Trapped in a negative budget? You’re not alone - here’s what you can do

An estimated four million people in England and Wales are stuck in a negative budget, according to Citizens Advice.

The charity also estimates that in 2024/25, around 320,000 people were just £50 away from the red, and that number could rise to 580,000 by 2025/26, as the cost of living continues to climb.

If you're a private renter or a single parent, you're more likely to be feeling the squeeze.

What is a negative budget?

If your income doesn’t cover your essential living costs, like rent, food and bills, you’ve got a negative budget. In other words, you’re spending more than you’re earning.

What to do if you’re in a negative budget?

Know which bills to pay first

When money’s tight, it’s tempting to pay whoever shouts the loudest, but some bills matter more than others. These are known as priority bills.

They include:

• mortgage or rent
• gas and electricity
• overpaid benefits
• secured loans
• child support and maintenance
• hire purchase for essential items e.g. a car you need for work
• council tax
• court fines
• TV licence

Not paying these can lead to serious consequences, like losing your home, having the bailiffs knocking at your door, or having your energy cut off.

Non-priority bills include:

• credit cards
• store cards
• overdrafts
• hire purchase for non-essential items
• unsecured loans
• water bills
• loans from friends and family

Catch up on priority bills first

If you’re behind on priority bills like rent, energy or council tax, contact your lender to try and agree an arrangement to pay back what you owe. If you can’t pay everyone, offer token payments to non-priority lenders while you focus on the essentials.

Try to boost your income

Check if you’re missing out on benefits

Every year, billions of pounds in benefits go unclaimed. Try our benefits calculator to check you’re getting everything you’re entitled to. You may be able to get help even if you’re working.

Are others paying their fair share?

If you’re co-parenting, make sure the other parent is contributing their fair share. Find you what to do if you’re struggling to get enough financial support from the other parent of your child.

Are you being paid properly?

Check your payslip to make sure you’re being paid the right amount and you’re getting at least the minimum wage.

If you’re being paid less than the minimum wage or you think your employer is taking money they shouldn’t from your pay, then get advice.

Look into grants

Many charities offer grants to help with essentials like:

• energy bills
• household appliances
• emergencies

Some energy providers also offer support funds. And your local council may help through the household support fund.

Check with your local council to find out what’s available.

Cut costs where you can

Go through your budget to see if there are any areas where you could cut back, such as:

• cancelling unused subscriptions
• switching providers to save on broadband or mobile
• returning non-essential items bought on finance

Use our budget calculator to help take control of your finances.

Need more help?

Check out our guide on what to do if you’re in a negative budget.