Budgeting Help - Ending Paycheck to Paycheck Living

luckofthe_irish

Hi all,

Apologies if I am posting this in the wrong thread, but I really need some advice regarding budgeting and managing my money as I end every single month overdrawn despite starting every month with the aim to spend less and save more.

I currently have my main current account with First Direct and use this for everything - salary, bills, spending money etc.

I also have a savings account (which doesn't have anything in it!) and a separate savings account and a Help to Buy ISA where I am saving for a deposit on a house (can't put all my savings for a deposit in H2B at once so they are in a TSB Classic Plus account to earn some interest). I am in the very early stages of saving so I don't have a huge amount.

My issue is budgeting really and I am looking for tips on how people manage their money. I seem to be OK for the first 10 days of the month and then spiral into despair at the lack of available funds.

Taking this month for an example... I got paid today but started £100 overdrawn. Money automatically gets transferred to my savings account (which I end up having to raid every month) but that is all I have. My rent will not come out until the 1st but I don't want to take the money out of my current account in case I forget to put it back in one month and I am left in trouble... My biggest spends in the month are rent, car payment and food shopping (I am single but absolutely love food and keeping healthy, so I spent a lot on ingredients). I am not a massive clothes shopper or party girl so I always wonder where my money has gone every month... seemingly into nothingness even though I do keep an eye on my accounts.

Do people have different bank accounts for different things or do you just withdraw money/spend on debit card?

Would love any ideas to get me out of this rut.

Thank you!

badger09

You might get more help if you post on the Debt-Free Wannabe board.

Usual initial advice is to keep a spending diary for at least a month, writing down everything you spend. That will give you some pointers as to where you're wasting money and could cut down.

Also useful tips on economising in the 'Old Style Moneysaving' thread under Household & Travel.

Good luck:)

mjtomo

You sound like me 3 years ago!
You work hard to get paid so you need to fight tooth and nail for every penny that goes out each month.
My tips would be to print out your bank statement and categorise your spending (fixed,car,food,enjoyment etc) and really look at each payment to see where you can save, for example if you are paying £40 p/month for your internet then get on the phone and see if you can get that down to £30, that's a £10 saving straight away, (it wont make you rich but you get the idea).
I started to use a piggy bank a couple of years ago and you would be surprised how effective they are, keep dripping any spare cash you have in your wallet into it, it will mount up.
Write down your targets and break it down into days, it will give you a whole different outlook and you will think about it more and come up with new ways to save money. eg Target £100 p/month is £25 per week, just under £4 a day. Surely you can find a way to save £4 a day! This has always been a great way for me to tackle a target.
Good luck and smile at every pound you save, you will soon feel better!

Anthorn

Leapfrog over a month. For example in March you will be spending your January income. Make sure you have a current account that pays interest. Probably the only way to get it done immediately is to spend savings for a month or otherwise set up a savings goal to save a month's income.

This is also covered in the budgeting software, YNAB.

unimaginative_user_name

There are a couple of things that might help.

I find it best to have an annual budget as well as a monthly one. Some things are yearly expenses - eg Christmas and birthdays, car tax, MOT, holidays and I tend to estimate what these are going to cost based on previous years figures, divide the total by 12 and move this amount every month to another account.

It might help you to go to a cash only system for your discretionary income. Once you've moved your monthly amount to another account and all your rent and bills have been paid, divide what's left by the number of days until your next pay day and withdraw a week's worth of spending at the beginning of the week, then lock your cards away until the following week. If you have any cash left at the end of the week put this in another account to start an emergency fund (for when the washing machine breaks down for example).

The other thing I would say is look at your store cupboards and freezer contents and see if you can have a week where you use up what you've got and limit your grocery spending to milk, bread and fresh fruit and veg. I like to do this before I go on holiday, as the amount I save on grocery shopping goes towards my spending money.

Hope some of this helps or at least provides food for thought even if it doesn't fit your particular circumstances.

GingerBob_3

Pedant alert:


It's pay cheque not check, and when was the last time anyone got paid by cheque anyway?

Anthorn

GingerBob wrote: »

Pedant alert:


It's pay cheque not check, and when was the last time anyone got paid by cheque anyway?

It's an American term increasingly being used in U.K. A paycheck is not necessarily a cheque. Very often it refers to the pay advice such as for example ... er ... a paycheck

Ballard

If you have the discipline then a credit card may help you. Depending on your circumstances you might be able to get an interest free period for purchases so that you can pay the minimum each month. You would also get the benefit of seeing exactly where you spend your money when you look at your statement.

If you were to go down this route then it is imperative that you put the money aside in an interest bearing account each month so that you are able to repay the credit card bill in full at the end of the interest free period. This wouldn't make you a huge amount of interest but it would set you off into the right direction with regards to (for want of a better phrase) learning to save.

I obviously don't know your circumstances or your willpower level so I would only recommend that you get a credit card if you feel that you would use it as I've suggested. If you think that you might be tempted to splash out on unnecessary items then steer clear.

tiger_eyes

You may find it helpful to split your spending into different bank accounts.

Each month you put enough money into your bills account to pay your fixed monthly bills (rent, electricity, gas, water, council tax, internet, etc). You never spend from this account - ever. That way you can't spend the rent money by accident, and if a company forgets to take their direct debit one month, the money is still sitting there when they remember.

Meanwhile, you put enough money into your separate cash account to cover variable monthly spending (food, petrol, clothes, etc) and the rest goes into savings.