Calculations to consider for your 2021 budget

Lowell are here to help you plan your 2021 budget by reflecting on the impact of 2020. We've pulled together some research, helpful calculations and tips on how you can plan.

When it comes to planning your budget for 2021, the usual approach of looking at the previous year’s incomings and outgoings will be a little bit different. When you’re planning for 2021, you’ll need to take into account the financial changes and challenges of 2020.

Here are the things you’ll want to remember when you’re looking at your finances for the year ahead.

Energy consumption

Working from home can cost you more in energy bills thanks to the extra costs of running microwaves and kettles and general heating and electricity during the day.

If you’re planning your budget for 2021 based on past usage, you’ll need to consider any months that you worked from home in 2020 when you’re estimating your likely energy costs. If you’re expecting to continue working from home in 2021, factor in the increased energy consumption to your monthly outgoings – but new rules about tax relief might be able to help with those costs.

Tax relief

If you’re working from home on a regular basis, you might not know that you may be able to claim tax relief for additional household costs. Additional costs include things like heating, water bills, and home contents insurance. You can claim £6 a week from the 6th April 2020, so you might want to consider including this in your new year’s budget.

Commuting costs

When you’re working out what your commuting costs are likely to be for 2021, you’ll need to figure out a new estimate for your mileage instead of looking back on 2020, when national lockdowns and working from home will have massively reduced your commuting.  

No one loves paying for parking, but you’ll also need to remember to factor in parking costs for your 2021 budget – i news estimates an average cost of between £1.10-1.65 per hour for parking, or £3-4.80 per hour for London.

If you use public transport to get to and from work, you might also need to consider how often you’ll be in the office. Statista estimates the average weekly household cost of transport for 30-49 year olds at £28.40 a week, but that doesn’t factor in how often you’ll be in the office if you’re working from home for part of the week due to social distancing. If you’re used to paying for a monthly pass at the beginning of the month, you might need to reconsider how you budget to make sure you’ll have enough for daily passes.

Food and Drink

If you were working from home in 2020, your spend on food and drink might well be lower than in a standard year, so remember to factor this in for your monthly outgoings in 2021.

If you’re working in an office, you might want to allow for a daily spend to buy lunches – in the UK, the average daily spend on lunch is £6.08, so remember to factor this in to your spending.


One big thing to consider in your 2021 reflection budget is how the last year might have had an impact on your salary. Many people were placed on the government’s furlough scheme, living on 80% of their usual wage. If you were furloughed and no longer will be, you can allow for an extra 20% spend in 2021. If you remained on your usual full pay, then you can plan your outgoings to the same amount.

If your salary was affected by the pandemic, either through reduced hours or loss of work, you might be concerned about the impact on your budget for 2021. If you’re a Lowell customer and your circumstances have changed because of the coronavirus outbreak, we can help, just get in touch to let us know. For more advice, check out our guide to your next steps, or find out how we can help with independent support and advice.

Payment holidays

If you’re paying off a credit card, loan or other finance agreement, you might have applied for a payment holiday in 2020, allowing you to defer payments for up to 6 months.

However, when you’re planning your 2021 budget, you’ll need to factor in any additional costs from a payment holiday.  If you’ve taken a payment holiday, it could possibly cost you more to repay your debt. If you’re a Lowell customer and this is something that’s causing financial difficulty for you, find out how we can help by letting us know.

Housing costs

If you have a mortgage and your income has been affected by the coronavirus outbreak, you may have already had a mortgage holiday in 2020. A mortgage holiday defers your payments, but once it’s over, you’ll still need to make up the payments you missed, plus any interest, so you may want to speak to your bank about how much this might affect your 2021 payment.

For renters, you may be entitled to additional benefits to help with housing costs if your income has been reduced, even if you’re still working. Deciding whether to allow rent holidays is up to individual landlords to decide, so speaking to your landlord might help if you’re planning your 2021 budget and have concerns about your rent payments.

If you’re a Lowell customer and payments for your mortgage or rent are concerning you, please get in touch to see how we can help you. Alternatively, you can find free financial advice from available independent organisations.

2020 has been a year of upheaval and uncertainty. As you’re planning your budget for 2021, it’s important to reflect on the changes, and work out how they might affect your finances for the new year ahead. For more about how Lowell work with our customers and the help and support we can offer after this difficult year, check out our help and support pages.


By Emma Sams on 12 January 2021


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