How did you 'mentally' start saving?

Eco_Miser

When I was young, anything I wanted had to be saved for first, and by the time I'd saved enough I usually realised I didn't really want it anyway.
Now, I could afford to buy most things straight off, but I still have the habit of thinking again, and considering whether I will actually use it, and then not buy it if I won't.

Pepperoni wrote: »

This is an interesting way to do it. Things like holidays, would you consider that a 'want' or a saving though? Similarly, presents - a need or a want?

They are 'wants', but they need saving for - in yet another account if you can't mentally separate savings for different objectives in the same account.

Domayne

Pepperoni wrote: »

Thanks everyone for your replies - I did not expect so many and have found them all very helpful.

Could I just ask how you all decided on the amount to save? I go from one extreme to the other, one minute no savings, the next planning to save say 30% of our income etc. I'm wondering if being over ambitious is half the problem?

Be realistic. Do a budget. Figure out how much money you will need for rent/bills/car/clothes/dentist/entertainment etc even figure out yearly expenses like car insurance/xmas/bday gifts etc and figure out how much to budget for all these things when you get paid. Then see how much you have left over to save....when the money is gone, it's gone and you have to wait until you get paid again....OR some people figure that they want to save for example £500 per month, then they make the rest of their money work by being strict with the budget and sacrificing other things.

Why not open an account that you can't touch for a year and have your savings sent straight to it by standing order and you will learn to think of this as just another bill. Then at the end of the year when you see how much you have managed to accumulate, it will spurr you on to keep going and hitting new goals

bigadaj

This might not be a very popular convention but a harsh way of looking a t things is wasting money on frovolous things is effectively stealing money from your future self, or your kids if that works better.

The fact the government does this by running a huge deficit and debt isn't something to look on as an example.

Pepperoni

Thanks all.

I'm going to be completely honest, as I know that will continue the great advice I have received so far. I have a budget that covers everything except house stuff, clothing, and entertainment. Everything else has money allocated.

I did have money that was allocated to house stuff, clothing and entertainment but I never found it enough (clothing and entertainment are the areas where I do our overspending!). And then ended up using 'savings' to fill the whole. The amount was probably enough, it was just overspending on unnecessary stuff. I thought maybe having an open pot for these amounts, so I could vary the amount allocated to each element every month would work better.

Why? Because I see that I have 'XX' for the house fund, and I spend it because it's there? Even if I don't need anything! You get the drift. Similarly, I always found there would be an unplanned spend, say a new diary - no budget for that.... put a budget in for it? But then I spend it when I don't really need to.

Sorry, I'm rambling and jumping all over the place - asking for advice then spilling all my spending habits out! Just finding this thread useful to get it all out!

Domayne

The way I get around the 'frivolous' spending is my Amazon wishlist. Everything that I feel like I want, I add it to my wl. Then a few weeks later, usually at payday I will go through the list and see if I still want this stuff - the majority of the time I don't

You could try going back to the house/entertainment budget but increasing it....Maybe using your most expensive month as a template and that is your budget for those categories and if you have any of that left at the end of the month, you can chuck it at the savings.

I find saving kind of like dieting. You don't know how much you want something until you tell yourself you can't have it so don't do that. Tell yourself I can have it but I need to work for it. Constantly set yourself mini challenges and don't lose heart if you fail, just keep trying.

It's taken me 2 years since I was debt free to save 15k when I could have saved almost double that, but I fall of the wagon a lot. Like last month I went to Edinburgh and blew 450 on a painting just because I liked it.
I did feel bad after but then I remind myself it's a constant work in progress and I'm constantly improving it

bowlhead99

Pepperoni wrote: »

Could I just ask how you all decided on the amount to save? I go from one extreme to the other, one minute no savings, the next planning to save say 30% of our income etc. I'm wondering if being over ambitious is half the problem?

The percentage is different for everyone so comparing them is not particularly useful. If you earn £100k a year you will be losing a higher percentage of your salary to tax than if you earn £20k. But the loaf of bread that you need to buy each week is only using up a much smaller percentage of your take home pay if you take home £5500 instead of £1500 each month.

The mindset should be along the lines of: pay your creditors (debts), pay yourself (savings and emergency money), pay your future self (investments), pay your bills (usual basics including living costs and basic fun/ entertainment).

Then if there's more, you can have more fun/entertainment/ luxuries now, or you can increase your rate of savings and investments to have more fun/entertainment/security/well-being in the future.

You probably get a lot of satisfaction out of buying a random cute item of clothing for your child. The child may or may not get a lot out of it. But you and they would probably also get a lot of satisfaction out of buying your child a nice wedding, or driving lessons, or the ability to fund university or a career change without massive debt. If you've "paid your future self" before buying the cute t-shirt and there's still money for the t shirt knowing you're not compromising the future, buying cute t-shirts is fine.

Maybe it would help to keep a separate account for "random fun things" like cute clothes for the kids or extra convenience food shopping or takeaways. The trick is then just to make sure it's an account that can run dry, and don't raid another pot if it does.

So if you'd like to buy a random clothes item and a random extra food shop and a random other extravagance, every week... maybe only fund the account with half to two thirds of that, to force you to decide which ones you'll do that week. Or some weeks you'll do all, but others none because the account is dry. But meanwhile the other savings and investment accounts which pay for a holiday and a new boiler and a replacement car and some retirement plans, are not compromised.

Multiple accounts are definitely a good way to enforce budgeting and to avoid compromising one goal to reach another. In recent years all the top interest-paying accounts have been current accounts which is difficult as you are building up your funds as it encourages you to lump all your money together and cycle money in and out of accounts to chase rewards. When you have multiple goals, this can make it hard to see what you really have available for what.

Personally, I don't take "interest rate chasing" to extremes, instead preferring to have some easily labeled accounts with defined purposes funded by regular standing order.

Eco_Miser

You need multiple savings pots for your multiple objectives. These can be just entries in a notebook or spreadsheet, or entirely different bank accounts, depending on how much you can trust yourself.
Either way you need to realise that while you have allocated a monthly amount to each category, your spending should be 'lumpy' - that is you don't spend on a category for months (or years), then you have a need in that category and you spend a huge amount - to replace a broken fridge for instance.

A new diary? That should be a once-a-year item from your Christmas budget.

Pepperoni

bowlhead99 wrote: »

You probably get a lot of satisfaction out of buying a random cute item of clothing for your child. The child may or may not get a lot out of it. But you and they would probably also get a lot of satisfaction out of buying your child a nice wedding, or driving lessons, or the ability to fund university or a career change without massive debt.

This with cherries on top. I need to print this and read it everytime I'm buying something unneeded!

Exactly this. :T

Pepperoni

Eco_Miser wrote: »

You need multiple savings pots for your multiple objectives. These can be just entries in a notebook or spreadsheet, or entirely different bank accounts, depending on how much you can trust yourself.
Either way you need to realise that while you have allocated a monthly amount to each category, your spending should be 'lumpy' - that is you don't spend on a category for months (or years), then you have a need in that category and you spend a huge amount - to replace a broken fridge for instance.

Yes, you're right. I think I need to probably set some goals within those budgets to help keep me focused. For example - house fund, we need to do up our sons bedroom, and the garden. So rather than just thinking 'house fund' for nothing, I know what it's for and then hopefully I'd leave it alone. No - I will leave it alone!

wjr4

I had a goal of buying a house to motivate me but once we have bought it I won't stop saving now! I think seeing the savings add up is motivation in itself. I used to be the opposite and see my debt starting to spiral out of control (luckily I stopped spending just before it started getting worse!) but having a goal is very helpful! Also cutting back on things such as expensive make up and shopping in aldi/cheaper stores has helped a lot! I keep a spreadsheet of my income and outgoings to ensure the amount I save each month is affordable - good luck!!