The mistakes to avoid, and the tricks to help keep your funds going until the end of the month.

When you’ve had an expensive month or there’s been an unexpected cost, the knock-on effect usually means there’s very little left in the bank to get you to payday.

It’s usually at its worst in January as people often get paid early in December, but it can happen all year round, especially with the cost of living crisis messing with savings and spending.

So what do you do? Well it’s very easy to jump to high-cost loans and hope it’s just a one-off. But this isn’t a good solution.

First, I’ve shared the things you shouldn’t be doing so you know not to make those mistakes. Then I’ve written about a few things you can do to help that cash stretch a little further as well as a few cheaper alternatives for borrowing money.

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What not to do when you’re out of money

Don’t get a payday or guarantor loan

You know that payday loans are bad for you. Despite many of the big lenders going out of business, it’s still possible to take out payday loans, and they will cost you a fortune in interest charges.

Guarantor loans are also bad for your wallet and your credit rating. Avoid both of these types of loan, even if you’re desperate as there are cheaper alternatives (more on those below).

Don’t use your overdraft

Unless you have 0% interest overdraft the chances are that using one is costing you a lot more money than you realised with many banks charging rates of close to 40%.

Don’t put it on credit cards

It’s tempting to put the things you can’t afford on a credit card, or buy things via “easy” credit from retailers like Very.

But this isn’t just delaying dealing with the problem you’re also adding to it with extra interest and charges added on top of the amount you borrow.

Don’t use Buy Now Pay Later

You can now find the likes of Klarna, Clearpay and Laybuy on most retailer websites, so the temptation could be to just put your purchases on there to delay the payment over two or three months.

But if you don’t think you’ll have enough left over next month to cover these purchases and all the other new expenses that’ll come along you’re going to get caught up with constantly owing money month after month. Here’s more on why they’re not risk free.

What you should be doing to reach payday

Find and use existing sources of cash

Do use your savings

If your bank balance hits zero then the first place you should go is your savings. This is better than borrowing money where you’ll be charged interest as that rate is almost certainly going to be higher than what you’re earning on your savings.

You could also see if friends or family will lend money to you, but make sure you all know upfront the terms of lending the cash – you don’t want it to be the cause of any animosity later on.

Pay with points and gift cards

Do you have a gift card at the back of a drawer, a build-up of never used Nectar points, rewards to your current account or a refund to an online account (Amazon and John Lewis are among the retailers who sometimes do this)?

These are all forms of money you can spend now instead of cash.  And don’t forget those coffee shop loyalty cards – you might have enough for a free cuppa!

Claim forgotten money and credit

I’ve written before about chasing down forgotten money, and this is a perfect time to actually do it! When we pay for most utilities we’re actually paying a month in advance. So when you switch away, you’ve actually paid more than you needed. Sometimes this is automatically refunded, but not always, so check to see if you’re owed any cash. 

Energy bills might also have been estimated, and if you’ve been overpaying your current supplier then you’ll likely have credit sitting there. You can ask for this money to be refunded to your account (though bear in mind there are still a few winter months ahead of us).

Don’t forget to check places like cashback accounts and money-making apps where you might have enough for a payout to your current account.

Borrow at the lowest rates (if you have to)

Consider a 0% purchase credit card

Another option is to look into a 0% purchase credit card. For a limited amount of time (it varies depending on the bank and card) you won’t get charged any interest on your purchases. This is the cheapest way to borrow money.

Of course, it’s not that simple. You will have to make at least the minimum repayments each month on the card and clear the balance before the 0% period ends to avoid any interest at all. And if you don’t think you can cope with this, or think you’ll be adding to the balance every month, then they’re best avoided.

Here’s my pick of the best cards right now.

Find the loans with lowest interest rate

If you don’t have savings and can’t get a 0% credit card, then you can still borrow money without resorting the charges you’ll get from payday loans and overdrafts.

See if you have a local Credit Union. The Finding Finance site will help you find responsible lenders. For bigger costs you can’t avoid then check out comparison sites to see what you’d get charged for a loan from a high street bank.

But only, and I really can’t stress this enough, borrow money in this situation if you really have to. And if the situation appears so bad that you can’t see a way out, then you absolutely should seek some free debt advice.

Think about how you spend

Do work out a spending plan

Yes, this might sound painful, but it’s essential to find out exactly how much money you have and where it’s going. Here’s how to do it.

Track your spending

Use your banking app or even a specialist money management app to keep an eye on where your money is going and when bills are coming up. Here’s my recent guide to these budgeting apps, taking you through how they work and the best ones.

Do use cash

You’ll need to budget the money you have left and a simple way to do this is to only pay with cash. Withdraw the money you’ll need (and can afford), say for a week and then split it into different expenses. Then only take with you the cash for that activity.

This prevents you spending more than you intended and stops any impulse spending. You’ll need to leave your cards at home.

Of course, right now there are still a number of retailers operating as cash-only. If you’re faced with a card-only retailer, or don’t want to deal with change, you could look at using the pots or spaces features on digital banks such as Chase or Starling to split the funds out into different spending needs.

Cutback and shop around

Very simply, buy less. If something isn’t essential then you need to be strong and not spend money on it. This could mean you buy less and go out less.

You could even consider a no-spend week or month challenge where you only use money for things like food and bills.

If you do have to spend cash, look for the cheapest options. At the supermarket, trade down to own brand equivalents. When you travel, find the cheapest fare. Cook from scratch rather than ordering a takeaway It’s all obvious stuff, but you have to follow through and actually do it.

Find alternatives to new spending

Use up the food you’ve got

Check the cupboard, fridge and freezer. You will find all sorts of things hidden away that mean you don’t need to buy as much new food as usual. Just use these items up and then you can restock once you’ve been paid again and things are back to normal.

it’s always worth having a small stockpile ready for emergencies like when you’re too ill to go out or get snowed in, or months like this!

While we’re on the topic of food, you could also try cooking from scratch rather than buying ready-made meals or ordering takeaways. It really can work out much, much cheaper.

Find (new) clothes in your wardrobe

Go through your wardrobe and I’m confident you’ll find a few items of clothing you’ve forgotten about but are perfectly good to wear. 

If anything is looking a little shabby then you could see if it’s possible to repair them – if you can’t do it yourself there will be a local shop that’ll do it for a few quid. I got a coat fixed recently for a fiver and it’s as good as new.

Of course, there’s always the chance stuff doesn’t fit you anymore, in which case you could try “Schwopping” with friends or check out a charity shop.

Watch DVDs, read books and listen to CDs

Though I have a lot less than I used to, I’ve still got a decent collection of physical media, with hundreds of books, CDs and DVD that I’ve rarely touched since everything went digital.

Well, to save some cash take a month off from your streaming services and actually watch those DVDs. You can also find loads to watch on iPlayer and All4.

The same goes for other subscriptions – especially music. Cancel Spotify and listen to some CDs or the radio. And rather than buy a new book or magazine, revisit one of your favourites or head to the library.

If you are paying for TV via Sky or Virgin then you’ll only be able to cancel if you’re out of contract – but that’s well worth doing anyway and moving over to something like NOW TV.

Regift unwanted presents

If you’ve got a birthday or something coming up then check if you’ve anything you’ve been given that you’ve never used that could be a suitable gift. There’s more here on the dos and don’ts.