Three steps for living on a budget

How to survive living on a budget

Whether we're looking to cover housing, food or travel costs, many of us are living on a tight budget to make our money last the month.

SEE ALSO: What to think about once you've got a budget

SEE ALSO: 10 tricks to cut your grocery bill in half - without coupons

This situation can be made worse if you don't have a regular income because you're working part-time or are self-employed.

So we took a look at the three steps to managing your money when living on a budget.

1. Make a budget

The first step is to sit down and work out how much money you have coming in and how much money is going out.

Total up all your income including wages from work and any benefits you are entitled to.

Next, work out how much is going out. This should include your housing costs, travel, energy, phone bill, internet and food. Don't forget to include any outstanding debt repayments like loans and credit cards.

Subtract your outgoings from your income and you have your disposable income for the week or month.

Creating and sticking to a budget really is one of the most effective ways to stay on top of your finances and know how much you can afford to spend. Or even better, work out how much money you can save.

2. Cut your costs

No matter what income you are on, you can always cut costs.

Switching your gas and electricity supplier could save you up to £300 a year, particularly if you've been on your current deal for more than 12 months.

But switching isn't just about energy. Internet, mobile phone, insurance – switching to a cheaper deal for any of these is an effective and easy way to cut costs.

You also need to cut back on things you don't need or use. For example, that morning cup of coffee, or an online streaming service you don't use.

And be on the lookout for savings. Whether you're shopping for food, clothes or anything else, make sure you shop around to get the best price.

3. Maximise your income

Look for extra ways to make money. If you've got any unwanted or unused clutter around the house, think about selling it online to make a little extra money.

If you're on a low income you might also be entitled to benefits such as Universal Credit, tax credits and housing benefit. You might also be able to get a council tax reduction.

This article is provided by the Money Advice Service.

21 PHOTOS
Vintage money-saving tips
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Vintage money-saving tips
Back then there was no choice, because the mass-produced microwaveable meal was just a glint in a marketing guru's eye, but now, cooking from scratch can save substantial sums.
The older generation learned that there were meat-free days of the week to save money, and that if you had meat you''d stretch mince with breadcrumbs, or buy cheaper joints and use every scrap.
Perfect fruit and vegetables and top-of-the-range brands are a new phenomenon. Buy generic non-branded food and fruit and vegetables in whatever size and shape is most affordable

Nowadays we rush around the supermarket grabbing things we like the look of - with little idea of what we're going to do with it. Making a list and thinking about what you buy can save you thousands of pounds over the course of a year.

There's no such thing as 'left-overs' there's just the ingredients for tomorrow's dinner. The remains of the meat can be stir-fried the next day, the vegetables blended into  soup, and the potatoes saved for bubble and squeak.

Try an experiment and eliminate everything from your life with the word disposable in the title. Not only will you save money, but your bin will take far longer to fill too.

Before you bin anything, think twice about whether you can give it a second life. Think carefully, does your granny have her tried and tested tips that she has a habit of mentioning, for instance, washing out freezer bags? If you mock, you're missing a trick and wasting money and resources.
Cutting out draughts and insulating your home properly can cut 10% off your heating bill.
Back in the 1940s when no-one had central heating, people got used to wearing another layer at home. Try lowering your thermostat gradually, and only stop when those around you start to notice - you'll be surprised how much you can save.
If you save your washing and dish washing until you have a full load every time you'll save energy and save money.
Over the generations we have been sucked into believing the hype. In the days when adverts were few-and-far between, we managed without many of the things we consider essential nowadays. Re-consider what you buy, and why. Without advertising, would you buy any of it?
It's always cheaper to save in advance and plan a purchase than to rush in and borrow - which could end up costing you hundreds of pounds more in interest.
Older generations typically withdraw what they can afford to spend in cash and then leave their debit card at home or deep in their wallets. This has the advantage that they don't tend to reach for a debit or credit card and spend more than they can afford.
Because the older generations couldn't borrow their way out of trouble, they tended to plan more. Give your family a financial safety and a nest egg for the future.
Back when there were only a finite number of items of clothing to go around in a neighbourhood, people borrowed from each other for special occasions. Nowadays swapping and sharing can save substantial sums
Back in the 1940s when no-one had central heating, people got used to wearing another layer at home. Try lowering your thermostat gradually, and only stop when those around you start to notice - you'll be surprised how much you can save.
There was a time not so long ago when no-one could actually remember anyone who had actually bought a bike. They were passed through the siblings, then across family and friends networks, so that decades later, children were still learning to ride a bike for free. Of course it helps if you buy something gender-neutral, then you can hand it down, and reap the benefits as others hand expensive toys on to you.
In previous generations, neighbours would think nothing of asking each other to babysit, walk their dog, or to borrow a ladder. Nowadays we pay handsomely for babysitters and dog walkers, and each have an expensive ladder gathering dust in the shed.
The army of people who come to our homes to do odd jobs is a new phenomenon for all but the very wealthy. You may well have the skills required to complete these jobs, so get stuck in.

Ditch going out for dinner or browsing round the shops for taking a walk, visiting the beach with a picnic, or holding a family DVD night.

Nowadays we're constantly striving for a bigger TV, a flashier car and a better kitchen. Generations ago people never considered that they would ever be able to afford bigger, flashier and better, so they got on with the business of enjoying what they had.
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