Money Wellness
Close up of a woman using a calculator as she sits in front of a computer
category iconcost of living
category iconincome & budgeting
calendar icon20 Jan 2023

How to prioritise your spending

Sometimes it can be difficult to decide which bills and monthly expenses should be paid first. Especially if you’re on a tight budget. If you’re struggling to cover all your bills, here's our lowdown on how to prioritise your spending.

Categorise your spending

First things first, make a list of all your expenses and separate them into categories. How you sort them is completely up to you, but here is a rough idea of what your list should cover:

  • housing
  • utilities
  • food
  • tax (including council tax and road tax)
  • travel
  • children
  • debt
  • treats

Identify your high-priority bills

Your highest priority bills are about keeping a roof over your head. The first bills to pay each month are your rent or mortgage, and any other debts that are secured on your property.  If neglected, you could face added interest, late payment fees, legal action and possible eviction in the worst-case scenario. Bottom line: always pay these first.

Cover your essentials

Next up in your priority list are your essential costs - water, gas and/or electricity, and food.

Also in the essential category will be money that you need to spend travelling to work. This could be to tax, insure and run your car, or it could be your bus or train fare. You should always budget for these so you can get to work. If you have a loan for your car (or HP) then make sure you’ve covered that.

Your council tax should also fall into this essential category – but check if you are entitled to a discount.

..Household spending

Remember to allow enough in your budget for other household essentials – such as clothes, personal care, school dinner money, your phone, broadband costs and so on. For some of these – like mobile phone and broadband contracts - you can shop around to save money.

Don’t forget to include your TV licence in this category too.

Make unsecured debt repayments

Your lenders might not want you to think so, but unsecured loan repayments, credit card bills and so on should only be paid once you’ve set aside money for the essentials listed above. That doesn’t mean it isn't important to pay them, but it does mean that the consequences for missing them are less serious. If you can’t afford to make repayments, then don’t ignore them – speak to the lender and explain the situation or get in touch with us for free debt advice.

Make a list of your treats

If you’re struggling to balance your budget, it may be time to reassess unessential monthly expenses. Of course, everybody’s idea of what’s essential for them will be different and we certainly aren’t here to tell you what you should and shouldn’t be spending your money on - and we all need a treat now and then.  However, if when you're being honest with yourself, you realise you're spending on things you could manage without, consider dropping them, even if it’s just temporarily.

Note down your budget

Once you’ve categorised your spending, create a budget planner to clearly identify how much you have to spend - it’ll help you stay on track. To do this, simply calculate your income minus your essential outgoings. 

Avatar of Rebecca Routledge

Rebecca Routledge

A qualified journalist for over 15 years with a background in financial services. Rebecca is Money Wellness’s consumer champion, helping you improve your financial wellbeing by providing information on everything from income maximisation to budgeting and saving tips.

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