How to manage daily spending

Growurown

Some great advice here. I use a Credit Union account to put money in I don't want to be tempted to spend. There are no cards issued with the account so the only way to get money out is to phone them to transfer some into my bank account, which they do on the same day. So it's not too much of a problem to get hold of the money in an emergency but it's not so readily available to spend on the silly stuff.

I find it very difficult to keep within my food budget. OH is always popping into Waitrose, sigh. Anyway we have discussed it today and decided the only way we will keep it under control is to have cash each week and when it's gone it's gone, and we will have to make do with what we have got in the store cupboard.

lilmissthrifty

FireWyrm wrote: »

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....

Wow FireWyrm - that post was amazing!! Plenty of food for thought there. We will sit down now and look back at previous months so we can see plainly where our money is going. I will be changing all DDs to the same day each month as well. Excellent advice - much appreciated. I feel ready to take on this challenge!

We did a weekly food shop today and it cost just 20 quid as we are using up all of our freezer stuff etc. Starting as we mean to go on...