How to manage daily spending

lilmissthrifty

Hello everyone,

Right, 2014 is the year we make a serious dent on our debts!

Unfortunately, we're not off to the best start - after all of our bills come out we'll be left with just 50 pounds to last us until Jan 24.

However, we'll not be put off by this - we've got a store cupboard and freezer full of food and even though we might be bored out of our brains, we'll just have to use the TV as our main source of entertainment until then!

I am keen from February to get more of a grip on daily / food / entertainment spending. Do people find that using cash works best? Do you have separate purses for each type of spending?

I would like to set clear budgets for spending at the start of the month and then stick to them but I find this hard given that I spend using my debit card and then don't attribute it to a certain budget.

Many thanks for any advice!

On a positive note, my last student loan and Mum and Dad loan payments will be done by the end of February so I'll hopefully have 600 pounds more each month to throw at our credit cards!

The_Green_Lady

I have found in the past, and intend to implement again now, a number of purses containing each allocated budget - food / fuel / entertainment etc but I break the budget down into weeks and then only withdraw the money from the account each week so I can't blow it!

Mrs_Cheshire

I've recently sought advice about our debt and have been given budgets, all per month except food
£40 clothes
£40 leisure/entertainment
£10 school expenses
£60 petrol
£120 food per week. I'm aiming to spend £60 per week on food and save the rest for presents/bulk buys etc as we don't have a budget for that!
This is drawn out as cash and when it's gone it's gone.
I do a weekly meal plan and buy meat when it's reduced at least 50% and freeze it!

rising_from_the_ashes

Hi & best of luck with your debt busting

Budgeting really is the key so, if you've not done one already, do a SOA and see exactly what you need to put away for each thing each month

It's then up to you how you do it - some people have envelopes that they put cash into / others have one bank account that they put money into each month & keep a spreadsheet noting what belongs to each specific budget

Me ... I use various bank accounts:

1 - main account where salary is paid into / credit card paid from / used for spending money
2 - household bills account and I transfer a set amount each month on pay day and all my d/debits come out of here (I never use this for anything else / take cash out of it)
3 - pots, see below

When I started, I had 1 pot for each budget - but it got ridiculous (I think I had 18 :eek:) so I combined them as follows:

1 - pets (I have dogs & cats and doing this lets me buy their stuff in bulk which saves huge amounts of money)
2 - house & car - house insurance, landline advance rental (saves £3.50 / month!), emergency fund, car insurance, tax, service, mot, repairs etc
3 - others - dentist, optician, holiday etc

I worked out the annual amount I need / 12 and put that away each month. I keep a simple spreadsheet showing the balance of each individual budget - but it is handy having them all together

I put everything on the c/card (I am hopeless with cash ) and clear in full each month. When I get the bill, I work out what I need from each pot, transfer the money back to my main account to pay the bill :)HTH

FireWyrm

lilmissthrifty wrote: »

Hello everyone,

Right, 2014 is the year we make a serious dent on our debts!

Unfortunately, we're not off to the best start - after all of our bills come out we'll be left with just 50 pounds to last us until Jan 24.

However, we'll not be put off by this - we've got a store cupboard and freezer full of food and even though we might be bored out of our brains, we'll just have to use the TV as our main source of entertainment until then!

I am keen from February to get more of a grip on daily / food / entertainment spending. Do people find that using cash works best? Do you have separate purses for each type of spending?

I would like to set clear budgets for spending at the start of the month and then stick to them but I find this hard given that I spend using my debit card and then don't attribute it to a certain budget.

Many thanks for any advice!

On a positive note, my last student loan and Mum and Dad loan payments will be done by the end of February so I'll hopefully have 600 pounds more each month to throw at our credit cards!

Whatever you decide to do has to be sensible and sustainable. What works for me, might not work for you. However, there are a few rules which are pretty much applicable to all serious debt busters.

1) All spending is logged in some way. It doesnt matter if it is an app on your phone, a filofax, a diary or a simple notepad, but it has to be logged and receipts kept.

2) Make a sensible plan. It is no good pledging to yourself never to spend between the first and the last of the month if you have absolutely no chance of achieving it due to things 'cropping' up. Expect things to crop up and you wont be surprised. Build it into your budget. Call it what you want, but ensure money is available for those 'unexpected' things. When you get better, there should never be an unexpected bill since you already knew about them all before hand.

3) Use the tools available to you. If you cant trust yourself, then get an account where it is difficult to get into. This worked for me for years in terms of Xmas savings. Money went out of one account and I couldnt touch it until the end of the year. ISA's are good for this, bonded accounts etc. Likewise, use tools like MoneyDashboard.com and start reporting on what you have spent and where. There is nothing that makes your blood run cold quite like seeing cold hard figures for the amount of money you have 'frittered' away on 'this and that'. Our household once spent £800 in a single month just 'popping to the shop' up the road...:eek:

4) Get all your DDs paid on the first of the month. Most creditors will let you specify a date except for Co-Op who only allow DDs on the 'fives' of the month for some archaic reason that even they dont understand anymore. The reason for this is that all bills are paid and anything left is what you have until payday.. You wont ever be surprised by a fixed bill again.

So, here are some ideas.

1) Separate your accounts. I have a main current account with the juiciest overdraft and that is where I am paid. I never touch it for any other reason, money goes in and DD's and SO's go out. I have several other accounts too into which go a SO at the beginning of the month (1st or 2nd ish - see, all at the beginning of the month). My other current account is a 'running account' which gets £450 a month. This is £200 for food and £250 for petrol. As it happens, I have just opened another account with RBS for petrol purposes. This means that when I want to buy food, I use one card, petrol, another etc. Use different banks so the cards are easily identifiable. When one pot of money is gone, it's gone. On the other hand, if you get good and have a few pennies left over, at the end of the month, it can be bunted into a savings pot. E-Saver accounts are good for this purpose. You can give them personalised names, they come with a sortcode and account number so you can send money to them directly and they are often 'attached' to the current account so if you do get into trouble, you can rob money from elsewhere to square it up relatively easily with faster payments system.

2) Identify your long term bills. These are things like house insurances, car tax etc. You have to pay them, better to save for them than stick them on the CC. Average out a typical year and SO the money into one of those E'Savings accounts. Even if you cannot afford to do them in their entirety this year, even a 50% contribution will get you miles further on next year.

3) Get some cash out on the first of the month. For me, this is £60. It is ex-gracia, I dont get my knickers in a twist about where it goes, but it does pay for ad-hoc takeaways on the nights when we get the cooking messed up for some reason. However, when it's gone its gone. The reason for cash is you can see where it is and what it is going on and the fact that it evaporates at an alarming rate. It concentrates the mind wonderfully. It also means I dont leap off the trolley because I cant afford a few extra treats here and there. Dont make your budget too tight - you'll only end up breaking it leading to a cycle of anger and frustration as you continually fail to manage.

4) Efficiency and planning are your friend. The more you plan, the better you manage. The reason you get unexpected bills and therefore get in a mess is because you didnt anticipate them. You need to be rigorously honest with yourself about how much money is spent where and on what. Meal planning is probably one of the best and easiest ways to save yourself around £2000 a year without trying very hard. Most people seem to think that £450 a month is tough to live on...it isnt. I live on £200 for a family of 5. If you plan, it is entirely possible and actually pretty satisfying.

5) Analyse your month and the past year if you are just getting started. Get a print out and some highlighters. Give each transaction type a colour and start highlighting. You may well find that around £2000 a year (or worse) is evaporating in 'cash withdrawals'. These are neither logged (so you have no idea what you spend the money on) nor evaluated. It is just 'lost'. Knock that right on the head immediately. No cash withdrawal unless it is the budgeted and previously mentioned £60(ish).

6) Pay all your insurances yearly, even if you have to stick them on a card temporarily. Most of us can get a 0% deal or at least a 19% deal. Insurances cost 34% in interest. It's a massive rip off and you could save a few bob a year just by doing that alone. Check your paperwork on the amount of interest that was charged.

That should give you something to think about....

datlex

I personally avoid cash on the whole. I think it is too tempting to pop into shops and buy that extra can of drink or bag of crisps etc if you have cash.
For food shopping I find a good way to keep control is to do it online, even if it is just to generate a list. If you have time to go to different shops you can then maximise your savings.

japmis

FireWyrm that was AWESOME!!!!

PurpleJay

Great post Firewyrm!

its_maths_not_magic

Daily spending used to be a problem for me and I solved in surprisingly practical ways:

1. I put my savings away as soon as I get paid into a different account that has no internet or phone banking attached. If I have to withdraw from it, I have to go into the bank to do it. This also means to spend it I have enough time between want and get to use a cool head and think about what Im doing.

2. I value time more than money so I stopped seeing things as this costs X ammount, but this took me X ammount of time to make, time I will never get back - is it really worth it?

3. I took up a couple of hobbies that are practically cost-less, drawing and guitar playing. I spend my free time doing that, rather than shopping or buying stuff. I also have far more fun doing that than I ever did shopping.

Hope that helps.

MrsGSR

Really really useful post FireWyrm, I've picked a few ideas myself from there!

vasseur

rising_from_the_ashes wrote: »

Hi & best of luck with your debt busting

Budgeting really is the key so, if you've not done one already, do a SOA and see exactly what you need to put away for each thing each month

It's then up to you how you do it - some people have envelopes that they put cash into / others have one bank account that they put money into each month & keep a spreadsheet noting what belongs to each specific budget

Me ... I use various bank accounts:

1 - main account where salary is paid into / credit card paid from / used for spending money
2 - household bills account and I transfer a set amount each month on pay day and all my d/debits come out of here (I never use this for anything else / take cash out of it)
3 - pots, see below

When I started, I had 1 pot for each budget - but it got ridiculous (I think I had 18 :eek:) so I combined them as follows:

1 - pets (I have dogs & cats and doing this lets me buy their stuff in bulk which saves huge amounts of money)
2 - house & car - house insurance, landline advance rental (saves £3.50 / month!), emergency fund, car insurance, tax, service, mot, repairs etc
3 - others - dentist, optician, holiday etc

I worked out the annual amount I need / 12 and put that away each month. I keep a simple spreadsheet showing the balance of each individual budget - but it is handy having them all together

I put everything on the c/card (I am hopeless with cash ) and clear in full each month. When I get the bill, I work out what I need from each pot, transfer the money back to my main account to pay the bill :)HTH

I use a similar system to this. I actually have 6 bank accounts that I have online access to. They are:-

Current acc (salary paid into)
House & bills
Car & petrol
Holiday / After school club fees
Groceries
Emergency fund

I work out what I would need in a salary month for each of them (apart from the c/a) and I transfer the amounts over on payday. E.g I budget £40 a week for food so in a five week month I would transfer over £200. When I buy groceries I use my debit card from my c/a but as soon as I get home I transfer over the exact same amount from the groceries account to cover it. If it goes over the £40 I would try to keep it down a little the following week. Same goes for petrol etc.

Then I keep a cashbook and this has everything that goes in and out of my current account, along with a running balance and is KEY to keeping control of things. Some people use spreadsheets but I have found my cashbook to be the system that works for me. I check my online banking every day and tick off when payments leave my account. This way I know exactly how much I have left even if it doesn't agree to the bank. I have some DD's that come out halfway through the month but I take them into account at the beginning of the month because I know they've got to be paid and I won't have any shocks later in the month.

Great advice from FireWyrm too