Budgeting on a Single Income: Making the Most of What You Have

Budgeting on a single income, whether you live alone or with a partner, can be difficult to adjust to. If you’re finding the transition to a single income household a challenge, we’re here to help you establish a budget, set realistic goals, adjust shopping habits and also provide some savings tips to help you work towards your long term financial goals.

Physically Write Down Your Budget

First up, it’s so important that you physically write down your budget. Budgeting very rarely works when you’re quite vague with it, for example just saying “we’ll spend no more than £200 on food shops this month” but then not having it written down anywhere, or not tracking your spending, will mean you’re very unlikely to stick to it. Effective budgeting is all about being precise and holding yourself accountable to the purchases.

So, you should start by looking at your income and then how much you currently spend each month. Many banking apps provide a spending overview, where you can look at how much you’re spending on different categories like groceries, bills, entertainment, etc. You can also look at how much you’re spending with particular merchants. This will help you to look at where you might be overspending and where you can cut back.

From here, it’s time to set up a budget. On a spreadsheet, write down all of your different outgoings on each row, with some examples being:

• Essential outgoings: rent, debt repayments, council tax, water, electric, insurance, phone contracts, internet.
• Flexible outgoings: house savings, holiday savings, gym memberships, subscriptions, food shopping, going out, public transport.

After this, write down how much you’re currently spending next to them, and if your outgoings exceed your income, then you need to make cut backs. You can also evaluate where you can make cuts anyway, for example changing energy providers or swapping to a cheaper supermarket. You can then put this additional money towards other goals, like savings.

It’s key to make sure you set realistic goals as you’ll be much more likely to stick to it. Rather than getting to the end of the month and realising you’ve overspent, make sure to keep track of your spending throughout the month by making a note whenever you’re spending.

Adjust Your Shopping Habits

Next, you may need to adjust some of your shopping habits to help fit into your new budget. There are plenty of different things that you can do to reduce your spending, so here’s some inspiration:

• Check all of your outgoings and make sure that you’re not being charged for any outdated subscriptions.
• Install a smart metre and timer for your electricity to reduce your bills
• Change to a cheaper supermarket.
• Use price comparison sites to find the best deals for your bill, insurance and phone providers.
• Pre-plan your weekly shop to only buy what you need (this also reduces food waste)
• Carefully consider your clothing purchases, trying to aim for things that you can wear often with lots of different outfits.
• Always look for discount codes when shopping online, from buying loungewear through to furniture and everything in between
• Check if your bank offers cashback options.
• Always ask yourself when you will use whatever you’re buying, if you’ll feel guilty later for making the purchase, where it fits into your budget and would you still want to buy it in 24 hours or a week’s time.
• Unsubscribe from retail emails if it makes you tempted to buy
• Reduce the amount you eat and drink out, including takeaway drinks, and entertain more at home.
• Eat less meat in your diet and more budget friendly recipes with beans to reduce your weekly food shop cost.

Everyone’s habits will be different, so we’d recommend sitting down, looking at where the majority of your outgoings are and then cutting back can make a huge difference to making the most of your single income.

Automate Your Savings

Last but not least, when you’re budgeting on a single income, it can be easier to dip into savings when things get a bit tight. So, we’d recommend that you automate your savings at the beginning of the month with a direct debit, so it leaves your account like any other bill would and hopefully the saying “out of sight, out of mind” will take effect.

You may not be able to save a significant amount each month, but the small contributions add up long term, so even if you set up a direct debit for £25 a month, it will be worth it.

Final Thoughts

It may take some adjusting when budgeting on a single income, however with some planning and tracking, you can really transform your personal finances. Set yourself a realistic budget, adjust your spending habits slightly to fit into it and automate your savings to help you get on the right track.

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