Got a pension question? Our help is impartial and free to use. Get in touch online or over the phone on 0800 011 3797

Can you afford to borrow money?

Before you borrow money, make sure you can afford the monthly repayments on top of your current outgoings. Knowing exactly what money is coming in and going out each month will help you work out whether you can afford to borrow.

Draw up a budget

arrow icon

The only way to work out whether you can afford to take on new borrowing is to put together a household budget.

This will show you if you have any money left over at the end of the month for the repayments, when you’ve paid all your bills and living expenses.

What to include in your budget

It’s easy to miss expenses off a budget, especially if many of your bills go out by Direct Debit.

arrow icon

Here are some costs to consider

Home:

  • Gas
  • Electricity
  • Council Tax
  • Water
  • TV Licence
  • Mortgage or rent
  • Home and contents insurance
  • Telephone, mobile and internet service.

Existing credit commitments:

  • Loan repayments
  • Credit and/or store card repayments
  • Hire purchase or in-store credit agreement repayments (for example, for furniture or a TV).

Travel:

  • Fuel
  • Car tax
  • Car insurance
  • Vehicle maintenance
  • Car finance repayments
  • Other transport, such as train or bus tickets.

Essentials:

  • Clothing
  • Food shopping
  • Toiletries and cleaning products.

Other costs

  • Pension contributions
  • Life insurance premiums
  • Other insurance, such as critical illness or income protection cover.

Children:

  • Clothing
  • School trips
  • Childcare costs
  • Maintenance payments
  • Private tuition/schooling.

Entertainment:

  • Holidays
  • Hobbies
  • Eating out
  • Hairdressers
  • Lottery tickets
  • Gym membership
  • TV subscriptions (such as Sky)
  • Trips out (for example, to the cinema or events)
  • Magazine and newspaper subscriptions/purchases
  • Drinks outside the home (including coffees and alcohol).

Of course, every household has different bills, so it's important to not treat this as a complete list.

Think about any extra costs you or your family might have to pay.

It’s a good idea to gather bank account and credit card statements from the last three months and record everything you spend over a period of a month or longer (as you might have some bills taken every six or twelve months).

Make sure you include everything you spend to get a true picture and add a bit extra to allow for inflation and any unexpected costs.

When you know:

  • exactly how much money you spend in any one month, and
  • how much you need to put aside as a cushion or to save

you’ll be able to see whether you can afford to take on any new borrowing.

arrow icon

Review your financial commitments

If meeting monthly repayments is hard or you have lots of different loans and cards, it’s a good idea to review your borrowing commitments and see if you can reduce these rather than taking on more.

Whatever you do, don’t take on more credit to pay off what you already owe.

Confident you can afford to borrow?

arrow icon

If your budget shows you have enough spare cash and can afford the borrowing you want, it’s still important to take the time to compare the various credit options available and find the right borrowing for you.

arrow icon

Only just making ends meet?

If your budget shows you have little or nothing to spare to make your repayments, you can’t afford to borrow.

It can be worrying to realise you’re only just coping with your current financial commitments, but don’t ignore the problem.

There are things you can do to help.

Struggling with financial difficulties?

arrow icon

If you can’t manage, contact one of the free debt advice charities for help.

arrow icon
Was this information useful?
Thank you for your feedback.
We’re always trying to improve our website and services, and your feedback helps us understand how we’re doing.
Looking for us? Now, we’re MoneyHelper

MoneyHelper is the new, easy way to get clear, free, impartial help for all your money and pension choices. Whatever your circumstances or plans, move forward with MoneyHelper.

Continue to website
Looking for us? Now, we’re MoneyHelper

MoneyHelper is the new, easy way to get clear, free, impartial help for all your money and pension choices. Whatever your circumstances or plans, move forward with MoneyHelper.

Continue to website
Looking for us? Now, we’re MoneyHelper

MoneyHelper is the new, easy way to get clear, free, impartial help for all your money and pension choices. Whatever your circumstances or plans, move forward with MoneyHelper.

Continue to website
Talk to us live for…
Talk to us live for…
Talk to us live for pensions guidance using
Talk to us live for money guidance using…
Hours
  • Mon – Fri:9.00am – 5.00pm
  • Sat, Sun and bank holidays:Closed

* Calls are free. We’re committed to providing you with a quality service, so calls may be recorded or monitored for training purposes and to help us develop our services.

Talk to us live for money guidance using the telephone
Hours
  • Mon – Fri:8.00am – 6.00pm
  • Sat, Sun and bank holidays:Closed

* Calls are free. We’re committed to providing you with a quality service, so calls may be recorded or monitored for training purposes and to help us develop our services.

Talk to us live for pensions guidance using web chat
Hours
  • Mon – Fri:9.00am – 6.00pm
  • Sat, Sun and bank holidays:Closed
Talk to us live for money guidance using webchat
Hours
  • Mon – Fri:8.00am – 6.00pm
  • Sat:8.00am – 3.00pm
  • Sun and bank holidays:Closed
Talk to us for pensions guidance using our web form

We aim to respond within 5 working days

Talk to us for money guidance using our web form

We aim to respond within 2 working days

Talk to us live for money guidance using WhatsApp

Download app: WhatsApp

For help sorting out your debts or credit questions. For everything else please contact us via Webchat or telephone.