If you’re struggling to stretch your bank balance from one month to the next, you aren’t alone - find out how to solve the problem once and for all.
Having enough funds to last you from one payday to the next is an ever-growing problem in the UK, with a study by Abbey suggesting that most of us run out of money around five days before payday. Finding yourself having to scrape the pennies together for the last few days of the month can be demoralising, and if it’s happening on a regular basis it spells trouble for your finances in the bigger picture.
Unfortunately, if you are having trouble getting from one payday to the next there’s unlikely to be a quick-fix solution. If you have to eke out your money towards the end of the month this is likely to be indicative of a larger problem – perhaps what you have coming into your account just isn’t enough to fund your current lifestyle, or perhaps there are ways you can learn to manage your outgoings better. Either way, the only way out of the woods is to take a good look at your finances and see how you can help yourself.
Address the issue head-on
If you find that you are regularly struggling to get from one month to the next it’s time to confront the issue rather than ignore it and hope it will go away. Besides making life difficult for you financially if you live like a king the day after payday and a pauper the day before it, this will only make you miserable and so you’ll need to look at how you can change things.
1. Draw up a budget
Writing up a budget is likely to be one of the most frequently suggested pieces of advice when it comes to sorting out your finances, and you may find doing this a chore, but it’s an invaluable first step to knowing exactly what is coming in and going out of your account each month.
If you don’t know where your money disappears to every month, writing down your spending for a week or a month can help solve that mystery right away. When you know where your money is going, you can look at where to cut back – allowing you the extra funds you need to sail through to payday.
2. Make sure your bills are paid
Remember that the most important thing each month is to make sure your essential bills are paid. That means rent or mortgage payments and utilities bills such as electricity, gas, and water. It’s imperative that you keep on top of these each month before you look at anything else as without paying these, you could put yourself at risk of losing your home or going without the absolute living essentials.
If you’re struggling so much with your finances that you can’t meet your essential bill payments, speak to your utilities provider, mortgage lender or who you pay rent to right away – don’t hide your head in the sand. It’s likely you’ll be able to come to some other arrangement for paying the bills if you explain the problem, but if you simply don’t pay, you’ll risk racking up fines and interest on your outstanding amount.
3. Speak to your lenders
If you owe money to anyone, whether that’s your credit card provider, your loan provider, or your mortgage lender, it’s crucial to speak to them and explain that you are having trouble keeping up repayments. As with bills, these repayments have to be met and if you simply forego paying them, you’re likely to receive heavy fines and penalties.
It may well be that you can come to an arrangement with your lender that will help you keep up the repayments but still have enough money to last you till payday. And if your only debts are smallish outstanding amounts on credit cards, make a point next month of clearing them on payday so that you don’t have to worry about keeping up repayments for this month, the next, and so on.
4. Tell someone about it
If you’re having trouble getting from one payday to the next, one of the best things you can do to ease the burden is talk to somebody – whether that’s family or close friends. You may not want to admit that you’re in financial hot water but talking about it will certainly ease the pressure and you may even find that a helpful relative or friend can come up with a temporary solution until you can get back on your feet.
Beware though that borrowing money from friends or family can be a potential source of friction down the line, so if you do this make sure you come to an agreement of repayment that suits you both.
Also, it’s always a good idea to have a chat with someone at a Citizens Advice Bureau if you’re struggling with your money. Advice at the Bureaux is free and confidential, and it could be the difference between tearing your hair out over how to manage your money and coming to a workable solution that makes you feel much calmer about the situation.
5. Dip into savings
If you do have any savings built up, regardless of what you have been saving up for, now is the time to dip into them if you are struggling to last from one month to the next. Dipping into a source of funds that is your own will always be a better way to go than dipping into new credit and owing it back to a lender plus interest. Once you’re back on your feet with your finances, you can always make a plan to replace any money that you took from your savings when you really needed it.
6. Look at increasing your overdraft
If you just need a little extra each month to last you through, it may be a good idea to speak to your bank and see if a small extension to your overdraft might be allowed. This may involve fees but these will be much less than what you would face in terms of penalties if you went over your overdraft limit without asking. Having a little extra breathing space in your current account could be the perfect temporary solution to help you get back on track with your monthly finances. But you'll need to make sure this solution is only temporary and make sure your balance stays above £0 the next month.
7. Only consider a loan as a last resort
Using credit to get you through the month, whether that’s on a credit card or by taking out a payday loan, is something you should only look at as a last resort after trying every other avenue and still finding yourself in desperate need of a few extra pennies to get you to payday.
Borrowing money and then owing interest on that money can quickly become very costly and is likely to only exacerbate the problem rather than be a step towards solving it. However if there really is no other choice make sure you are at least getting a loan or credit card whose interest rate is as competitive as possible, and have a plan in place to pay the money back as soon as you humanly can.
