Everything you need to know about managing your money on Universal Credit
Universal Credit has become the main benefit system in the UK, replacing older benefits like Jobseeker's Allowance and Housing Benefit. This comprehensive guide covers everything you need to know about budgeting effectively on Universal Credit in 2026.
Universal Credit is a monthly payment designed to help with your living costs. It is paid into your bank account, and you are responsible for paying all your bills from this amount, including rent.
Your payment is made up of a standard allowance plus any additional elements you may be entitled to, such as for children, housing costs, disabilities, or caring responsibilities.
Your Universal Credit payment depends on your circumstances. The standard allowance is adjusted based on your age and whether you are single or in a couple.
Additional elements can significantly increase your payment. These include the child element for each child, the housing element to help with rent, and elements for disabilities or health conditions that affect your ability to work.
The key to managing on Universal Credit is creating a realistic budget. Start by listing all your essential expenses, then compare them against your expected income.
Be honest about your spending habits. Many people find they are spending more than they realised on non-essential items. Small changes, like bringing lunch from home or cancelling unused subscriptions, can add up to significant savings.
If you rent privately, the housing element of Universal Credit can help with your rent. However, there are maximum amounts that can be paid depending on where you live and the size of property you need.
If your rent is higher than the local housing allowance rate, you will need to pay the difference yourself. This is why it is important to check the local rates before signing a tenancy agreement.
If you have existing debts, it is important to address them proactively. Contact your creditors to explain your situation and see if you can arrange affordable repayment plans.
Organisations like StepChange, Citizens Advice, and National Debtline offer free, confidential debt advice. They can help you understand your options and create a manageable debt repayment plan.
While budgeting is essential, many people on Universal Credit also benefit from finding ways to increase their income. This could include taking on part-time work, developing new skills for better-paid jobs, or exploring additional sources of support.
The work allowance means you can earn some money before your Universal Credit is reduced. For 2026, you can earn up to £673 per month if you have children or limited capability for work, or £404 per month if you do not.
Use Delphina to create a detailed budget and track your spending to make the most of your Universal Credit.