Cost of living: making the most of your money (Scotland)
Budgeting is really difficult at the moment as many items have increased in price. This increase in the cost of living means most people will need to try and save money where they can.
You may be paying more than you need for everyday goods and services or paying for items you no longer need.
Go through your income and expenditure to gain an idea of what you are spending your money on and how much. You can complete Your budget on our website. To make sure the budget is accurate, it may be helpful for you to have a look at your bank statements.
Deficit budget sheet
A deficit budget means not having enough money to pay for essentials such as your home, food or travel to work, even before you pay any debts.
If you find that you have a deficit budget or you have started missing payments on your household bills or debts, contact us for advice.
Check your regular payments, such as direct debits, standing orders and recurring payments. Make sure that all the payments are essential and that you aren’t paying twice for items.
If you have direct debts or standing orders set up that you no longer need, you should be able to cancel them using online banking. If you can’t cancel them, or don’t have online banking, speak to your bank.
You may have given a company your credit or debit card details to set up a recurring payment, this is called a continuous payment authority. You will need to write to your card issuer asking for this payment to be stopped. You can use the sample letter on our website.
A budgeting app may help you stick to a budget and find savings. Many budgeting apps only work on smartphones, but there are some that work on computers. Budgeting apps can provide a range of tools to help you budget, including:
- allowing you to see spending from all your accounts in one place;
- splitting your payments into categories so you can see where your money goes; and
- alerting you to areas where you may be being overcharged.
Some will charge a small monthly fee, but many are free of charge. You can find out more about each budgeting app on the Which? website.
Buy now pay later
It can be tempting to purchase items through buy now pay later (BNPL) credit if you can’t afford the payment in full. BNPL services enable you to repay after 30 days, 3 months or longer depending on the item.
- Consider whether you really need the item and whether the future repayments are affordable. If you are unable to afford the payment now, it is unlikely that you’ll be able to afford it when it becomes due.
- It’s easy to become reliant BNPL. The more items you purchase, the more likely it is that you may miss a payment to an essential bill.
- Depending on the BNPL company you use and the length of the repayments, interest may be added if you are unable to make the repayment in time.
- BNPL lenders are now sharing information with credit reference agencies. This will include details of purchases, late payments and unpaid purchases. This means that missing payments will have a negative impact on your credit score.
Alternatives to BNPL
There may be other ways to get the items you need.
You may be able to get free items through the internet. Freecycle, Freeloved and Freegle. are websites where people offer various items for free. You can reply and arrange collection.
You could also consider buying the item second hand, it will usually be cheaper. Gumtree has lots of items for sale, you can search for items in your local area.
Which? has a guide to shopping second hand online, including the best websites to buy from.
A charitable grant may help if you need to purchase an essential item. See the Help from charitable grants section of our Cost of living: other organisations that could help page.
Your local council may also be able help if you need to purchase an essential item. See the Other government support section of our Cost of living: other organisations that could help page.
Save money on your food and grocery bills
Groceries are usually a big part of your household spending. The cost of an average shop has gone up a lot recently so you may be finding it difficult to afford the things you would normally buy.
Here are some ways to try and reduce your grocery spending.
- Plan your meals for the week and write a shopping list. MoneyHelper research shows that 60% of people who use a shopping list spend less in the supermarket.
- Use loyalty schemes and money-off coupons if they give you the best deal. Be 'money smart' and check the unit prices (supermarkets usually put this information on the front of the shelf). Bigger jars and multi-packs aren’t always the cheapest option.
- Supermarkets vary in the amount they charge for items. You could consider changing where you buy your groceries to try and save money. Which? has compared the prices in the UK’s biggest supermarkets, find out more on the Which? website.
- Most supermarkets reduce the cost of items when they are nearly out of date. Usually marked with a yellow label, buying these items can save you money. Ask your local supermarket what time of day these items are usually available to buy.
- Could you take food to eat at work rather than buying it at work? Making food is usually a lot cheaper than buying ready-made food at work. Factor any extra amounts you’ll need into your grocery shop.
- MoneyHelper has a guide on how to try and prepare meals on a budget.
Help with food costs
If you are struggling to afford to buy food from the supermarket, don’t be embarrassed to get food from elsewhere. Doing this could free up money to pay for other essential items. Many people get help with their food through charitable organisations that are there to help and provide valuable support. We’ve outlined some of the main sources of help below.
- There are a growing number of Local Pantries which may help you save money on your grocery shopping. You will need to become a member of your Local Pantry by paying a small weekly amount. You will then be able to choose food weekly from the pantry up to the value of £20. Each pantry has its own membership criteria so you’ll need to contact them to find out if you can join. You can out find if there is an existing Local Pantry near you by typing your postcode in the search box.
- Feeding Britain provides affordable food clubs which work in a similar way to Local Pantries. A small fee is paid each week and you’ll be able to choose up to 20 items of food.
- FoodCycle offers free hot meals to anyone who needs them. You don’t need a referral or voucher and it doesn’t matter what the reason is for needing their help. Volunteers will provide you with a meal and any support you need. You can find your closest FoodCycle location here.
- There may be other local food projects which can help. While there isn’t a website to find them, you can search on the internet by trying searches such as ‘community grocery’.
- Community fridges share surplus food free of charge. Food is usually supplied by local businesses and individuals. You can see if you have a community fridge near you on the Community Fridge website.
- Olio is a free app which helps you find food items local to you that may otherwise be thrown away. You’ll need a smart phone to be able to use Olio. Once you have downloaded the Olio app, a list of people giving away food locally will appear. You can then request and arrange collection of the food.
- Too Good To Go is a free app which puts you in touch with local business to buy food that would otherwise have been thrown away. The food parcels will be much cheaper than you’d pay for similar items at the supermarket.
- Trussell Trust food banks can give you a minimum of three days' food in an emergency. You will need to get a voucher first. You can get vouchers from various organisations such as a doctor or health visitor. Some Jobcentres, councils and local Citizens Advice also provide vouchers. You can contact your local Trussell Trust food bank to find a full list of who gives out vouchers locally. For information about your nearest food bank go to the Trussell Trust website or contact us for advice.
- There are over 1,000 independent food banks across the UK which can help. Each food bank will have its own eligibility criteria. You can find a local independent food bank through www.foodaidnetwork.org.uk.
Save money on energy costs
Many people are struggling to pay for their gas and electric as the cost of energy has risen significantly. We know that not being able to afford you energy payments can be a cause of anxiety. You’re not alone; Citizens Advice think that more than a quarter of us won’t be able to afford our energy bills this winter.
Should you cancel your direct debit?
There has been some discussion in the news and social media about customers cancelling their energy direct debit. If you can afford your monthly payment, then we suggest that you continue to pay. We only suggest cancelling your direct debit if it seems likely the direct debit will bounce or if taking the payment would cause you more financial difficulty, for example it would take you into an unauthorised overdraft.
Non-payment can result in higher bills and affect your credit file. Your energy supplier could also look at fitting a prepayment meter or, if you have a smart meter, switching it to prepayment. If you really can't afford your payment and you are going to cancel your direct debit, you should use Your budget to show your energy supplier what you can afford and pay this lower amount to them instead.
You should be able to set up a standing order which allows you to control how much you pay to your supplier. Ask your supplier to accept this payment until the situation improves and ask that no action be taken. Usually paying by direct debit allows you to be on your energy suppliers cheapest tariff so your bill may increase a little if you cancel the direct debt. Speak to your energy supplier to check if your bill will increase.
If your energy supplier isn’t helpful, call us for advice. Our Gas and Electricity arrears fact sheet also has more information on how to deal with any arrears you may have.
The cost-of-living crisis is making it difficult for many people to cover all of their essential costs, such as keeping their home warm and buying food. If you are struggling, using a warm bank may help you to free up some money.
- Warm banks are safe places provided by some councils and charitable organisations where you can spend time to keep warm without having to worry about paying the heating bill.
- Warm banks can be found in different places, such as libraries, community centres and places of worship.
- While warm banks offer somewhere to keep warm, some may offer additional support like a warm meal or advice.
The warmspaces.org website allows you to search for places near you where you can keep warm. Not all warm banks will be registered on this site, so you could also try searching on the internet using terms like ‘warm bank’ and ‘warm space’.
Should you switch supplier?
Energy costs are one of the biggest costs for most households, so it’s usually worth checking whether you can save money. However, due to the recent rise in the energy price cap, it is unlikely you will find any cheaper deals at the moment. The price cap and the current problems with switching supplier are explained on the Money Saving Expert website.
If you have a fixed deal, do a comparison before your agreement ends. Plan ahead and add a note to do this in your diary. If you want to stay with your existing supplier, you may still be able to save money. Contact your supplier and ask if you are on their cheapest deal.
You can find a list of energy price comparison websites on Ofgem’s website.
Here are some other ways to try and reduce your energy costs.
- Paying for your energy by fixed monthly direct debit can be a cheaper option. This is where you pay an amount each month based on what your supplier thinks you will use.
- Smart meters are a type of gas and electricity meter that can send automatic meter readings to your supplier. Smart meters also come with an in-home display, which is a device that shows you how much energy you are using. The information from an in-home display may help you to identify how you can reduce your energy usage to save money. The Smart Energy GB website has more information about smart meters and their benefits.
- If you have a prepayment meter, you are probably paying more for your energy than you would on a credit meter. See whether your supplier will let you change to a credit meter. For more information, see the Decide if prepayment is right for you page of the Citizens Advice Scotland website. If you can't access the internet, you can call you can call consumeradvice.scot on 0808 164 6000.
- Home Energy Scotland offer free, impartial advice to help you stay warm at home, save energy and also help you access financial support to make your home more efficient and cheaper to heat.
Save money on clothing
Can you reduce how much you spend on clothing? Don’t be tempted to remove this figure from your budget completely as you are likely to need some clothing or footwear in the long run.
- It is usually cheaper to buy second hand clothes. You can get second hand clothes through a variety of places such as charity shops, car boot sales and eBay. There are also apps such as Vinted and Depop that you can use to buy second hand clothes. You’ll need a smart phone for these apps.
- You may be able to get free clothing through Freecycle or Freegle. People offer various items, including clothes through these websites. You can reply and arrange collection.
- If you have children, you may be able get help with the cost of school uniforms. Money Saving expert has more information on who is eligible and how to apply.
Save money on water costs
Water rates are usually included in your council tax payment. If you have a water meter, then payments are paid to Scottish Water and are not included in council tax payments.
Scottish Water gives advice on how to use less water.
Save money on phone and broadband costs
Whether it’s a landline or a mobile contract, phone costs vary between providers. Broadband costs also differ depending on the type of contract or package you have. You could be paying a lot more for a service than you need to.
Check if you can get a better deal elsewhere. Ofcom has a list of approved comparison sites that you can use. See the Price comparison page on Ofcom's website. If you can't access the internet, call Ofcom on 0300 123 3333.
Here are some other ways to try and reduce your phone and broadband costs.
- Many broadband providers have a ‘social tariff’ that limits the cost of phone or broadband for people who receive certain benefits. Ofcom has links to these providers and includes the cost, speed and eligibility criteria for each one. It is really worth checking if you are eligible for a social tariff scheme.
- See if you can save money by buying your broadband and landline in a package from the same provider. This is called a ‘bundle’. Ofcom says that you could save at least £15 a month by buying your broadband and landline services as a bundle.
- Pay by direct debit. It’s usually the cheapest way to pay.
- Check your mobile phone contract. Are you paying for a service that you do not need, such as voicemail or call barring?
- Avoid using directory enquiries if you can. If you do, dial the number they give you instead of agreeing for them to transfer you.
Save money on travel costs
If you drive, you’ll have noticed the cost of filling up your vehicle has gone up a lot recently. Travel costs can make up a lot of your monthly spend. There are ways to try and reduce your spending whether you drive or use public transport.
- If your car insurance is due for renewal, it’s likely that you will find a cheaper policy by switching your provider. You can compare car insurance quotes through Uswitch.
- Buy cheaper fuel if possible. Petrolprices.com compares prices in over 800 forecourts.
- Sharing lifts to work will help reduce the amount you spend on fuel. www.liftshare.com can help you find people in your local area that are looking to share a lift.
- Can you travel by public transport or cycle instead of using a car? If you use public transport, is it cheaper if you buy a weekly or monthly travel pass or a season ticket.
- If you need a bike, you may be able to get one at a reduced cost through the Cycle to Work scheme.
- If you travel by train, check if you would be eligible for a Railcard, you can save up to a third on the cost of your journey.
- Buying train tickets in advance will usually be cheaper.
- Your child may be entitled to free school transport if they live a certain distance away from their school or you have a low income. More information can be found on the mygov.scot website.
Where to find more money saving tips
The websites below have more money savings tips you may find useful.
- www.moneysavingexpert.com has a cost of living crisis survival guide.
- www.moneyhelper.org.uk has a guide to help save money on household bills.
- www.which.co.uk covers the best ways to save money.
- www.gingerbread.org.uk has tips on making ends meet.
Other ways to make the most of your money
- If you are on the minimum wage, check you are being paid the right amount. This usually goes up every year and is linked to your age. Go to www.gov.uk for more information.
- Everyone is entitled to a personal tax allowance, which is the amount you can earn before you pay income tax. There are also other tax allowances and reliefs which depend on your age and personal circumstances. Check you are getting all your allowances. Go to www.gov.uk and search for ‘Income Tax rates and Personal Allowances’. You can ask for tax allowances to be backdated for up to four years. Check your position by calling HM Revenue & Customs general enquiries on 0300 200 3300.
- If you are on a low income you may be able to get help through the NHS Low Income Scheme. The scheme can help with prescriptions, dental, eye care and more.
- If you smoke, can you reduce your smoking costs? Your GP may be able to help with this. The NHS has a Quit Smoking website and mobile app that can help.
- Do you have a spare room in your home that you could rent out to a lodger? The Rent a Room Scheme allows you to earn up to a certain amount without paying tax. You will need to check how this income will affect any benefits you are claiming and that your landlord or mortgage lender agrees to this. Go to www.gov.uk and search for ‘Rent a room in your home’ or contact us for advice.
- Make sure that any grown-up children or other adults that live with you are paying enough towards the household expenses.