Living on 80% of Your Usual Income

The Coronavirus crisis has impacted everyone in some way or another. For some it has meant making small changes to their usual routines, whilst for others the restrictions have been devastating. Whether you have had your pay cut, been furloughed, unable to work or lost your job entirely, we have created this guide to help you financially survive over the next few months.


With significantly less money than you’re usually used to living on, you may find yourself struggling to afford things the same way you did before. This means you’ll need to take some new steps to either adjust your current budget or maybe even start budgeting if you haven’t before.

A budget is essentially a plan of how much money you expect to come in and go out over a certain time period. The goal of a budget is to make sure you have enough money coming in to cover your expenses going out.

How to Create a Budget Plan in 3 Simple Steps

What you’ll need:

In this guide, we’ll be demonstrating how to create a monthly budget, but you can easily alter this to be weekly/daily if you’d prefer.

1. Calculate how much money is coming in

In order to make a budget, you’ll need to know exactly how much money you’ll have each month and taking into account any changes that may have been made as a result of the pandemic

If you have been furloughed

If you have been furloughed by your employer, then 80% of your regular wages (up to £2,500 a month before tax) will be paid for by the government as part of the Coronavirus Job Retention Scheme. This money will be sent to you via your employer and some may even top the remaining 20% up. You will still receive a payslip form your employer and will still have to pay taxes.

To work out your income, take a look at your most recent payslip since you became furloughed. The net pay figure will indicate how much of your income you will actually receive once taxes have been deducted.

If your pay has been cut

If your employer has reduced your salary, you can work out what your new income is by taking a look at your most recent payslip since your pay was cut. The net pay figure will indicate how much of your income you will actually receive once taxes have been deducted.

If you are self employed and have lost some or all of your earnings

If you are self employed and have lost some or all of your income, you may be eligible for the Self Employment Income Support Scheme (SEISS). This scheme was originally set up in April of 2020 and was due to end in July of the same year, however, there have been a number of extensions to the scheme since as a result of continued government restrictions and the strain they have had on the self employed.

On 24 September the Government announced an extension to the SEISS that would be introduced in November which could cover the six months up to the end of April 2021. The SEISS Grant Extension is made in two taxable grants with the first to cover November to January and the second to cover February to April. The grants are calculated on the basis of 80% of average trading profits, up to a maximum of £7,500.

Applications for the third SEISS grant opened on 29 November 2020 and are to close on 29 January 2021. Find out if you are eligible here.

If you have lost your job or on a low income

If you have lost your job as a result of the coronavirus crisis, or if you are struggling to survive on a low income, you may wish to apply for Universal Credit. This is usually a monthly payment from the government which aims to cover your living costs if you are unemployed or on a lower income.

If you are eligible for Universal Credit, you will usually receive your first payment five weeks after you submitted your claim. Once you have received your first payment, you can work out how much you have coming in to create your budget.

Find out if you’re eligible for Universal Credit and apply here.

If you have other sources of income, make sure to include them as part of your budget. These include:

2. Calculate your expenses

Once you have worked out how much money is coming in, you need to work out how much money is going out each month. Once again, it is important to consider any changes that may have occurred during the coronavirus crisis. For example, you may find that you are spending less money than you did previously now that you cannot go out for regular meals or day trips. Alternatively, you may find that your spending has increased as you have subscribed to streaming services such as Netflix and Disney+ to keep the family entertained during lockdown.

To accurately calculate your spending during coronavirus, make sure to use recent information and data from your bank statements or online banking app instead of making rough estimates. If you do have to make some guesses, always round up instead of down as it’s better to have a little money spare than not enough.

Categorise your expenses into ‘Needs’ and ‘Wants’

Your ‘Needs’ category should contain expenses that MUST be covered each month such as:

If you are currently paying off any debts, you should aim to prioritise them as paying certain debts first can allow you to save on interest and avoid penalties or charges. It’s also important to remember any expenses you pay in regular intervals such as quarterly or annually as these may be due to be paid in the next month. Factor these payments into the relevant month’s expenses and be sure to set aside money for them.

Your ‘Wants’ category should contain expenses that aren’t necessary and are more for pleasure or enjoyment such as:

3. Subtract your expenses from your income

Compare your income and expenses by taking away your total monthly expenses from your total monthly income.



Monthly Income

Furlough Pay - £1,350

Bonus - £50


Monthly Expenses


Rent - £950

Council tax £50

Energy Bill £40

Water Bill £13

Basic Shop - £170



Takeaways - £48

Netflix - £6.00

Spotify - £10.00

WeighWatchers - £11




Balance Your Budget

If once you have subtracted your total expenses from your total income you are left with a positive number then this is a fantastic start. However, you may wish to increase this number so you can put more towards your savings or so you have a financial safety net should anything go wrong.

If you’re left with a negative number then you need to reduce the amount you’re spending or find a way of increasing your income. This is called ‘balancing your budget’.


How to reduce your spending

Ideally, you will be able to make your difference positive by making small changes to your spending in the ‘wants’ category. For example, you could decide that from now on you will only have one takeaway a month instead of four, or you could decide to stick to just one subscription service/club membership instead of three. (Just make sure to look out for any hefty early cancellation fees!)

If you have cut back on all of your ‘wants’ and are still struggling to cover the payments in your ‘needs’ category, it may be worth speaking with your creditor or provider to see if they would be willing to offer you a discount or a holiday on the payments.

For example, you can get a mortgage payment holiday if you are a homeowner or you can apply for a holiday for buy-to-let landlords if you are a landlord whose tenants have been financially affected by coronavirus and are struggling to pay rent. Read more about this here.

How to increase your income

Alternatively, you could try to balance your budget by increasing the money that is coming in. Of course, during these trying times, increasing your income is much easier said than done, but there are ways of safely bringing in more money such as by selling old clothes or finding a second job. You could also see if you are eligible for any government benefits such as Universal Credit or the Self Employment Income Support Scheme.

Trying to live off less money than you’re used to can be tricky but you can gain control over your money and prepare for the future by budgeting. For more help, visit our tips and advice page or get in touch with us by calling 012625 801007.

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