I Can't Afford to Live on My Wages

Are you finding it hard to make ends meet with your pay in the UK? You’re not alone! Every month, over 170,000 people visit our website for tips on how to deal with money problems.

In this guide, we’ll show you:

How to talk to your local council and energy suppliers for lower bills.
Ways to use food banks and get free advice on money matters.
Steps to get rid of some debt.
What is seen as a low wage in the UK, and why wages are low.
How much money you need to earn to live well in the UK.

Many of us have had money problems, too. We know how it feels when costs keep going up and pay stays the same.

But don’t worry; we’re here to help you understand how to live better on your wage today.

Don’t worry, here’s what to do!

There are several debt solutions in the UK, choosing the right one for you could write off some of your unaffordable debt, but the wrong one may be expensive and drawn out.

Fill out the 5 step form to find out more.

Food Banks in the UK

A food bank is a place where people who are struggling to live off their wages or benefit payments can go to collect free food and household essentials donated by the wider community. If you cannot afford to live off your wages, you can consider using a food bank to help ease your financial stress.

Food banks have been around for over two decades. But they have been in the news a lot over the last years with many people declaring that it is an outrage that a developed UK relies on them so much to help millions of people get by – even when working a job and receiving monthly wages.

Reliance on food banks has been increasing over recent years. Even before the coronavirus pandemic, the number of families using food banks was going up. During the pandemic that has increased much further. Data reported by the UK Parliament suggests there was a 62% increase in demand for food parcels in October 2020 compared with October 2019.

Should I use a food bank?

If you were recently made redundant and cannot afford to live off your current wages, consider using a food bank. The people who run these events do so without judgment and a genuine willingness to help people who are worse off.

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What is considered a low salary in the UK?

A low salary can cause workers to feel emotional stress, leaving them to worry about their ability to put food on the table, make ends meet, and afford bills or debts each week. There is no official way to measure what is considered low pay in the UK. However, some figures have been proposed by the Department of Work and Pensions (DWP), as well as the Minimum Income Standard Project.

The DWP defines low pay as a household that earns 60%+ less than the national median salary, which is currently just over £31,000 per year.

Therefore, the DWP suggests that a low salary in the UK is when a household (which is usually more than one adult) receives around £12,400 or less. This calculation has and should be criticised. The Minimum Income Standard Project goes further and considers any household with less than £19,200 per year should be classified as low pay.

There may not be a fixed rate of pay which is classified as a low salary in the UK, but UNISON estimates that 13 million households are low-income households. One thing we have learned from the pandemic is some of the most crucial workers in our society are wrongfully receiving lower pay.

Why are wages so low in the UK?

Due to a vastly competitive job market, employers have the power to reduce wages and still receive scores of applicants for roles. An employer can underpay for overqualified professionals and get away with it due to the number of people seeking work.

The minimum wage in the UK currently sits at £10.42 per hour for an adult over 23.

However, it should also be noted that many neighbouring rich EU countries also have low wages, such as Germany and France. In Italy, there isn’t even a minimum wage and income taxation is exceptionally high to boot.

The UK is just one of many economically developed countries where wages have stagnated for years as the cost of living has simultaneously increased. This is a recipe for people to have financial problems and accumulate debt, even when they are being paid an employment income.

If you are struggling to make ends meet even when you are working, you could chat with Citizens Advice for free support and guidance.

Struggling with debt? click here

How much do you need to earn in the UK to live comfortably?

How much you need to earn in the UK to live comfortably is relative to what you believe living comfortably means.

Living comfortably may mean one thing to you and it may mean only eating organic quality food and two holidays each year to someone else.

It can be argued that to live comfortably you need to earn the UK living wage. Some people think it is a scandal that there is such a thing as a minimum wage and a living wage. Surely the two should be the same amount?

But that’s a whole other conversation. Back to the living wage…

The UK living wage is a fixed amount determined by the Living Wage Foundation. They set two living wages; one is for those residing in London and the other is for everyone else.

This is because the living wage is calculated on the actual living costs and inflation rates, and living in London is typically more expensive than in other major UK cities and towns.

What is the current living wage?

The current living wage in London is £11.95 per hour, and it is £10.50 per hour for everyone else.

If you earn this amount and work a full-time job of 35 hours per week, you would be earning around £19,700 or £17,300 per year respectively.

What to do when you can’t live on your wage

If you cannot easily live on your salary, you need to do things that will either increase your income or reduce your expenses. The latter is usually easier than the former.

Start budgeting

Budgeting and personal finance management is the first step towards managing your money effectively. Some people spend way more than they believe on morning coffees, workday lunches, and other convenience expenses without realising.

By reducing living expenses by cutting out or finding alternatives you may be able to save hundreds of pounds each month.

Contact your local council

Contact your local council and ask if you are entitled to a council tax reduction. Deductions in the normal payment rate are offered to some low earners or households that do not have two fully working adults.

You may have even paid too much council tax in the past and are eligible to claim those payments back as well.

Never purposely make a false claim for a deduction or you could be hit with costly fines.

Switch your utility suppliers

Many renters don’t bother switching their utility suppliers because they believe it is too much trouble. The truth is it’s now no trouble at all.

Thanks to the UK Government switcher service, you can call their team for free and have someone find you a better deal to save you on electricity, gas, internet, or water bills. They will even execute the switch for you so you’ll hardly have to move a muscle.

You may end up saving hundreds or thousands of pounds by switching to the cheapest supplier. Do this frequently to make your salary go further.

Cancel non-essential subscriptions and services

Cancel those luxury subscriptions and services you don’t really need. Whether it be a home grocery delivery service complete with meal plans or a magazine subscription, we all have these little luxuries in our life.

But that doesn’t mean we should be paying for them, especially if finances are tight right now. You can always re-subscribe in the future!

Research money hacks and saving tips

The internet is packed with blogs, vlogs and guides providing top tips on how you can save money. Search online now to read about the best.

MoneyNerd can support you here with our own free money-saving guide!

Ask for a pay rise or more hours!

The previous five tasks were all focusing on ways to free up some of your income, but that doesn’t mean you can’t focus on increasing your income.

You may want to try and negotiate a wage rise with your boss or ask for more hours.

If you do try to negotiate a wage increase, focus on what you bring to the company and how you help the business. Do you have special skills that make a difference? Lead with these in your negotiations to evidence why you are worth the wage rise.

Are you eligible for benefits?

If you are struggling financially, I recommend that you check to see if you can claim any other benefits or increase your current benefit claims.

Most working people who are struggling with the cost of living can apply for Universal Credit. Universal Credit eligibility has two main criteria:

You must be over 18 and younger than 66
You must have less than £16,000 in savings or investments.

There is no income threshold that stops you from being eligible for Universal Credit – you could get this benefit even if you work full-time.

There are lots of alternative benefits available to different groups of people so using a benefits calculator may be useful. If you use a benefits calculator, keep in mind your results will not be accurate if you are:

Permanent resident of a care or nursing home
A student
A prisoner
A striking worker
Living abroad
Not a British citizen.

What to do if you can’t afford to live on your own?

When our grandparents worked, they could live on their own as long as they had a full-time paying job.

Now, many people who work full-time cannot live on their own in private accommodation due to stagnated wages and the increased cost of renting an apartment or house.

This has given rise to the number of Houses of Multiple Occupancy, also known as HMOs. People often get their own bedrooms and have to share the main accommodation with other residents, such as the bathroom, kitchen and living room.

Sometimes the standards of these properties decline faster and so does the quality of living. Some rogue landlords also break the rules and don’t keep to regulations about room sizes and fire safety measures.

If your pay doesn’t stretch far enough to rent a property where you can live alone, you may have one of three options:

Search for an HMO that you will be comfortable living in
Consider living with friends or family to create some savings that will allow you to live alone
Consider moving in with a partner
Cut back on your non-essential spending to live alone.

Low pay and unpaid debt

If you receive low pay and have an existing credit card or loan debt that is getting on top of you, you have some options to get back in control of your finances.

Your first move should be to make contact with your creditors and explain your situation. They may offer a reduced payment plan that allows you to keep making your monthly payment on time without getting into (further) arrears.

Negotiating with creditors can feel scary, so make sure you are as well-informed as possible on your finances and your rights.

There may be an alternative debt solution that will work better for your circumstances.

A Debt Relief Order (DRO) is a great option if you have debt, but not enough disposable income to ever pay it off. If your DRO is successful, all creditors will be blocked from requesting payment or taking legal action for a full year. If your disposable income doesn’t increase by the end of the year, all debts can be written off.

Other debt solutions may be too costly for you now, but speaking with a debt advice charity will give you the best information about your financial options. Free financial advice can be found from any of these organisations:

Can I join a credit union with low wages?

Credit unions are an alternative to traditional building societies or banks. Unlike most high-street banks or building societies, credit unions are not-for-profit. This means that the business is not set up in a way to make a profit off its customers.

As such, credit unions have a strong willingness to make small loans. These loans can be anything from £50 to £3,000 and can be paid out on the same day.

Keep in mind that interest rates from a credit union are a little higher than some loans from high-street banks or even some credit cards. However, they are significantly cheaper than payday loans and other products that are specifically for those with bad credit or money issues.

Many credit unions also offer current accounts.

These accounts work in a similar way to a basic bank account but there will be a small fee to cover costs. The fees usually start off at £1 a week, going up to around £5 with some unions.

While there is a fee, you will not be charged for paying late or making an error with your money. But you will not get an overdraft or a chequebook with your credit union current account.

So how do you join? The first thing you need to do is work out which credit unions you can be a member of. Most credit unions have a ‘common bond’ between members. This can is usually from living in a specific area or working in a specific profession.

Who can help?

If you are struggling with your finances, I recommend that you seek advice. There are several organisations that offer free financial advice and information on the cost of living crisis.

Are you struggling with unaffordable debt?

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