Why are we so bad at budgeting?

colink24

Myself and partner have a serious issue with managing our money and it is really starting to get me down. We have no savings and pretty much live month by month, which is annoying considering how much we earn etc. Brief rundown

Earnings

Me £38,000
Her £17,000

Outoings monthly

Mortgage £866
Car £275
Other bills total about £450

I have done a quick Excel spreasheet and this leaves us with around £1500 per month to live on, which would include shopping and petrol.

Surely something is wrong somewhere? Most months we end up borrowing from someone to get through to payday, which surely isnt right?

I know there are area's we can cut down. She likes to shop, I buy lunches everyday at work, we often eat out at weekends, expensive make-up etc (I could go on!)

Prior to our mortgage we had a very low rent flat, which allowed us such luxuries but I feel we havent really adapted to the financial change.

We have increased our overdraft twice int he past 6 months, and have bought a sofa and laptop on credit which we will need to pay in the next 6 months.

I am considering going to the bank and aksing their advice but not sure this is really the correct route

Any help would be greatly appreciated

Thanks all

mrposhman

I had a similar problem but was on a lower wage than you guys. I wasn't really sure where my money went to each month.

So I sat down and went through my statements (its easier online, download them into excel and do your work from there).

I worked out exactly how much my committed expenses were per month and then noted down my variable spends. It quite surprised me how much cash I withdrew and being as I mostly spend on my debit card it left me wondering where I was spending this. It also shocked me how much I spent on food.

I've now got an accurate budget which I track daily from what occurs on my online statements and its helped me no end. I've gone from spending more than my income to spending less which means I can now start saving and overpaying on debts which can only help in the long run.

I hope this helps, its painful in the beginning but hopefully will help you no end in the long run.

davetrousers

I think you've answered your own question.

colink24 wrote: »

Prior to our mortgage we had a very low rent flat, which allowed us such luxuries but I feel we haven't really adapted to the financial change.

Kandipandi

I was in the same boat a few years ago. I cut up all credit and debit cards and ran a cash only system. I paid all my bills by D.D. and calculated what needed to remain in the bank for the bills, mortgage etc. then withdrew the rest from the bank each month (leaving a little buffer for unexpected bills). Then i divided that money up into 4 envelopes (1 for each week) and gave them to my mum. Each week i collected the next envelope and by the end of the month i knew i would still have money left at Mums so we would make it to payday. It really makes you think about what you spend, if i only have 120 for the week and need to get fresh food and travel out of that i obviously cant go spend £60 on nice face cream (which is what i have done in the past). Its a very basic method but it worked for me and got me out of a big hole, and its amazing how you can survive on cash only and live without the (all too handy) debit and credit cards. One more thing, each time you withdraw cash get a receipt and note on it what that cash was used for (it can be scary)! Good luck.

tiff

You said she likes shopping, thats the answer lol

Seen_the_light_4

We had the same problem so we took £200 cash out of the bank each week and put it in a tin to use throughout the week. This made a big difference as before we used to use the debit cards and you don't grasp how much you are getting through until you see the overdraft. We actually felt we had more money and built up a float which came in handy when a new washer was required.

Good luck

greyster

I'd do a couple of simple things:

1. When the money enters your account on pay day, take the figure you want to save out immediately and live on the rest. Never touch your savings but agree with yourself the money that remains can go on what you need/want. The key is to do this on pay day when you are at your richest. Start logging in to online banking more and watch your balance. You don't need to cut back as much as you think as long as you are aware of your spend. You'll start becoming more money conscious.

2. Do the old give yourself a payrise tactic - look at your utility companies and see if you are on the best deal, especially mobiles and broadband. A quick change may give you enough money for the extra meal out a week.

If your girlfriend likes to shop, you need to pay attention to spend if its your money of course. Get her to do point 1 - especially checking her balance.

If you are comfortable with making your own lunch do that, its a big saver. Personally I can't but I don't make a big meal when I get home.

Good luck.

PasturesNew

£3450 - income
£1591 - outgoings
=====
£1869

You should be able to save £1000 of this without trying. £869 is quite a small fortune to live a good life on.

Go to http://www.spendingdiary.com and start keeping a diary of every penny you spend.

Set up a savings account and transfer £1000/month into it every month right after you've been paid.

Get over to the debt free wannabe board and post your SOA (income/outgoings list), they'll probably be able to shave more money from your outgoings.

You can have your cake and eat it ... if you cut down on wastage in your basic outgoings + save £1000/month, you still have enough money left over to go out, eat out, have a holiday, buy stuff.

Good luck

MrsTinks

You manage to spend £1869 between you??? Not being rude but.... HOW???

Ok firstly you BOTH need to be onboard here... She has to stop the shopping, either that or set her the challenge that she can only buy new stuff once she's SOLD things to pay for it - bet you she'll soon curb it!
Start spending diaries - you'll be amazed where stuff goes...
Lunches... how much do you spend on this? A couple of quid fair enough - you're earning a fair salary... but £5 and above daily and you need to address this. I spent £5 on a HUGE lunch on friday - So I know no matter where you are that it can be done... And that was in central London from a Sushi bar takeaway.

Out of interest does your partner put any money towards bills? Is there a proportional split in bills? In our house we pretty much split things proportionally but ultimately we're a team - if I have more money than my husband then we share and vice versa
We earn quite nicely too - I'm a couple of grand under you and I'm the lower earner... unfortunately we both came into this with debts and so we have a while yet before we're debtfree and can really look at savings.