A drop in income

Your income might fall for many reasons, for example cutting back on work to look after the new baby, redundancy or short-time working, splitting up with your partner, or illness.

Whatever the reason, the first step to tackling a drop in income is to draw up a budget so you know exactly where you stand. See Budgeting for the cost of children or use the online Budget calculator on our Moneymadeclear website.

The tips on this page may help you think about ways to boost your income or cut your spending.

Boosting your income

• Check you are claiming all the state help and tax credits you are eligible for. Your local Jobcentre Plus (Jobs and Benefits Office in Northern Ireland) or Citizens Advice Bureau can help you do this (see Useful contacts).
• Does your fall in income mean you can claim a tax rebate? Check with your tax office.
• If you are working, could you do extra overtime?
• Could you start your own business? If you have been unemployed for six months, your local Jobcentre Plus (Jobs and Benefits Office in Northern Ireland) can help you set up, and may provide funding for the first few months.
• Would you consider taking in a lodger? You can receive up to £4,250 a year tax free in rent from someone who shares your home.

Ways to save money

• Do you need to buy everything new for your baby? Children grow out of things so fast that there are lots of good quality second-hand items available. Check charity shops, car boot sales, eBay, local papers and local noticeboards. But remember to check the safety features if you’re buying a buggy, pram or car seat. Alternatively, swap clothing or other goods with friends or family.
• Check whether you could cut your fuel bills by switching supplier. For a list on online fuel comparison sites, go to the Consumer Focus website (see Useful contacts).
• You may be able to save on phone, credit-card and other bills too. Again, comparison websites can help you compare deals.
• Could you cut back on non-essential spending, for example having friends round instead of going out, taking sandwiches instead of buying lunch? The Cut-back calculator on our What about money website will help you see where you can make savings simply by cutting back on a few things.

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