Every debt solution starts with a budget. It shows creditors what you can afford, and it shows you whether your debts are manageable. Debt advisers in the UK use a format called the Standard Financial Statement (SFS), and you can follow the same approach.
The short answer
- Start with your monthly take-home income from all sources.
- List essential spending: housing, council tax, energy, food, travel, phone.
- Include irregular costs like clothing, repairs and birthdays as a monthly amount.
- Pay priority debts first.
- What’s left is your disposable income for non-priority creditors.
Step 1: Income
Include wages after tax, benefits, pensions, child maintenance received and contributions from others in your household. Use monthly figures. If your pay varies, use an average.
Step 2: Essential spending
- Rent or mortgage, council tax, gas, electricity and water
- Food and household items
- Travel to work, car insurance and fuel
- Phone and internet
- Childcare and school costs
- Insurance, prescriptions and pets
The SFS uses “trigger figures” to judge whether spending is reasonable for your household size. Creditors may question costs well above these.
Step 3: Irregular costs
Work out yearly costs, such as car servicing, clothing and Christmas, and divide by 12. Leaving these out is one of the main reasons budgets fail.
Step 4: Priority debts
Add any arrears payments on priority debts, such as council tax or rent arrears.
Step 5: What's left
Subtract everything from your income. That’s what you can offer non-priority creditors. If it’s too little to clear your debts in a reasonable time, look at options such as a DMP, IVA or DRO. Our debt calculator can help you see where you stand.
Common questions
What is a Standard Financial Statement?
It’s the budget format used by most UK debt advisers and accepted by creditors. It sets out your income, spending and what you can afford.
How much should I spend on food in a debt budget?
It depends on your household. The SFS has guideline figures based on household size, and spending within them is usually accepted.
Should I include savings in my budget?
A small amount for emergencies is sensible. Creditors may question large regular savings while you’re paying them reduced amounts.
Getting help
You don’t have to deal with debt on your own. Free, impartial advice is available from MoneyHelper, StepChange and National Debtline. If you want to talk through whether a formal solution such as an IVA could be suitable, you can also get in touch with us.