How to fall in love with saving money

cathybird

JoJoC, it's been a pretty dull old day where I am too. Re budgeting, it shouldn't be incompatible with having a life - in fact I think it can help with it by allowing you to see how much money you can realistically spare for nice treats like eating out. I think I struggle with it because I'm unrealistic about how much I spend on things - hence my several failed attempts to set up a food budget when I started this diary.

atush

Don't just budget for food, slap in a Misc budget per month. Set it low, and roll it if need be (like treats maybe?).

It doesn't really make a difference if you pay out of savings, but using your savings over a Misc budget might demoralize your saving mojo.

Lomcevak

Just picked up my marathon number, getting nervous now ... about 40 hours to go

That sounds good Lomcevak. What do you class as treats?

Eg my husband needed a new pair of work trousers a couple of weeks ago so went online and ordered some. This money wasn't budgeted for but I wouldn't class it as a treat either.

Either way, we had the money there as we don't budget strictly, but I was just wondering how you worked it?

My question to those who budget strictly is- if they're not a treat, and you haven't budgeted for them, where does the money come from? An emergency budget? Or taken from savings?

Similar questions; my view as a 'strict budgeter' (YNAB doesn't really let you be anything else) is that the budget isn't a straight-jacket so it is fine to adjust the budget mid-month, we do it all the time. But balance and setting priorities are important too. So if we decide we want something and it isn't in the budget, then we can either wait or something else has to give way - so we might spend more on clothes but at the cost of not eating out, or less on wine, or (in extremis) adjusting other discretionary budgets like holiday plans or car replacement.

As for 'nasty surprise' items (car bills, dentist, home repairs, etc.) foreseeable expenses are already budgeted for - e.g. I have £500 budgeted for car repairs, which should cover most likely bills we might encounter. In a sense this is just like a well-defined and costed emergency fund, where i've worked out what expenses we might encounter and put money aside to fully cover them, although we also have six months of un-allocated money stashed away that would get called in to play if we ever had any very major, unforeseeable expenses that exhausted the emergency funds

That all makes it sound more complicated than it really is - fundamentally all we really do is a combination of 'you can only spend it once' and 'save for a rainy day'


edit: I didn't answer "What do you class as treats?". It's one of those things that's much easier in practice than to explain, but the simple answer is it's just a small amount of guilt-free money to use as we want - we don't need to justify it to ourselves or each other.

cathybird

Lomcevak, good luck! I must have got confused, thought it was tomorrow (Sat) but it is clearly on Sunday. In case you're not about tomorrow, I hope you have a great race You seem very well prepared so I am sure you will do really well.

Thanks for the thoughts on the budget. I did buy the YNAB software but have not got around to using it, which is not very MSE of me. Must take a proper look.

Atush, I currently have a completely separate savings account and bung whatever is left over into it each month, so don't pay for food out of savings per se, though obviously if I wildly overspend on food it cuts down the amount I can save, etc. I'm just not sure I'm brilliant at working out in advance what things are likely to cost - by things I mean travel plans, monthly food costs etc - I tend to underestimate because I think I can cut down more than I actually do, when push comes to shove. Something I should give some thought to.

[Deleted User]

(I've been reading this thread every day since December but haven't had cause to post yet... so hi I guess, it's fun following along with everyone's financial progress)

cathybird wrote: »

Thanks for the thoughts on the budget. I did buy the YNAB software but have not got around to using it, which is not very MSE of me. Must take a proper look.

YNAB is fantastic software because it isn't just a way to track payments or predict expenses, it's built around their "method" which can really change a persons approach to money. All the claims YNAB make about how it can save people from financial ruin are completely true. Their method is outlined on their website (here) and it's well worth a read, the first time that I read it really changed my outlook on personal finance. Their method is similar to the Envelope method if you've ever read about that.

atush

cathybird wrote: »

Lomcevak, good luck! I must have got confused, thought it was tomorrow (Sat) but it is clearly on Sunday. In case you're not about tomorrow, I hope you have a great race You seem very well prepared so I am sure you will do really well.

Thanks for the thoughts on the budget. I did buy the YNAB software but have not got around to using it, which is not very MSE of me. Must take a proper look.

Atush, I currently have a completely separate savings account and bung whatever is left over into it each month, so don't pay for food out of savings per se, though obviously if I wildly overspend on food it cuts down the amount I can save, etc. I'm just not sure I'm brilliant at working out in advance what things are likely to cost - by things I mean travel plans, monthly food costs etc - I tend to underestimate because I think I can cut down more than I actually do, when push comes to shove. Something I should give some thought to.

Have you ever done a spending diary? Writing down every thing you spend fr a month? Do it for a few and you will know what you spend on what, and what/where there is any waste. It will tell you your spends on some things you are having trouble budgeting for?

Lomcevak

I'm just not sure I'm brilliant at working out in advance what things are likely to cost - by things I mean travel plans, monthly food costs etc - I tend to underestimate because I think I can cut down more than I actually do

One of the things I like about YNAB is that you only budget money you have - the 'buffer' means that the money you earn this month funds next month's budget - so you know in advance exactly how much you have to work with. Initially the budget will be well out, but that's totally normal - just 'roll with the punches' (as YNAB says - 'rule 3' ) and move on. After a few months your initial estimates will become much better, even though you'll never totally lose the need to adjust as you go - life's just like that.

(as an aside, you don't have to be fully 'buffered' - i.e. with a full month of income put aside - many people, myself included, have to start without a buffer. It's a bit more challenging to get started that way, but far from impossible - just budget what you have, and make building the buffer a priority.)

cepheus

I doubt is spending on material stuff would bring much happiness. Someone with the basics will have more happiness than someone in poverty on average, but having too much of it certainly doesn't help. See

https://forums.moneysavingexpert.com/discussion/comment/65170701#Comment_65170701

cathybird

atush, yep, done spending diaries previously, back in the bad old days when I was first on MSE. It's not so much that I don't know what things cost, I think, more that I get over-enthusiastic and think I can cut down more than I actually really want to. An example would probably be my decision to live on £10 a week not so long ago. It might perhaps do no harm to keep a spending diary for a month now just to get a handle on the specifics though - probably a good suggestion, in fact. I think the suggestion to try YNAB is a good one too - I have bought the software, after all. It's a matter of sitting down and working out how it works really. Thanks to Lomcevak and citricsquid for spurring me on.

cathybird

A propos of nothing, though it is quite money-saving, I was going to chuck out an oldish jar of home-made chutney I seem to have had for some years but decided to try it first. Delicious!! Really flavoursome. No idea how old it is - must be at least eight years, I reckon? I haven't even got the faintest idea what veg went into it. But it is way too nice to throw out, and will come in handy for a few sandwiches this week, I think with just a little cheese.