How To Survive In London On A Low Income

Living on a low income isn’t easy for anyone. That’s especially true if you’re living in London, the most expensive city in the country. When the cost of housing and childcare in London is at an all time high, you might be left asking yourself the question: how to live in London on a low income?

As of 2012, a huge 41% of Londoners had a household income of less than £20,000, and this salary is considered to be below the Minimum Income Standard. Presumably, this is still the case (if not worse) in 2023. It’s very hard to meet this Minimum Income Standard because of the sky high costs of housing and childcare in the Greater London area.

So if you’re on a low budget in London, how can you survive? What help is there available? And what tools are there that you can use?

A low income in London is very different depending on if you’re in your first job, you’re a single person, or you have a low income with a family to think about. We cover all these eventualities in this article.

We’ve rounded up our top tips for living in London on a low income, as well as a section on benefits for low income houses at the end of the article. Let’s dive in.

Low income as a young person

If you’re just starting out in you career in London, you may find yourself with a low income. If you are interning, or starting out in a low paid industry, you may well be struggling with the high average cost of living in London.

Reduce outgoings

There are lots of ways to save money in London, but your best approach is to first focus on reducing your largest expenses. That is most likely to be your rent, utilities, bills and travel. You may wish to rent in a cheaper area of London, reduce your bills and any subscriptions, switch utilities provider, and focus on cheap London travel.

The cost of groceries all over the UK is at an all time high, and is likely to be another large monthly expense, even as a single person in London. To reduce the cost of your groceries check out our top tips in this article on the average cost of groceries in London.

Increase income

We are limited as to how much we can cut back on our spending. However, we do have somewhat more scope when it comes to increasing our income. Whether that’s asking for a pay rise (if you’re very early in a role you may wish to hold out for a year or so), or it’s starting a side hustle to start making extra money in London.

Other easy ways of increasing your income include selling your old stuff on eBay, Vinted, or Facebook Marketplace, current account switching for bonuses (these often reach £200+ in cash for switching) MoneySavingExpert has a great list of available offers.

Budget

Budgeting might sound boring, but actually, a budget is a plan for your money. It means that you can make room for the things you want to spend money on.

It means you might spend less on convenience food, so you can spend more on socialising with friends. Or it might mean that you spend less on clothing and beauty, so you can spend more on travel. You get to decide the rules!

You can use a classic budgeting spreadsheet to keep track of your budget. Or, you could open a bank account with a challenger bank like Monzo, where you can set a monthly budget, and it automatically tracks your spending and tells you if you’re on track for the month.

Another great free tool is Snoop– a free budgeting app that shows all of your accounts in one place (including your credit cards). You can also set a budget within this app, and it will track it for you.

Save an emergency fund

An ’emergency fund’ is a small pot of money that you save up over time to cover yourself in the event of an emergency. That could be emergency dental work, needing to pay for a train to see your family in an emergency, or to help you if you lose your job.

Although when you’re living on a low income, saving can seem impossible, £10 here or there each month can really help build up a pot of money over time, so that you don’t need to rely on credit in an emergency.

Make sure that your emergency fund is saved in a high interest, instant access savings account, so that you’re making a good amount of interest on your savings. My favourite high interest account that I use and love is Chip– you can open the account within the app quickly and it’s super easy to manage.

Manage and avoid debt

If you’re living on a low income and you’re also managing debt repayments, this can be really challenging. When your expenses are already high, adding a monthly debt payment can feel like the straw that broke the camel’s back.

If you are already in debt and struggling to manage your debt, you could consider moving your debt to a 0% interest credit card if this is an option for you. Most 0% credit cards will only be 0% interest for a set amount of time, so if you choose this option, it’s important that you are confident that you can pay off the credit card within that timeframe.

Check out the website debtcamel for impartial advice on what to do when it comes to managing your debts and what options you have.

Alternatively, if you feel that your debt is totally unmanageable, you may wish to consult a debt charity for free advice on your situation.

Debt charities

StepChange

Citizens Advice

Christians Against Poverty (you don’t have to be a Christian to get support)

Low income with a family

If you have a low income and you have a family to support, that is of course a very different situation to managing a low income as a young or single person.

Your income is spread over multiple persons, needs, and expenses. It may include childcare, uniforms for the children, travel and more. The question of how to live in London on a low income becomes more complex.

Although some of the tips above around reducing your expenses, budgeting, increasing income and avoiding debt may apply, the reality is that it is much more challenging to do this when you are managing the costs of a family and a family home.

This article from Citizens Advice has some great information on the help available for families living on a low income. Including income support, work and childcare tax credits, housing benefit and more.

Marriage Allowance

If you and your partner are married, and one of you doesn’t work, or earns less than £12,570, you could be eligible for marriage allowance. This allows you to transfer £1,260 of your personal allowance to your husband, wife or civil partner. It reduces their tax by up to £252 in the tax year.

To benefit as a couple, you (as the lower earner) must normally have an income below your Personal Allowance – this is usually £12,570.

Benefits for low income households

If you’re living in a low income household, it’s important to seek out the help that is available to you. There are several different schemes that might be applicable to your situation. Don’t hesitate to apply to them, or call a charity like Citizens Advice to get more clarity on your options.

The government website has a big list of all benefits available for those on a low income, which you can see here. There is also a benefits calculator on the government website which you can use to find out what you might be eligible for. Below we delve into a few of the most well known available benefits.

Universal credit

Universal credit is highly publicised in the media, so it’s likely you’ve already heard of this benefit if you’re on a low income in London.

It’s a monthly payment to help with living costs. You may be able to get it if you’re on a low income, out of work or you cannot work.

Help with heating

The warm home discount scheme is available for the year 2023/2024. You be eligible to get £150 off your electricity bill for winter 2023 to 2024 under the Warm Home Discount Scheme.

The discount is directly applied to your electricity bill between early October 2023 and 31 March 2024. You should automatically receive a letter in the post by early January 2024. If you do not get a letter and you think you’re eligible, you must contact the Warm Home Discount Scheme before 29 February 2024.

Roundup: extra tips on how to live in London on a low income

Use cashback websites

Topcashback

Use the Topcashback app or browser extension to make money back on absolutely everything that you buy online (including online grocery shopping!). I have received more than £200 back in cashback over the last two years.

Cashback works on the basis that whenever you click through to a retailer website, the retailer will pay he cashback site a small commission (also known as an affiliate payment) for referring you to their website. The cashback site will keep some of that commission for themselves, and then pass on the rest to you!

Quidco

Quidco works in the same way as Topcashback. However, they have different retailers listed on the platform, and sometimes will offer a different rate of cashback. I would recommend using both Topcashback and Quidco to make the most out of getting cashback on your online spending. On average, Quidco members earn back £280 per year!

Cheddar

Cheddar is an instant cashback website. The amazing thing about Cheddar is that you earn cashback automatically as you shop. You simply connect your card to the app and shop as normal. There are several food and grocery stores on the app, so it’s super easy to start getting automatic cashback on your shopping. Use code THRIFTY to sign up here.

Use price comparison websites

Price comparison websites are great for comparing utility providers, insurance providers, and also for day to day shopping. Moneysupermarket, Compare The Market and Go Compare are probably the most well known.

If you frequently shop at Amazon, you may wish to compare prices on camelcamelcamel which is an Amazon-specific price tracking website. It displays historic Amazon prices, so you’ll know for sure if you’ve really got a good price or not!

Use budgeting apps

Budgeting apps are always a great idea because you can track your expenses and your budget automatically. It takes a lot of the effort and guesswork out of budgeting.

Snoop is my recommended free budgeting app of choice, and you can connect your accounts so that you have a snapshot overview of your finances. It’s brilliant.

Switch to a high interest savings account

A high interest saving account is a must, especially while interest rates are high. It’s a passive way to increase your savings, and it’s totally free to do. My favourite high interest, instant access savings account is Chip. They have generous rates and it’s super easy to set up through their app.

FAQ

How do you qualify for affordable housing in London?

London Living Rent is an affordable housing scheme for middle-income Londoners. The scheme provides rented homes with stable tenancies, with rents based on a third of local household incomes.

Across London, the average monthly rent for a 2-bedroom London Living Rent home is around £1,077 a month. To be eligible for the scheme you must live or work in London, have a maximum household income of £60k, not own a residential home, be unable to buy a home in your local area, have a formal tenancy or or live in an informal arrangement with family or friends as a result of struggling with housing costs.

Can you live in London on £20k per year?

If I am being completely honest, no. I don’t think it’s possible to live in London on £20k per year and maintain an acceptable standard of living. If you are able to stay with a relative and pay less rent, it might be possible.

However with all the other costs associated with living in London, I don’t think it is possible to rent privately and pay for your living costs in London on a £20k salary.

Where to live in London on a budget?

When you’re thinking of how to live in London on a low income- the best thing you can do is reduce your rent. The cheapest areas to live in London are places like Ealing, Greenwich, Sutton, Lewisham, Enfield, Harrow, Hillingdon, Bromley, Barking and Croydon.

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