Knowing what you can afford
Before you borrow, it’s important to consider what you can reasonably afford to repay.
Budgeting basics
Start by making a list of your earnings and everything you spend in any given month, highlighting where your money is going, and where you could make savings. Could you make your money work harder, helping you to achieve your financial goals?
It could help you to plan your spending and keep closer track of what’s coming in and going out:
- A budget isn’t just for people trying to manage debt.
- The aim isn't to restrict your freedom but, instead, to help you make better spending choices.
- Making the most of your current earnings could be easier than you’d expect.
Your budget should also account for things you pay for less frequently, but perhaps once or twice each year. These could include things like:
- Vehicle expenses, such as road tax, insurance renewals, tyres, servicing or an annual MOT.
- Seasonal essentials, such as winter coats and footwear, or summer clothing.
- Insurance policies you pay annually, such as car, medical or home cover.
- Annual passes, such as train, local attraction or cinema tickets.
- Celebrations and gifts for birthdays, festivals and feast days.
Finally, there are the things you may want to save up for:
- Holiday costs, including travel insurance, transport, accommodation, food and entertainment.
- Unexpected costs, such as emergency home or car repairs.
- Non-essentials, like treats, meals out and luxury goods.
- Life events, such as a wedding or significant birthday.
- Future needs, like university fees and housing.
Based on your income and your outgoings, are you living beneath, within or above your means? Knowing where you stand, could help you to make more informed decisions in future.
Save The Change®
If you’re using a Lloyds Bank debit card, you could register for Save the Change®. When you spend, we’ll automatically round up the amount to the nearest pound, transferring the difference to an eligible Lloyds Bank savings account, helping you to save without really thinking about it.
Review your budget regularly
There are no rules here – check your budget every day, week or month if you prefer – but it’s worth a review any time:
- Your income increases or decreases.
- Your regular costs increase or decrease.
- You’re planning a large purchase or expense.
- You’ve paid off a debt – how will you put any extra money to good use?
Planning to apply for credit?
Lenders and other service providers will usually complete a credit check as part of their decision-making process. In addition to information from your credit record, they may also consider:
Where next?
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