26, no savings feel stuck

Flobberchops

Reading through your posts, Houseplant26, I get the feeling that although you're obviously on a budget you find yourself buying unplanned things if you have the money to hand.

This is where the saving principle of "pay yourself first" comes in. You pay your landlord, the utility companies, your phone operator, you pay your mates for favours, you tip the waiter. All fine. But do you pay yourself? And why shouldn't you be the *first* person you think of paying, not the last?

I suspect that even with a variable income and and a tight budget you could commit to saving a certain amount each month, straight away, as soon as you get your salary paid. £20 a month for example, would put such a tiny dent in your finances that it would have a negligible effect on your lifestyle, but at the end of the year that's £240 saved and hopefully earning you interest. I once read that actually 10% of your income is a guideline for how much you can aim to save monthly and either not feel the impact to your standard of living, or else it's a small adjustment that you'll quickly and painlessly adapt to. In your case that would be about £100 a month saved, which at the end of a year (two years, five years, etc) would represent a tidy sum. You're probably doing some mental arithmetic right now - but bear in mind the actual amount saved will be *even bigger* due to compounding interest!

Best of luck to you. The spending diary is a great idea, at the end of the month try to find areas where you can trim the fat - preparing food at home instead of eating out is a big one for most people. I understand you're locked into your phone contract but when it comes to an end I think you should consider switching to an entry-level phone instead of the hottest gadget available - I have a perfectly serviceable phone that I pay over £10 a month less for than you do yours, and to be honest I could probably make do with even cheaper.

Houseplant26

I've cancelled my two charity direct debits. Came to £15 each. I feel a lot better for doing it. I felt guilty at the thought of it but now I know I do need to concentrate on saving a bit before I give money away. You hit on some valid points about paying myself first, I do tend to make sure I do right by other people and then fritter away money if I have it left. In some ways I make a conscious effort to be frugal and I scrimp a lot more than a lot of people I know but I think having savings would really help my self esteem. More than a new lipstick.

Houseplant26

I read about wobbling last night. Today I think I've managed to grab 27 inclaimed nectar points from someone's dropped receipt. I also looked like I was up to no good though and found it quite stressful. I guess it gets easier? I've found stuff in the street and sold it before, best was a table for £30.

eskbanker

Houseplant26 wrote: »

I read about wobbling last night. Today I think I've managed to grab 27 inclaimed nectar points from someone's dropped receipt. I also looked like I was up to no good though and found it quite stressful. I guess it gets easier? I've found stuff in the street and sold it before, best was a table for £30.

If you haven't already, you might wish to read through a myriad of tips about frugality at the Old Style MoneySaving board

HornetSaver

Houseplant26 wrote: »

I've cancelled my two charity direct debits. Came to £15 each. I feel a lot better for doing it. I felt guilty at the thought of it but now I know I do need to concentrate on saving a bit before I give money away.

Judging by what you've said in your original post about your work it clearly wasn't an easy thing to do, but it was probably a wise thing to do at least for the short term. If you succeed in your aim of being in a more sustainable financial situation, the causes you care about will benefit from that in the long-run too.

I agree with the advice of others that an old school diary of your spending is the best approach at this point. When I went through that process (probably about 9-12 months ago) I was amazed at how little the large amount of extra money I was previously spending added to my lifestyle. There are one or two luxuries that I decided I wasn't too thrilled about giving up, but I let myself have those conditional on meeting my overall savings target.

Charitable donations don't quite fit into the category of "luxury", but the principle is similar - something that you really want to do but which will cost you a slice of your income. Once you know what you're aiming to save each month towards your holiday and deposit, and know that you can consistently do it, you'll be in a good position to look at the issue again.

And once you're in that position, you could consider playing the bank account game, and making extra money that way.

Houseplant26

HornetSaver wrote: »

Judging by what you've said in your original post about your work it clearly wasn't an easy thing to do, but it was probably a wise thing to do at least for the short term. If you succeed in your aim of being in a more sustainable financial situation, the causes you care about will benefit from that in the long-run too.

I agree with the advice of others that an old school diary of your spending is the best approach at this point. When I went through that process (probably about 9-12 months ago) I was amazed at how little the large amount of extra money I was previously spending added to my lifestyle. There are one or two luxuries that I decided I wasn't too thrilled about giving up, but I let myself have those conditional on meeting my overall savings target.

Charitable donations don't quite fit into the category of "luxury", but the principle is similar - something that you really want to do but which will cost you a slice of your income. Once you know what you're aiming to save each month towards your holiday and deposit, and know that you can consistently do it, you'll be in a good position to look at the issue again.

And once you're in that position, you could consider playing the bank account game, and making extra money that way.

Thank you HornetSaver for your support and ideas.

I'd love to get to a point where I feel I can do without my overdraft and trust myself with a 0% credit card for emergencies (or maybe just savings ideally) and then be freed up to change banks. At the moment I worry I wouldn't get the same overdraft facility and the charges are really small.

I'm going to keep up with my spending diary as best as I can. I'm not doing too awfully apart from a planned work team building outing I had to pay for (£9 but I did really enjoy it) and a can of coke and a ready meal one day as I didn't have lunch prepped. Rest of the time I've been brown bagging and avoiding the shops.

I've also joined swag bucks and I'm loving it!

I think saving 10% of my income is a good goal for me, thanks Flobberchops. That would be around £110 so I'm thinking I could open two bank accounts or do one bank account and a sealed pot. Bank account 1 would take £100 and this would be my deposit fund. Bank account 2 or sealed pot would take £10 and this would be holiday fund. Although that seems a very slow way to get a holiday. Perhaps I could add all extra income to this one too though.

Thoughts?

Thankyou everyone for being so kind.

Dobbibill

Have you considered a separate bank account for your spending money? That way you aren't going without an OD as it will still be on the bills account but it would be reducing each month if you treat it as a bill and pay off a little each month.

I'm a fan of different pots for different purposes, it does makes you stop and think a little more.

darkidoe

Houseplant26 wrote: »

Thank you HornetSaver for your support and ideas.

I'd love to get to a point where I feel I can do without my overdraft and trust myself with a 0% credit card for emergencies (or maybe just savings ideally) and then be freed up to change banks. At the moment I worry I wouldn't get the same overdraft facility and the charges are really small.

I'm going to keep up with my spending diary as best as I can. I'm not doing too awfully apart from a planned work team building outing I had to pay for (£9 but I did really enjoy it) and a can of coke and a ready meal one day as I didn't have lunch prepped. Rest of the time I've been brown bagging and avoiding the shops.

I've also joined swag bucks and I'm loving it!

I think saving 10% of my income is a good goal for me, thanks Flobberchops. That would be around £110 so I'm thinking I could open two bank accounts or do one bank account and a sealed pot. Bank account 1 would take £100 and this would be my deposit fund. Bank account 2 or sealed pot would take £10 and this would be holiday fund. Although that seems a very slow way to get a holiday. Perhaps I could add all extra income to this one too though.

Thoughts?

Thankyou everyone for being so kind.

That could work. Or you could based on ur previous month's spending diary, estimate next month's spending. Once your pay comes in at the end of the month, allocate the estimated spending amount into a 'spending account', where all ur transactions, bills, groceries etc get paid for from. The rest can go into a 'savings' account earning some interest.

I wouldn't be so fixed on 10% or 20% savings right from the start. That can be your goal. If your achieve it one month, great and see if there's possibility of increasing that goal. If not, reassess things and find out why and see what else you can do. Set achievable goals for yourself and keep reassessing things.

ViktorOnopko

Hey,

I think it's great you've got the motivation to start saving and appreciate how hard it can be to get started because it seems like such a long road ahead. I've been there and gradually you will build savings which give you that short-medium result you want.

This is obviously a savings thread and there's been some great advice in here for you to consider , many of which I use. Indeed, I looked at how much I could save but then read this quote "The amount you can save is limited but the amount you can earn isn't" and with that in mind I started my own side business to generate extra income.

Once you get your basic finances in order (like cancelling your charity payments, ensuring you're not spending on unneccessary stuff) I would look at whether you have any skills that you could build a side-business from? It may be something related to your day job, a side hobby (I built a business around my love of Social Media) or something you have a separate talent for (crafts etc). You could then explore this avenue and turn earnings in to a separate savings fund (after tax etc). Food for thought.

bobobski

Hiya, I'm the same age as you and only started saving about 18 months ago, so I know how you feel. If you're like me, it's about trying to find the right motivation but every month there's a false start of one kind or another.

The trick is just to start, even if it's small, and gradually it'll build up. But I also thoroughly recommend watching the free YNAB live tutorials (https://www.youneedabudget.com/learn/classes) to get you into the budgeting and saving mindset, whether or not you actually get YNAB yourself. I do have YNAB, and a lot of people on here do, but since it involves spending money to budget it goes against a lot of people's philosophies and I've seen lots of free budgeting software referred to on here.

Anyway, those are my two tips: start small and build up, and watch those tutorials. The tutorials are live so you can submit questions, and most of the teachers are American so super keen and friendly, which is kinda nice too