How to Deal With Financial Uncertainty: Practical Steps to Protect Your Finances
Published 19th of May 2012·Updated 2 April 2026
Reviewed by: Reviewed for accuracy April 2026
When your income drops or costs rise sharply, you need a clear plan rather than vague reassurance. The most effective approach is to start with your essential outgoings, reduce what you can, protect against what you cannot control, and deal with any debt before it spirals. Small actions taken early make a much bigger difference than large actions taken too late.
Short Summary
Start by listing every regular outgoing and labelling each one as either essential (rent, mortgage, food, energy, travel to work) or non-essential (subscriptions, eating out, leisure). Essential bills come first, always.
If you have debts, contact your creditors before you miss a payment. Most major lenders have hardship teams and the Financial Conduct Authority requires them to treat customers in financial difficulty fairly.
Free debt advice from StepChange (0800 138 1111) or National Debtline (0808 808 4000) is available without obligation. You do not need to pay a company to help you manage debt.
Extra income from freelancing, selling unused possessions or taking on additional hours at work can make a meaningful difference to your monthly budget, even if the amounts seem small at first.
How do you work out where you stand financially?
Write down your monthly income after tax. Then list every outgoing: rent or mortgage, council tax, gas and electricity, water, food, insurance, phone, travel and any debt payments. Add them up and subtract from your income.
If the result is negative, or close to it, you need to identify what can be cut and what needs to be negotiated with creditors. If the result leaves you with a reasonable surplus, make sure that surplus is being used to build an emergency fund of at least one month's essential expenses before increasing debt repayments.
The Money Helper budget planner (moneyhelper.org.uk) is a free tool provided by the government-backed MoneyHelper service that can help you structure this exercise.
Which bills should I prioritise if money is tight?
Always pay priority bills first. The consequences of falling behind on these are more severe than falling behind on a credit card or personal loan.
| Priority bills (pay first) | Non-priority bills (address second) |
|---|---|
| Mortgage or rent | Credit card balances |
| Council tax | Personal loan payments |
| Gas and electricity | Overdraft |
| Water (though disconnection is limited for households) | Store or catalogue cards |
| Income tax and National Insurance | Payday loan balances |
| Court fines | Subscription services |
If you cannot pay a priority bill, contact the provider immediately. Energy suppliers are required to help struggling customers and many offer hardship funds or payment plans. Local authorities have council tax reduction schemes for people on low incomes.
How can I reduce my essential outgoings?
Review every essential outgoing and check whether you are on the best available deal.
Energy: contact your supplier and ask about their cheapest tariff. If you are on a standard variable rate, switching may save money depending on the current market. Check whether you qualify for the Warm Home Discount (currently £150 for eligible households).
Broadband and phone: most providers will offer a lower price if you call and ask, particularly if your contract has ended. If you are on a low income, social tariffs from providers including BT, Sky, Virgin Media and Vodafone start from around £15 per month.
Insurance: shop around at renewal. Using comparison sites such as Compare the Market or MoneySuperMarket at least three weeks before your renewal date typically produces the best quotes.
Food: the gap between the cheapest and most expensive supermarkets for identical goods is significant. Switching from Waitrose or Sainsbury's to Aldi or Lidl for staples can cut a weekly food bill by 20 to 30 per cent, according to consumer research.
Can I earn extra income during a difficult period?
Yes, and for many people this is a faster route to improving their financial position than cutting costs alone.
Freelancing is one option. Many professional skills, including writing, bookkeeping, graphic design, coding, and tutoring, can be offered on platforms such as Upwork, Fiverr or Bark.com. Even a few additional hours per week at a modest hourly rate can add hundreds of pounds to your monthly income.
Selling unused possessions through eBay, Facebook Marketplace or Vinted is quick and costs nothing to start. Electronics, clothing, furniture, and tools typically sell well.
Checking whether you are entitled to benefits or tax credits you are not currently claiming is also worth doing. Turn2us (turn2us.org.uk) has a free benefits calculator and can identify support you may not know you are entitled to, including Universal Credit, Working Tax Credit and council tax support.
How do I deal with debt when money is tight?
Contact your creditors before missing a payment. Lenders are far more willing to agree reduced payment plans when you approach them proactively. Explain your situation in writing, set out what you can afford, and ask them to freeze interest and charges.
If you have multiple debts and are unsure where to start, free debt advice services can help you prioritise and negotiate on your behalf.
- StepChange: 0800 138 1111 or stepchange.org
- National Debtline: 0808 808 4000 or nationaldebtline.org
- Citizens Advice: citizensadvice.org.uk
If you owe significant sums and cannot see a route to repaying them, formal options such as a debt management plan (DMP) or IVA may be worth considering. Both can reduce your monthly payments to an affordable level; a DMP through StepChange is free to set up and manage.
Frequently Asked Questions
What should I do first if I cannot pay my bills?
List your essential outgoings and your income, then identify the shortfall. Contact priority creditors (mortgage or rent, council tax, energy) immediately and ask about hardship plans or payment holidays. Then contact non-priority creditors such as credit card companies and explain your situation. Act early; do not wait until you have already missed payments.
Is free debt advice available in the UK?
Yes. StepChange, National Debtline and Citizens Advice all provide free, confidential debt advice. You do not need to use a fee-charging debt management company. The services offered by free charities are identical in quality to paid services, and free services mean more of your money goes towards repaying debts rather than fees.
Can I negotiate lower payments with my creditors directly?
Yes. You can contact each creditor yourself, explain your financial situation, and offer a reduced payment. This is known as an informal creditor arrangement. Lenders are not legally required to accept your offer, but many will, particularly if you present a clear budget and make a realistic offer. The FCA requires lenders to treat customers in financial difficulty fairly.
What benefits might I be entitled to if my income has fallen?
It depends on your circumstances, but possibilities include Universal Credit, Working Tax Credit (for those not on Universal Credit), council tax reduction, the Warm Home Discount, and local authority emergency funds. Use the Turn2us benefits calculator (turn2us.org.uk) to check your entitlement based on your specific situation.
Does reducing my outgoings really make enough difference?
For most households, a combination of switching energy tariffs, reducing food spend, and cutting non-essential subscriptions can free up between £150 and £400 per month. That may not solve a major debt problem on its own, but it changes what you can offer creditors and reduces the risk of falling further behind. Small, consistent savings compound over months.
When should I consider a debt management plan or IVA?
Consider a formal debt solution if your total debts exceed what you can realistically repay within a few years at your current income, or if creditors are refusing to cooperate with informal arrangements. A free debt adviser at StepChange can assess your situation and explain which options are available to you without any obligation.