Planning on moving to London? Or perhaps you already live here and want to learn how to live on a budget in London? Either way, here are some brilliant ideas about how you can live your best life in London, on less.
Learn how you can manage your money so that you can spend more on the things you love, and less on the things you don’t love.
Living in London on a budget doesn’t have to be difficult- in fact, with the right knowledge and tools, living on a budget in London can be achieved with relative ease.
How to Live On a Budget in London
Lower Your Fixed Expenses
Fixed expenses like your rent, bills, insurance and transport are the big unavoidable expenses that can often seem overwhelmed in London. After all, London is famous for its sky high housing costs. However, it’s possible to shop around to make sure that you find the most affordable options available to you.
There are a lot of variables which you will need to take into consideration to find the most affordable housing option for you. First, think about who you are going to live with- are you looking to live in a shared house? With a partner? Or perhaps in a 1 bedroom flat?
I’ve lived in all three of these options. First, I rented a room in a shared house, then I rented a room in a shared flat WITH my partner, and now I rent a one bedroom flat with my partner. Guess which option was cheapest?
It was by far the cheapest option to live in a shared flat with my partner. We split the cost of the room and only paid £425 a month in rent. This flat was in zone 2, so you could definitely use this method elsewhere in London and pay even less in rent. The key to this option is to find a flat, then go on SpareRoom to find some housemates (if you don’t already know friends who want to move at the same time as you!)
The next cheapest option is to rent a one bedroom flat with my partner- who knew!? We live in a fairly affluent area of London, but managed to find a cheap flat in the area which worked out as less than we each paid for our individual house shares when we first moved to London!
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Key things to consider:
- Sharing- sharing a room with your partner, whilst sharing with others seriously cuts your rent and bills- even if you live this way for a year, you are likely to save a lot of money
- Location- consider moving somewhere a little further from the centre, and do the maths to see if your commuting costs are worth the move.
- Negotiate- we knocked £50 a month off our rent by signing a two year lease, which saved us £1,200. Always negotiate, you never know how keen someone might be to get a new tenant.
Utilities & Bills
Utilities and bills are another unavoidable cost which can be lower when shared with other flatmates. Be sure to shop around for the best deal on your energy bills and your internet- many people don’t do this and end up paying over the odds for these services. Just check your tenancy agreement to ensure that the landlord is happy for you to change your provider.
And your phone bill? Given that most of us will also have a phone bill to consider, a brilliant way that I have found for reducing this is by using airtime rewards. Airtime rewards is an app that you link your bank cards to and get cashback off purchases at Waitrose, Wilko, Topshop and many other retailers. All of this cashback then goes towards the cost of your phone bill! If you use my referral code 9F333XJG, we will both get 50p.
Key things to consider:
- Use a price comparison site to get the best deal on your utilities
- Shop around for the best deal on your phone contract and use airtime rewards to get money off.
Insurance is something that I used to dismiss as ‘for grown ups’ until I saw a flat in the block opposite to mine go up in smoke with 3 fire engines called- seriously! I took out a contents insurance policy shortly after. This comes under an essential bill for me, it’s up to you whether you also consider it to be essential.
I also have a life insurance policy which gives me peace of mind that if something happened to me, I have a safety net and would not have to struggle with trying to continue to work if I was having treatment for a serious illness. My work do not offer a sickness pay package which is why I made this decision.
If you also think that insurance is an important part of your bills, make sure you again shop around for the best deals.
Key things to consider:
- Use price comparison sites to get the best insurance deals
- Use a cashback website to get money back on your insurance. I received £35 cashback on my contents insurance earlier this year- it’s free money! I recommend TopCashback.
- Do not allow your insurance policies to auto-renew. Often the renewal payments will be significantly higher than the payments you made in the first year of your policy.
Transport & Travel
Commuting and travel costs are also pretty much unavoidable in London too. To minimise the costs of commuting, I would consider the payoff between moving within walking distance to your place of work, and the cost of travel.
I can walk to work in 40 minutes, and it saves me over £2,500 per year. This is one of the reasons that we moved to the area that we live in, because the commuting costs are super low. My partner also had a 10 minute commute on foot for a year!
It’s not always possible if your place of work is in central London, but it’s definitely something worth considering if the financial payoff is great.
If you do regularly use public transport, and perhaps even get trains out of London at the weekend, it could be worth getting a rail card if you are between the ages of 16-30. A rail card saves you 1/3 on all off peak train travel (even the tube!) so it’s worth considering. At £30 per year, you can make the money back in a return trip from London to Manchester!
Check out this full guide to railcards which even has a handy savings calculator.
Key things to consider:
- Location- could you move somewhere close to your place of work to bring down the cost of commuting
- Rail card- could buying a £30 rail card save you hundreds of pounds over the course of a year?
Set a Budget Plan
If you want to live in London on a budget, a great place to start is by drawing up a budget plan. This will help you to manage your money, and get your finances to a place that you are happy with.
The budgeting method that you choose will depend on your attitude to money- I’d suggest reading my guides on each of the methods (linked above) to determine which budgeting method will be most suitable for you.
When I first arrived in London, my preferred budgeting approach was the zero based budget. I tracked all of my expenses, worked out where I could cut back, and created a budget on the basis that there would be ‘zero’ leftover after my salary had been allocated to various different categories.
A budget doesn’t have to be restrictive- you can still allocate money to ‘fun’ and spend money on the things you love. However if you do want to pay off debt quickly or want to save money on the side or save up for a holiday- there might be times when you squeeze your budget to allow for higher amounts to be paid to debt or savings.
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Key things to consider:
- What budgeting method is best for you?
- Track your expenses to find out exactly how you are spending your money right now
- Make sure that your budget is achievable, if you set your expectations too high, it sets you up to fail. Allow yourself some money for fun stuff!
Make the Most of Free Things to Do In London
The best things in life are free. And the best things in London are too. London has a crazy amount of free things to do- no matter what the season.
Check out my guide to 100 Free Things to do in London to get some inspiration. By cutting down the costs of entertainment and socialising, you can still experience the best things that London has to offer, but have the peace of mind that your bank balance isn’t going into overdrive.
And if you want to hear about even more free things to do in London, take a look at my guide to free museums in London which takes you through all of the free museums and galleries that London has to offer- there are tons of them!
And if you’re brand new to London? Check out my guide to the best free walking tours in London to get to know your new city a little bit better.
Making Extra Money in London
One way add more money to your budget is of course to make some extra money. If you are really struggling to make ends meet, or want to reach your financial goals faster, you could start side hustling for some extra money each month- take a look at my 20 ways to make extra money in London post to give you some ideas to start with, or even my 50 side hustle ideas for 2020 post.
I even have a dedicated FREE online course that you can take to help you figure out what side hustle is best for you. It’s a 7 day email course, which also gives you access to the exclusive Thrifty Londoner Facebook group where you can connect with likeminded individuals, you can sign up below if you’d like to take the course.
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Learning to live on a budget in London takes time, and a little trial and error. You won’t always stick to your budget, but it’s important not to beat yourself up about it. You can and should readjust your budget regularly to account for changes in income, changes to your lifestyle and changes to your fixed expenses.
Don’t set a budget that is unattainable, instead, keep it achievable and try to frame it as a guide to how you can spend more money on what you love. Or, a guide to achieving your overall financial goal- be it clearing debt, buying your first home or going on a holiday of a lifetime.
Keep your goals in mind to remind you of why you are budgeting, and the temptation to get your second takeaway of the week will diminish, I promise.