The Idiots Guide to Budgeting? Advice...

benjillm

I cannot believe the state of my finances! Im a 28 year old professional, earning 30k a year with massive bonus potential, yet I have no savings, and generally nomoney in the account at the end of the month, in short...its pathetic! I even appear to fare worse off than my flatmate, who is on quite a lot less than me!

Ive had thoughts about budgeting, with every intention of following my plans through, but im just rubbish at it! Id really appriciate some simple and 'easy to stick to' budgeting techniques to help me get on track....

Thanks, Ben

justjohn

Depends what you are like with money.

In my early years i/we could not save.Used to pay my bills then just spend everything. I handled it by ploughing my money into endowments ,so i had less to spend.(money used up each month onbills/endowments) endowment are a waste of time now

opinions4u

While I know this is supposedly a budgeting forum you might actually get better advice on the Debt-free Wannabe part of the site ... but that shouldn't stop others listing responses here.

Take a look at the site www.makesenseofcards.co.uk.

My main tip would be one of payday mentality .... save before you spend, rather than spending and getting to the end of the month and realising that you've nothing left over to save.

First act of payday is online banking: pay the bills that are due, put a stash in to a savings account (start with cash ISA and progress from there) and then plan what you're not going to spend money on between now and the next payday!

Here's some that may or may not be right for your lifestyle - figures may differ for where you live/work:

Coffee shop - cut it out and drink water ... possible saving £3 a day = £60 a month.
Lunch - make your sandwiches at home ... possible saving £4 a day = £80 a month.
Gym - cancel and walk to work instead of driving (or walk to the bus stop a mile up the road) ... possible saving £60 a month.
Car park - park in a less central location ... possible saving £2 a day = £40 a month.
Social life - don't go out on payday ... possible saving £30 a month

So that lot together is worth £3,000+ a year.

Good luck!

(Does your employer offer any savings schemes deducted from salary e.g. shares that they match, pensions, sharesave schemes etc? While these aren't good for short term savings, they are an excellent way of forcing you to save and if it's not in your net pay you really don't miss it).

pmduk

It may be worth keeping a spending diary for a while recording everything you spend. Doing it for myself was quite an eye-opener. I was spending a fortune on magazines and books, to the extent that several years on I still keep an excel spreadsheet of everything I spend on these items.

jen245

O4u is spot on, and this is how I now manage my money. As soon as I get paid, my savings money is transferred out into my ISA, I then leave enough in my main account to cover bills and dd's, and the remainder is transferred out into my spending account, and I use that for the rest of month, and anything left over goes into my instant access savings account the day before next payday. It's really helped me cut right down on unnecessary spending, and I now have quite a healthy savings pot :T

getmore4less

benjillm wrote: »

Ive had thoughts about budgeting, with every intention of following my plans through, but im just rubbish at it! Id really appriciate some simple and 'easy to stick to' budgeting techniques to help me get on track....

Thanks, Ben

Record what you spend your money on in enough detail so when want to analyse you can.

Knowledge is the key to finance know where you spend your money.

When you know what you spend and think about the trade offs.

Also set some long term saving goals for the things you need to get later in life, if you don't save you might need debt.

Loughton_Monkey

benjillm wrote: »

I even appear to fare worse off than my flatmate, who is on quite a lot less than me!

Then the answer's simple. Take on the same lifestyle and expense as your flatmate!

But seriously, you have a disease, common to many. Most of them fool themsleves into thinking that "I can't spread what I earn over my expenses......". This, ultimately, is 100% rubbish.

The 'disease' consists simply of thinking "I earn £100. Therefore I can spend £100." [ignoring the even worse disease of trying to spend £105]. This disease is contracted just as much by people who earn £70,000 as by those who earn £15,000. It has nothing whatsoever to do with the 'absolute' amount you earn.

Until you work out the fact that someone in your office/workplace earns 15% less than you, and hence living on that lower income is 'possible', then you will never get rid of the disease. It's got little to do with budgeting systems or methods. It simply means doing the absolutely and brainlessly obvious.

Spend less than you earn!

grizzly1911

Help! Money management & financial coaching?

Try this thread posted in last couple of days.

maximise

Download the MSE Budget Planner, its all laid out for you to fill in your income and outgoings, easy peasy lemons... !

pvt

Yo Benny-boy,

My first comment has to be that, based on what you say in your OP, you at least don't appear to be in debt - just spending everything you get. That's a very fine place to be starting from.

Secondly you've had some fine and dandy advice from O4u and others, that's all worthy of heeding.

Different methods work differently for different people. For example, keeping a record of spending doesn't work for me (tried it once upon a time), but I can see why it would work for others who are more disciplined.

I put my own personal financial health down to 3 things:

1. Never spend money you don't have. Ever!! Not easy, but possible. I do use credit cards, regularly, but I never borrow on them. Use cashback ones and suddenly you find they're working for you, making you money not costing you money. They also act as a nice audit trail of your spend.

2. Save money regularly using SOs or DDs. Set up a SO to put £500 a month into a regular savings or similar account that "breaks" if you withdraw from it. The money's accessible in an emergency, but the fact that you lose the special rate if you make a withdrawal is an incentive to leave it be.

3. Don't spend spare money unnecessarily just because you have it.

I am not a disciplined person, can be quite wasteful and buy things on impulse, but I stick to that first principle of NEVER spending money I don't have. It's worked well for me.

Good luck

pvt

sweetilemon

I think the previous advice is good. Set up a SO of what you can afford into a savings account so if your current account burns a hole in your pocket you dont have as much to spend. prioratise things you couldnt live without, things you love and feel you deserve and stuff you buy for the sake of it. I spend money on takeaways if ive not planned my food shopping at the start of the week for example.