers based on a standard financial statement, which shows your full income and spending.
Free debt advice is available
You can get free, impartial debt advice from not-for-profit organisations through MoneyHelper's debt advice locator.
Sources and further reading
This guide is general information, not advice, and was correct when last updated. Rules and limits can change. Speak to a regulated adviser about your own situation.