You’re not alone if you’ve ever searched ‘how to sort out my finances’. In the UK, many people across the UK feel overwhelmed by bills, credit cards, or simply not knowing where their money goes. But taking back control is possible. This beginner-friendly guide offers a simple, step-by-step path to help you get your finances in order, prioritise debt, and decide when it’s time to seek support.
Whether you’re facing mounting payments or just want to feel more in control, this guide can help you sort out money problems in a way that works for you.
Step 1: Understand where you stand financially
Start by getting a clear picture of your current financial situation. This helps you make informed decisions and identify the areas that need the most attention.
Begin by listing:
- Your total income (wages, benefits, pensions)
- Your regular spending (rent, bills, food, transport)
- All debts (loans, credit cards, overdrafts, unpaid bills).
Use bank statements, budgeting apps or our disposable income calculator to track the last 1-3 months. This gives you a clear view of how much comes in and goes out and what’s left.
If the numbers feel daunting, take it one section at a time. The goal here is simply to know your situation, not solve it all at once.
Step 2: Separate priority and non-priority debts
When trying to sort out money problems, some debts need more urgent attention than others. It’s therefore helpful to distinguish between priority and non-priority debts.
Priority debts are those that can have serious consequences if left unpaid. These include:
- Rent or mortgage arrears
- Council tax
- Energy bills
- Magistrates’ court fines.
Non-priority debts are still important, but they usually don’t have immediate legal consequences. These can include:
- Credit and store cards
- Personal loans
- Bank overdrafts
- Catalogue or mail order debts
- Buy now, pay later agreements
- Money owed to friends or family
- Water bills
- Payday loans.
Step 3: Create a realistic budget
Now you’ve mapped out your finances, build a monthly budget. This will help you stay on track and avoid spending more than you have.
Split your budget into three areas:
- Essential spending – rent, bills, food
- Minimum debt payments – pay at least the minimum on all debts
- Remaining money – use this to tackle debts or savings.
Step 4: Prioritise how to repay your debts
If you’re wondering where to start with debt, there are two main approaches: snowball and avalanche. The best option for you depends on your personal circumstances and what your priorities are.
- Snowball method – pay off the smallest debt first while keeping up minimum payments on others. This can be motivating.
- Avalanche method – pay off the debt with the highest interest rate first. This saves you more in the long run.
Step 5: Consider ways to boost your income
If your budget doesn’t stretch far enough, look at ways to increase your income:
- Check if there’s any benefits you may be eligible for
- Look into part-time or freelance work
- Sell items you no longer need
- Rent out a spare room or parking space if appropriate.
Even small amounts can make a difference when you’re trying to get your finances in order.
Step 6: Cut back where possible
Trimming your spending doesn’t mean giving up everything – it’s about identifying areas where you can save without too much impact. For example:
- Switch to cheaper providers for broadband, energy or insurance
- Plan meals in advance to reduce food waste
- Cancel unused subscriptions or memberships
- Use cashback or voucher sites for shopping
- Compare supermarket brands for better value.
Making a few thoughtful changes can free up money you can use to repay debts or build a safety buffer.
Step 7: Build an emergency buffer
Once your urgent debts are under control, consider saving a small emergency fund. This doesn’t need to be large, just enough to cover a few essential costs like rent, bills or groceries if something unexpected happens.
An emergency fund can:
- Prevent you from needing to borrow again if something goes wrong
- Give you a sense of security when unexpected costs arise
Aim for £100 to start, then build from there when you can. Setting up a separate savings account can help you keep this money untouched until it’s really needed.
Step 8: Understand your borrowing options
Not all credit is bad but using it without a plan can lead to problems. If you do need to borrow, choose carefully:
- Avoid payday loans or high-interest borrowing
- Consider a 0% interest credit card for balance transfers (if eligible)
- Only borrow what you know you can repay.
Understanding your credit file and score can also help you spot issues early. You can check it for free using sites like Experian, Equifax, or TransUnion.
Step 9: Set financial goals
Having clear, realistic goals gives you direction and motivation. Think about what you want your finances to look like in 6 months or a year.
Common goals include:
- Paying off a specific debt
- Saving for a holiday or emergency fund
- Sticking to your monthly budget for 3 months straight.
Write your goals down, break them into small steps, and review them regularly to track your progress.
Step 10: Stay on track and review regularly
Once your finances are more stable, keep reviewing your progress. Check in monthly to:
- Update your budget
- Track debt balances
- Adjust to any changes in income or spending.
Setting goals can help you stay motivated, whether it’s clearing a specific debt, saving for a holiday, or building a three-month emergency fund.
When to seek help
If you’re struggling to keep up with payments, don’t wait to get support. Speaking to a professional early on can often prevent things from getting worse. You can get free, impartial advice from MoneyHelper.
At MoneyPlus, we’ve helped thousands of people take back control of their finances. Our debt experts can help you:
- Understand your debt options
- Create affordable payment plans
- Stop creditor contact where possible
Get in touch with us today to speak to one of our advisers about the options available to you.
