How do you balance your finances?

camNolliesMUMMY

Basically we are a family who keep going into our overdraft.
I'm thinking of separating our bank account into two.
One for bills and transferring enough funds to cover them each month and the other one for personal spends and food.
I'm fairly frugal but I'm trying to figure out if this system will work for us.

How do you balance your account?

sourcrates

I have a basic bank account with no overdraught facility, when the money runs out, it runs out lol !!
On a serious note, I now manage my money pretty well, (ex IVA) now debt free :j I have learned my lesson the hard way.

camNolliesMUMMY

We are going through a hard time with finances due to renting our council flat and renovating our first house hopefully due to move in 1-2 mths time.

We are feeling the pinch but I would like a system that is going to work.

I used to have direct debits set for the 1st of each month but now a few dd can't be set for particular dates, such as hubby's vodaphone bill comes out on the 22nd of each month hubby gets paid the 28th!! This annoys me so much.

Once we move I just want my banking system to work so I'm not having to worry that forgot xyz bill is going out and panicking about lack of funds because it's been spent.

nearlyrich

We each have a bank account of our own and we both transfer a set amount each month into a joint account which the bills come out of. We don't have cards or chequebooks etc for the joint account and we have a recalculation each April when the council tax bill comes in. Works for us...

camNolliesMUMMY

We used to have separate accounts when I was working and we did this.
However I'm now a stay at home mum with two boys, married and hubby was happy with having a joint account.
Every Tuesday child tax credits go into this account and child benefit once a month to help bring the balance back up a bit.

[Deleted User]

I operate the 2 account system, and it works for me.

My salary gets paid into my main account.

The following day, a Standing Order transfers to my second account (for which I have no ATM card) enough money to cover all my DDs.

What remains in my main account, covers the none DD bills, food, diesel, etc.

elfy1807

I find I work better when dealing with cash.

The bank account that my wages go into is my main bank account and my direct debits come out of that.
I work out how much I need to pay before next payday and leave that in the bank.
Then I take out every other last piece of money to the nearest £5/£10 (just as a back up in case I've calculated it wrongly).
I then spread that cash out across the cash payments such as board to my mum, my monthly petrol money and my personal "pleasure" fund.

I also have a second bank account which I use to build savings.
I recently collected together my £1000 emergency fund, which I have transferred into my mum's book bank account so I still have access to it, but not as readily to stop me from saving. My second job wages get paid into that account and any spare money (such as any over overtime* at first and second jobs) will go into there as well to help me build up a start to a house deposit.

*My contract at my first job is just 20 hours per week. I get paid 4 weekly, and these wages cover all my bills - my car finance, car insurance, board, petrol, "pleasure" money and phone bill. I have been given 6 extra hours a week OT on a temporary basis for the foreseeable future and this money I treat separately and that is going towards various spendings throughout the year such as friends and family birthdays, christmas, and saving up for car insurance in january 2015 so I can save myself £42.99 a month (this year was just not an option to pay in a lump sum). I split this up into envelopes with the goal amount written on the front.
Then the over overtime (anything after the 26 hours at job 1) will be split between my second bank account alongside the second job wages for savings and given to my mum to pay off what I owe her.

Chrisblue1962

Bedsit_Bob wrote: »

I operate the 2 account system, and it works for me.

My salary gets paid into my main account.

The following day, a Standing Order transfers to my second account (for which I have no ATM card) enough money to cover all my DDs.

What remains in my main account, covers the none DD bills, food, diesel, etc.

I do basically the same but I have four basic bank accounts - YBS Cash Converter a/c - DD bills only (salary paid in here, no debit card on a/c) ; NatWest Basic a/c - non DD bills ; Lloyds Cash a/c - Motoring and petrol expenses and finally, Co-op Cashminder a/c - personal spending.

In addition, I have about ten savings accounts for various piggybanking purposes.

With regards to day-to-day management, I have a Monthly Budget Spreadsheet, which has two parts, Projected Budget for the month and Actual Expenditure.

The Projected Budget part is basically a list of all bills due in the coming month and as bills are paid, each bill amount is moved into the "Paid" column so I always know what / how much has been paid and what / how much is still due.

The Actual Expenditure part of the spreadsheet is a mirror image of all transactions on the four basic accounts, which are accessed online, so I know at any time how much is in each account at any time.

All non DD spending is tracked using a Spending Diary section.

By linking the Projected Budget and Actual Expenditure parts by formulae in a Headline Summary part, I can always ensure my budget and expenditure stays on track....with a large serving of willpower too, of course

Hope this helps

FireWyrm

Chrisblue1962 wrote: »

I do basically the same but I have four basic bank accounts - YBS Cash Converter a/c - DD bills only (salary paid in here, no debit card on a/c) ; NatWest Basic a/c - non DD bills ; Lloyds Cash a/c - Motoring and petrol expenses and finally, Co-op Cashminder a/c - personal spending.

In addition, I have about ten savings accounts for various piggybanking purposes

Hope this helps

I do something similar. I have a HSBC account with an overdraft into which my salary is paid. All bills come out of that account and although I do have a debit card for it, it absolutely never gets used. On the 1st of the month all bills are paid by DD and all standing orders are processed. The standing orders deliver money into different accounts for different purposes.

1) Red : Santander...children (covers clothes, shoes, school trips)
2) Green : Lloyds...entertainment (books, DVDs, games etc)
3) Blue : RBS....petrol (petrol only)
4) Purple : Natwest....food (food only)

In addition to this, any money left over out of those pots is siphoned into sub-accounts, so, anything left over from Petrol, is moving into Emergency, £70 a month gets moved automatically out of Santander into a sub-account for School Uniform.

I have various investements for Xmas and other longer term savings such as Car Tax, Car Insurance, AA Breakdown, MOT etc. These either take direct funding from HSBC or rollovers from other accounts.

I use YNAB (you need a budget) as my budget calculator and forecaster. All money is allocated down to the penny. If I want to buy food and there is nothing left in Natwest, tough...we make do and I do better with the planning next month.

If this sounds complicated, consider this. If you were running a business, would you employ an accountant to look after your budget of £40 - £80K annually if they didnt know what they were doing, didnt have any book keeping tools and had had no experience of money management? If the answer is no, then download a spreadsheet or some software and get stuck in. With the new Mortgage Market Reviews (now law as of 26th April), every time you come up to remortgage, you will have to prove to the banks' satisfaction that you can afford it. The only way to do that is to run your household finances as rigidly as you would run business accounts. That means you have proper books, keep receipts (or at least log them) and can explain where every penny went.

matttye

One main current account. Wages get paid into this. All DDs go out of this account. I put all spending on a credit card and pay it in full by DD (out of main current account) each month.

Additional current accounts simply for interest on savings.

No need for anything more complicated as I know what I have coming in and going out. There's nothing unexpected because I know what I have to pay for and when - even my yearly expenses.

That said, I always do leave a bit in my account "just in case." I'm not perfect and I'm sure I'll forget something at some point.

Chrisblue1962

FireWyrm wrote: »

"...If this sounds complicated, consider this. If you were running a business, would you employ an accountant to look after your budget of £40 - £80K annually if they didnt know what they were doing, didnt have any book keeping tools and had had no experience of money management? If the answer is no, then download a spreadsheet or some software and get stuck in. With the new Mortgage Market Reviews (now law as of 26th April), every time you come up to remortgage, you will have to prove to the banks' satisfaction that you can afford it. The only way to do that is to run your household finances as rigidly as you would run business accounts. That means you have proper books, keep receipts (or at least log them) and can explain where every penny went."

Thank you again Firewyrm, , excellent advice, as ever. I am lucky as I used to use spreadsheets all the time in a previous job so I have become quite proficient in using them.

However, the exact methodology can be bespoke software, eg YNAB, a spreadsheet ot even a handwritten book / cashbook of some sort. The fundamental part is to have "a system" that works and works for you.

The business analogy is very apt as a valid question to ask onself is "If I ran a business like I run my personal finances, would I stay in business, would I make a profit or would I go bust?"