Examples of necessary expenses
- Housing costs, including rent and mortgage.
- Household bills: gas, electricity, water, broadband, and council tax.
- Groceries.
- Transport, whether that’s fuel for your car or train tickets for your commute to work.
- Credit/ debt repayments; for example, loans and credit cards.
- Childcare.
- Vital pet care, such as food and veterinary treatment.
- Prescriptions and medication.
Your necessary expenses could change on a month-to-month basis. For example, your pet might need a vet visit one month, or over the summer, your gas and electricity bills may be lower.
What doesn’t count as a necessary expense?
Any expense that’s not listed in the section above would generally not count as a necessary expense. A couple of examples of non-essential expenses are:
- Hair/ beauty appointments.
- Holidays.
- Hobbies.
- Leisure and social activities.
- Streaming and entertainment services.
- Non-essential pet expenses, such as new toys and accessories to replace perfectly good, older ones.
The fine line between essential and non-essential outgoings
While things like socialising and leisure activities are not considered essential expenses, some things are arguably essential when it comes to your mental health and wellbeing.
Sadly, feeling restricted by finances is a common complaint, with 61% of UK adults saying that they have cut back on non-essential spending in response to the cost-of-living crisis.
Life isn’t meant to be lived miserably. Below, we’ve listed some free and low-cost ways to enjoy life on a budget.
- Suggest free social activities with friends, such as a walk at the local nature reserve, a visit to an art gallery or museum, or host a movie or games night at home.
- Cost-cutting standing in the way of your fitness goals? Fortunately, there are many ways to get fit for free. Running, walking, and home workouts are just a few examples.
- Cancelling hair appointments to save money? Check to see whether your local salons offer discounted prices on cuts and colours if booked in with an apprentice.
- In need of new clothes, shoes, or even household items? Shop second-hand. Remember, second-hand doesn’t always mean compromised quality; many pre-loved apps and sites allow you to filter results to display only new items that still have tags attached. Try Vinted and eBay.
If you’re on a low income, it might be a good idea to check your benefits entitlement.
Even if you don’t think you qualify for any benefits, there’s no harm in checking your entitlement; you can do this using the free Turn2Us Benefits Calculator.
Saving money: is this an essential or non-essential expense?
Some people prefer to include a set amount of money for savings in their ‘necessary outgoings’ list each month.
Whether you consider saving an essential monthly outgoing is really down to you and your financial situation.
Saving money is a choice, not a rule, and while it’s always a good idea to save money as and when you can, you should never prioritise saving over paying for your essential costs. If it’s a choice between putting money into savings or paying for a food shop, then the food shop should absolutely be a priority.
How much money should I save per month?
The amount of money you save each month – if any – is completely down to you.
However much you decide to save should be affordable for you and, as discussed, not leave you out of pocket when covering the cost of your essential outgoings.
Interested in trying out a saving strategy that works for you and your finances? Check out our guide to different savings challenges to make your money go further.
How to create a monthly budget
Setting a monthly budget may sound like a daunting task, but it’s actually really simple and could go a long way in helping you notice spending habits and look for ways to reduce your outgoings.
Below, we’ve provided an illustrative example of how a monthly budget plan might look.
| Monthly income after tax and deductions | £2,000 |
| Essential outgoings |
|
| Other essential outgoings this month only |
|
| Overall cost of essential outgoings | £1,582 |
| Disposable income | £418 |
Quick-fire jargon busters
- Monthly income: your monthly income is the total amount of money you are guaranteed to have coming in each month and includes wages as well as any benefits or side-hustle earnings.
- Essential outgoings: your essential outgoings are the things you need to pay for every month, such as housing and bills.
- Disposable income: this is the amount of money you have leftover once you’ve covered the cost of your essential outgoings. Your disposable income can be saved or spent however you choose.
What to do in a financial emergency
From broken boilers and a car that’s failed its MOT, none of us is immune to financial emergencies, and it doesn’t matter how carefully we budget; an unexpected cost can really threaten our financial planning.
This is just one reason why it’s a good idea to try to save money whenever you’re able to. Having a pot put away for a rainy day could be a real lifesaver in case of an unbudgeted expense.
If you don’t have access to savings and your disposable income doesn’t stretch quite far enough to cover the emergency expense, you might wonder whether a loan could help.
CashLady: search for a short-term, personal loan between £100 and £10,000
CashLady is a credit broker, and the UK-based, Financial Conduct Authority (FCA) authorised and regulated direct lenders on our panel offer a range of loans with repayment terms from 3 to 60 months, depending on the amount you apply to borrow.
If you do decide to search for a loan, please carefully consider how your monthly repayments, which will include interest, will affect your budget. You should never apply for money that you don’t need or can’t afford to repay.
What to do if you can’t afford your essential costs
If you’re struggling to pay your bills or mortgage, please get in touch with your provider as soon as you can. Unfortunately, money struggles are very common, and providers are trained to deal with such situations with empathy and compassion. They will be able to discuss any options that could be available to help you navigate this difficult period.
This could include offering you a payment holiday or temporarily reducing the amount of money you pay each month.
If you’re short of money and unable to buy food or pay for your rent, please visit this page on charity StepChange’s website for urgent support.
Get free financial advice
Worried about money? Please don’t keep your concerns to yourself. You can seek support from a number of UK charities and organisations offering free, impartial financial advice: StepChange, MoneyHelper, Citizens Advice, and National Debtline.
The information contained in this article is meant as a general guide and does not constitute nor should be taken as financial advice.
February 2026.