How do you manage your finances?

allthingsmustpass

jonmcclelland wrote: »

I take £30ish cash out every Monday morning and use it for any small spends for the week ahead such as random cups of coffee, newspapers etc.

Don't you find you just spend that amount just because its there, I think I would see that as my 'spending money' and probably even buy things I didn't really want just because it came out of that £30, I'd believe it was accounted for so is ok to spend!

I like to set myself targets so I try and spend less each week, keeping an accurate log really helps

Lith

Cant remember the last time i had 'cash' in my wallet...


all my bills are all online etc

Fiddlestick

Citygirl1 wrote: »

Just wondering how do manage your finances these days, do you use cash or cards?

Both, plus an Excel spreadsheet.

I pay all of my regular bills online as soon as I get paid, then I keep track of anything that I buy using my cards and any cash that I withdraw.

I do pretty well at keeping track of things, although I find that that "Cash" entry on my spreadsheet could do with being broken down further so that I know where my money actually goes[1]

[1] Most likely lunch at work some times, the occasional coffee, etc etc.

pqrdef

My spending varies wildly between months. This is partly because I bulk-buy or pay in advance when I can save money.

So I don't expect my incomings and outgoings to balance one month at a time. To make sure they balance in the longer term, I keep a budget, looking up to 12 months ahead, and all my spending is in it.

The way to balance the budget - on paper - is to split the big expenses into monthly chunks. So the car insurance will be in the budget as 12 notional monthly payments even though I actually pay a year at a time.

The budget decides what I can afford to buy. All spending is on-budget or off-budget. If it's off-budget, it's unaffordable unless the budget is reworked to accommodate it, which means finding something else to spend less on.

Managing the cashflow is a whole separate issue. Nothing spoils if I have to dip into savings to pay the annual car insurance without going overdrawn, because the monthly budget allocation for it will go back into the savings and it will all work out.

What I never do is look at a bank balance or card balance or wallet to see "how much I've got left to spend". I don't have any such concept, because I don't pre-allocate fixed amounts of income to undetermined spending for arbitrary periods.

As it happens, I mostly use credit cards now, and rarely cash, but it doesn't make any difference, the system would work the same with cash.

When I used to carry cash, it would disappear, but that's not because it was cash, it's because I didn't have a budget for the sort of things I was spending it on, so the on-budget/off-budget criterion couldn't be applied.

pqrdef

allthingsmustpass wrote: »

Don't you find you just spend that amount just because its there

It probably works if you've budgeted for the things you'll spend the money on, and you only spend it on those things.

It probably fails if you just spend the money until it runs out and then go back to the cashpoint.

debrag

currently have wages put in one account and transfer out anything not for bills into another account and use that for spending.

allthingsmustpass

pqrdef wrote: »

It probably works if you've budgeted for the things you'll spend the money on, and you only spend it on those things.

It probably fails if you just spend the money until it runs out and then go back to the cashpoint.

The trick is not to go to the cashpoint!

dotexe

I have a current account, e-saver and an ISA. I still live at home with my parent/step-parent as I'm building a deposit up for a house.

I tend to keep around £300-500 in my current account so I know I can cover anything coming up like the car's MOT or whatever. I put a chunk away in my esaver every month except recently I've been letting it build up to shove straight into my ISA at the start of the tax year.

I pay for everything on card. My worst habit I think is buying lunch on my way to work and I eat out a lot so I could save more if I just bought groceries for the week. Other than that I don't spend a lot (don't drink, smoke, buy much in the way of clothes or dvds/games)

My tip for not spending money is WORK. Ha. When you work an 84hr nightshift week not only are you making a bit of money you aren't giving yourself any time to spend it.

Now any tips on how to improve the OH/GF's approach to spending/saving? Everytime I produce a budget she tries to make me eat it.

pqrdef

allthingsmustpass wrote: »

The trick is not to go to the cashpoint!

The trick is not to spend the money. If 6 coffees a day are in the budget, I know I can afford 6 coffees. If they aren't, well, the money isn't going to appear from nowhere.

And the rest of the month is the worst thing to borrow money from, because it comes knocking every day wanting some of its money back, and it won't even wait till payday.

A lot of people don't manage their budgets at all, only their cashflow, as if that were the same thing.

This practically guarantees overspending. In a low-cost month. the surplus cash will be spent just because it's there. Then when the car needs fixing, how unlucky, wasn't expecting that, not my fault, it'll just have to go on the never-never credit card.

PipneyJane

dotexe wrote: »

Now any tips on how to improve the OH/GF's approach to spending/saving? Everytime I produce a budget she tries to make me eat it.

Now that is the really difficult bit. You can't change someone-else's behaviour but you can encourage her to change. A gentleman on another forum I frequent would give you the blunt advice to ditch her. I'm a bit more generous and would put her attitude down to thoughtlessness. However, you do need to take a long clinical look at her attitude to money before you do something life-changing like marrying or buying property together, because you could be setting yourself up for a lifetime of pain. (BTDT. Got divorced after 9 years and massive debts. Should have read the writing on the wall years earlier.)

She may fritter money away because she doesn't realise how hard it is to save a deposit for a house, let alone pay a mortgage each month. It may never really have occurred to her that borrowed money (i.e. a credit card) has to be paid back eventually and not only costs you more in the long run but robs you of cash flow, which in turn robs you of the ability to spend your money the way you want now. She may also be frightened by the numbers. (Denial isn't just a river in Egypt.)

You need to consider these questions and answer yourself honestly. (You don't have to answer them to us, but don't fool yourself.) What does she do with her own money? Does she pay her way in your relationship or does she expect you to pay for everything? Is she a saver or a borrower? Does she earn a better salary than you and expect you to keep up with her level of spending? Is she a good worker or is she the sort that will throw in a job because the boss complained about her spelling? Does she expect some knight in shining armour to come along and bail her out/pay for everything/keep her in the manner to which she wants to become accustomed? Does she accuse you of being "tight" while not reaching into her own pocket to pay for anything? Is she high maintenance or the sort that will happily live in a shack so long as it had running water and the roof didn't leak? Are you with her because she's genuinely wonderful or because you don't want to be alone?

(My God that sounds b!tchy. I don't mean to be. I only wish I'd had the foresight to think about those things before I married Dumbo then stupidly spent years hoping he'd change.)

If, after considering the above, you want to spend the rest of your life with her then the next step is to sit down together and do some mutual financial goal setting. What do you really want for your lives together? A house? A family? The ability to retire early? Savings and investments? A year-long cruise when you turn 40?

If she won't set joint financial goals with you and/or won't respect them by working together to save money for things, then find yourself someone who will.

(ETA: I've been living my own happy ending for the last 14 years. Facing the facts about Dumbo was hard. As was making the decision to divorce - it meant admitting to myself that I'd failed. Four months later - when I was most determinedly not looking for a partner - I met my DH.)