Managing Bills on a Low Income: Practical Steps
When money is tight, every pound matters. This guide explains how to prioritise bills, find help, and avoid the debt traps that make things worse.
TL;DR: Managing Bills on a Low Income: Practical Steps. First move: do quick no-cost wins first, then prioritise upgrades with the fastest payback.
When your income barely covers the essentials, standard budgeting advice is pretty useless. You can’t save your way out of not having enough money. But there are ways to stretch what you’ve got and, crucially, avoid the traps that turn tight situations into real crises.
Prioritise Your Bills
Not all bills carry the same weight. Some have serious consequences if you fall behind, others less so. Pay the priority ones first because the consequences are real.
Priority bills (pay these first):
| Bill | Consequence of Non-Payment |
|---|---|
| Rent/mortgage | Eviction, repossession |
| Council tax | Bailiffs, imprisonment (rare but possible) |
| Energy | Debt builds, possible prepayment meter conversion |
| Water | Debt builds (cannot be disconnected) |
| Child maintenance | Court enforcement |
| TV licence | Fine, criminal record |
| Court fines | Bailiffs, imprisonment |
Non-priority bills (still important but lower consequences):
- Credit cards
- Personal loans
- Catalogues
- Phone contracts
- Subscriptions
Non-priority creditors can chase you and wreck your credit, but they can’t evict you or throw you in prison.
If you can’t pay everything, sort priority bills first. Ring non-priority creditors, explain, and ask about reduced payments.
Reducing Bills
Energy
- Switch to cheapest available tariff
- Apply for Warm Home Discount (£150 off)
- Check eligibility for social tariffs
- Use less energy (heating down 1°C saves ~£100/year)
- Contact supplier if struggling - they must offer payment plans
Water
- Apply for social tariff (50%+ off for eligible households)
- Get a meter if you’re a small household
- Contact company for payment plans
Council Tax
- Apply for Council Tax Reduction (up to 100% off)
- Claim single person discount if applicable (25% off)
- Contact council to arrange payment plan if behind
Broadband
- Switch to social tariff (£10-15/month if on benefits)
- Reduce package to cheaper speed tier
- Cancel if necessary (use library WiFi or mobile data)
Other
- Cancel subscriptions you don’t use
- Negotiate with phone provider for cheaper contract
- Check insurance prices (sometimes cheaper deals exist)
Getting Help
Free Debt Advice
If you’re struggling with debt, get free advice:
- StepChange - Free debt charity, online and phone
- Citizens Advice - Local and national services
- National Debtline - Phone advice service
- Money Helper - Government-backed guidance
These services can:
- Help you understand your options
- Negotiate with creditors on your behalf
- Set up formal debt solutions (DRO, IVA, bankruptcy)
- Give you breathing space from creditors
Don’t pay for debt advice. Legitimate help is free.
Hardship Funds
Various emergency funds exist:
- Local Welfare Assistance - Council-run emergency help
- Supplier hardship funds - Energy and water companies have them
- Charity grants - Turn2us lists what’s available
- Food banks - For immediate food needs
These won’t solve ongoing problems but can bridge gaps during crisis.
Benefits Check
You might be entitled to more than you’re receiving:
- Use a benefits calculator (Turn2us, Entitledto)
- Takes 10-15 minutes to check
- Millions of pounds go unclaimed yearly
Common missed benefits:
- Pension Credit (for over state pension age)
- Council Tax Reduction
- Universal Credit top-ups
- Disability benefits (PIP, ESA)
- Carer’s Allowance
Avoiding Debt Traps
When money is short, borrowing seems like a solution. Often it makes things worse.
High-Interest Credit to Avoid
| Product | Why It’s Dangerous |
|---|---|
| Payday loans | Extremely high interest, debt spirals quickly |
| Doorstep lenders | Very high interest, aggressive collection |
| Rent-to-own | Pay 3-4x the item’s value over time |
| Catalogue credit | High interest on everyday items |
| High-cost credit cards | Interest compounds fast |
Borrowing to pay bills means next month you have the bill plus the loan repayment. Unless your income increases, you’re worse off.
Better Alternatives
- Payment plans with the company you owe (often interest-free)
- Budgeting loans from DWP (interest-free, repaid from benefits)
- Credit unions (much lower interest than commercial lenders)
- Local welfare assistance (grants, not loans)
- Charity support
Prioritising Debts
If you have multiple debts:
- Priority debts first (rent, council tax, energy)
- Then secured debts (car finance if you need the car)
- Then unsecured debts (credit cards, loans)
Paying minimum on credit cards while falling behind on rent puts your home at risk. Keep priorities straight.
Building Stability
Getting through a tight period is about survival, but building some stability helps prevent the next crisis:
Small buffer - Even £50 saved turns a small emergency into a manageable problem rather than a crisis.
Standing orders to savings - Even £5 a week adds up. Set it to transfer the day after payday so you don’t see it as spendable.
Annual bill sinking fund - Put aside money each month for yearly costs (insurance, car tax) so they don’t hit as a shock.
Review regularly - Check bills quarterly for switching opportunities. Check benefits annually for changes.
When to Get Help
Get advice if:
- You’re borrowing to pay essential bills
- You’re choosing between heating and eating
- Bailiffs or eviction are threatened
- You’re using credit to cover basics
- You can’t see a way to pay what you owe
Early advice prevents problems escalating. Debt advisers have seen everything and won’t judge. Their job is to help you find a way forward.
Free advice: StepChange 0800 138 1111, Citizens Advice citizensadvice.org.uk, National Debtline 0808 808 4000