Many people have had to adjust to a fall in income at some point in their lives, either because their work has reduced, or they have been made redundant.

Our analysis of government data shows that there were nearly 200,000 men aged 50 and older out of work between September and November 2021 – an increase of 24% in two years – and 50% of them were unemployed for at least a year. The proportion of both men and women unemployed for at least 12 months between September and November last year stood at 41%, up from 34% in the same period in 2019.

While it’s easy to feel overwhelmed if you’re out of work or your income has fallen, it’s important to take those first few steps to help you get back in control, so you know where you stand and can make a plan to move forward. Below are some useful tips to help manage your budget and handle a reduced income.

Make a list of your essential outgoings

Forget any extra costs for now and start by making a list of your essential monthly outgoings, namely the bills that could affect the roof over your head if you don’t pay them. These include; things like your mortgage or rent, council tax, and utility bills. You must also work out how much you need to cover other costs such as insurance, food and clothing. Prioritising these expenses first within your budget can help reduce money-related stress.

If you think keeping to a strict budget is going to be an issue for you, it might be an idea to set up a separate account dedicated to your essential outgoings. Separating this money from the rest of your income can help you fight the temptation to use it for other non-essential costs. You should be able to find advice on how to handle accounts online via your bank’s website, or by calling its customer service helpline.

Highlight areas where you could make cutbacks

Once you have written down your essential outgoings, it’s time to start identifying some of the areas you could cut back on. While the good news is that lockdown may have naturally reduced your non-essential outgoings such as eating out and retail shopping, you’ll likely be able to find a few more areas you could save on. This might mean putting things like magazine or music and entertainment subscriptions on temporary hold, or something as simple as removing luxury or non-essential items from your weekly shopping list.

Ask yourself, for example, whether you could swap pricey brands in your weekly shop for the supermarkets own brands, or even homemade alternatives? Are you currently on the best deal for your mobile phone and internet network? More often than not, if you’re out of contract on your mobile phone or broadband – you will be overpaying. If you’re not sure, you can compare mobile phone and sim-only deals using our Mobile Phone comparison tool or find the best deals on home phone and broadband in your local area here.

While cutting back on certain areas may be hard, in other cases this exercise may help you identify new habits that you’d like to maintain, for example food shop patterns that can make a huge difference to your weekly shopping bills. For example, making a clear food menu plan each week and shopping list in advance can help you stick to a budget and cut back on unnecessary expenses. You’re much more likely to spend less if you go shopping with a clear idea of what you will be buying instead of deciding as you go along.

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Think about the products you usually go for and consider whether these could be replaced with supermarket own brands. Studies have shown these can have a significant impact on reducing shopping bills. According to research by website Love Money, shoppers could shave around £10 off their weekly shop without having to compromise on ingredients or quality. For example, opting for supermarket own porridge oats over big brands could save shoppers up to £3.25 per kilo. Spread those weekly cut backs over a month, or a year, and you could end up saving a significant amount of money. You can find other ways to reduce your food bills in our guide 16 ways to save money on your food bills.

To complement your new shopping habits you could consider purchasing one of the many recipe books available that are specifically tailored to cooking on a budget, such as those from the Eat Well For Less collection available here on Amazon. Little lifestyle changes like these can be a great help when navigating a fall in income.

You can explore other ways to reduce your outgoings in our article How to save money – 18 ways to cut costs.

If you have an irregular income

A varying or unreliable income can make budgeting difficult and it can be tempting to plan ahead on the presumption that each month will be a good one. However, to avoid overspending or running into issues if you have a worse month, it is safest to budget based on your lowest monthly income. This way you’ll always be prepared to cover essential costs each month and can enjoy an extra boost of income if you have a better month.

Seasonal income changes may be particularly noticeable if you are self-employed as different companies fare differently throughout different periods. For example, while some industries such as retail may thrive during the Christmas period, it can be a difficult time for others with less income coming in.

On a more personal note, it is also useful to make note of when your outgoings may naturally increase throughout the year, factoring in Christmas, birthdays, and dates when annual bills such as car insurance are due, so that you can plan your expenses in advance. Sign up for our Free Insurance Renewal Reminder and we’ll email you when you should start looking for a new deal.

If you’re still struggling...

If, after making a budget, you find your essential outgoings still exceed your income, look at ways you might be able to boost the amount you have coming in each month, or whether you might be able to pause some of your outgoings while you get back on track.

Check if you qualify for any financial support If your income has fallen, you may be eligible for financial help from the government. To find out which benefits you may be entitled to, and how to claim, visit the government’s benefits calculator.

For example, you may be eligible to apply for ‘new style’ Jobseekers Allowance to help cover costs if you are out of work and actively searching for a job. Applications for contribution-based or income-based Jobseeker’s Allowance are no longer available, however if you previously applied you’ll continue to receive payments until your claim ends.

Jobseeker’s Allowance payments are usually made fortnightly, and you could receive up to £77 a week.

If you have a disability or suffer from a health condition that affects the amount of work you can do, you may be able to apply for Employment and Support Allowance. This allowance may also be available to those unable to work due to circumstances tied to coronavirus such as self-isolation or shielding.

From this allowance, you will receive money to cover living costs and help get back into work if you are able to.

To find out whether you’re eligible visit the website, or you could read our article Unemployment benefits: what are you entitled to?

You might also qualify for Universal Credit, a benefit paid to those who are unable to work or need some help meeting living costs due to being on a low income. Find out if you’re eligible for Universal Credit here.

The amount of Universal Credit you’ll receive will be calculated based on your individual circumstances. For example if you are single and aged 25 or above you can claim a maximum amount of £334.91 while if you’re a couple aged 25 or over, the maximum is £525.75 a month (in the 2022/23 tax year).

Get a free no-obligation pension consultation

Pension advice can help you get the most out of your retirement income, helping you on your way to a secure financial future. If you have more than £75k in pension savings, take the first step by arranging a free, no-obligation initial consultation with an expert from Aviva Financial Advice. Any recommendations advisers make will be for products from Aviva and other carefully selected partners. There’s no obligation, but if they feel you’d benefit from paid financial advice, they’ll go over how that works and the charges involved. Capital at risk.

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Bear in mind that different earning patterns can affect your Universal Credit payments, especially if you are paid on a more frequent basis than once a month.Let’s take a look at some examples:

  • If you get paid every four weeks, you may receive two pay cheques in the same month.
  • If you are paid every two weeks, there will be some months where you are paid three times.
  • And, if you are paid on a weekly basis, you could receive pay up to five times in one month.

This could also happen if you are paid monthly and receive an early payment because the payday falls on a weekend or a public holiday. Furthermore, if your payday and assessment date are close together it could mean you earn two full pay cheques within the same assessment period. If this happens, you might exceed the earnings threshold and receive no Universal Credit payment, or a reduced payment, for the following month.

If you live in Scotland or Northern Ireland and receive payments fortnightly, both payments will be equally reduced if you are still eligible for Universal Credit. You won’t need to make a new claim but you will need to reapply for Universal Credit by logging into your account and confirming your details to start the claim again. A useful tip is to look out for months this might happen and plan in advance. You can learn more about how Universal Credit works in our article Everything you need to know about Universal Credit.

Get help with your bills

Don’t suffer in silence if you can’t pay your bills. Talk to the companies you owe money to as soon as possible and let them know you’re having problems paying. They might be able to arrange for you to pause your payments for a bit, or make more affordable repayments each month temporarily.

If you’re worried about managing your debts, our article How to take control of your debts might help.