Struggling to budget

Bruce11

Any tips for someone who really struggles to budget? Ie stick to my budget! I’m permanently at my overdraft limit (which is just over a third of my monthly income) and sometimes over by payday. I desperately want to get back in the Black and reduce the OD limit but can’t seem to touch it. After all direct debits have been accounted for I have £400-500 per month “spending” for groceries, petrol, kids activities, clothes etc. I feel this should be more than enough but it rarely is. Money seems to melt in my purse.

getmore4less

Do a spending diary to find out which categories you are overspending to your budget.

Then adjust the budget to balance based on your priorities.

ValiantSon

Bruce11 wrote: »

Any tips for someone who really struggles to budget? Ie stick to my budget! I’m permanently at my overdraft limit (which is just over a third of my monthly income) and sometimes over by payday. I desperately want to get back in the Black and reduce the OD limit but can’t seem to touch it. After all direct debits have been accounted for I have £400-500 per month “spending” for groceries, petrol, kids activities, clothes etc. I feel this should be more than enough but it rarely is. Money seems to melt in my purse.

You need to be brutally honest about where that money is going. Go back over all of your spending over the last 3 months (if possible) and work out how much has been spent in a variety of categories, e.g. food, travel costs, clothing, entertainment etc. You should then be able to see where your money is actually going. It will probably help you to identify where you are wasting money on non-essentials, e.g. take-away coffees and lunches.

Once you have done this, you can then create a new budget. Allow yourself X amount for each of the essential categories, but do this based on reality, rather than a number plucked out of the air.

The next step is to plan spending. This includes things like working out what meals you are going to eat each week, and making sensible use of ingredients, so that there is no wastage (with leftover ingredients from one meal being incorporated in the next). Lunches can also be made from leftovers of the previous evening's meals.

This all needs to be followed with an ongoing record of what you spend. Every purchase should be accounted for and deducted from your monthly income - in real time - so that you always know how much money you have left.

I wrote quite a long post in response to someone else early in January, I have copied it below for you to consider too.

ValiantSon wrote: »

Without knowing all the details of your personal finances it is hard for anyone to offer much in the way of suggestions, but I'll try with a few things to consider.

1) Draw up a proper budget. Work out exactly what your monthly outgoings come to. Don't guess. Deduct this from your income and then allocate a small amount to entertainment and a larger amount to savings. Put the savings in a savings account and in a sense forget about; that is no longer money you have to spend.

2) Do you have a TV subscription (Sky, Virgin etc.)? Cancel it. If you are using up all of your salary each month (or more/) then you cannot afford this luxury.

3) How much are you paying for a mobile phone? As a rule of thumb, if it is more than £10 p/m it is too much. Find a better deal on SIM only or even PAYG. Don't sign up to any contracts where you get a new phone. These are hideously expensive and it would seem you would be spending money you don't really have.

4) Plan your meals for the week within a budget and then shop using a shopping list. Don't buy items that simply catch your eye. It can also be very helpful to do some batch cooking so that you freeze portions for use on evenings where you really don't have the energy, time, or inclination to cook. Don't buy take-aways.

5) Make your own lunch and take it to work. Do this every day without fail (and do the same for breakfast if you buy that on the go too). Convenience lunches are stupidly expensive. You can also use leftovers from evening meals to make lunches from too.

6) Don't buy take-away coffee. It might taste good, but you are paying through the nose for it. If work doesn't provide reasonable facilities for making a drink then take a flask with you. If you like real coffee (rather than instant) you can make a flask of that. Fresh coffee need not be particularly expensive if bought from the right place (see below).

7) Buy supermarket own brand products (unless the brand name is on promotion and works out cheaper) and do most of your shopping at "discount retailers" like Aldi and Lidl. The quality is no worse and can often be better.

8) If you drive a car then walk more when it is realistic to do so. You can save on fuel (not to mention wear and tear on the vehicle - all of which comes at a cost).

9) Allow yourself only a limited amount to spend on going out etc. It is too easy to fritter away money.

10) Check that you are on the best deal for gas and electricity. If not then switch and do this religiously.

11) Do the same with your broadband + phone. Also ask yourself what level of service you really need, e.g. do you honestly need fibre? The answer is almost certainly not, so don't pay for it.

12) Ignore the deals in the weekly MSE e-mail! They might sound like they are a great way of saving money, but actually they are encouraging you to spend more. If there happens to be one that coincides with something you were already intending to buy then that is different, but otherwise, ignore them.

13) Keep a track of all of your spending on a spreadsheet and update it every single time you spend money (allocating all known commitments, e.g. gas, electricity etc, at the start of the month). This way you will know how much you have at any given time. Don't be tempted to spend more and think that you will make it back by spending less next month!

14) Never buy anything on impulse. Think about it and consider whether you really need it and whether you can really afford it. Take some real time to do that, not just a few seconds.

15) Don't go shopping. What I mean is don't go out just to look round the shops as you will most likely end up spending money that you don't need to.

I know that some of these things might sound obvious or patronising, but they aren't intended to be. The most common cause of people's financial stress is lack of careful money management. You need to be ruthless in making sure that you spend less than you have coming in, so that you can really begin to save. This will take willpower and determination, but it will pay dividends.

Once your finances are in better shape then you can afford to indulge in a few more luxuries, but you still need to be sensible about these and keep a close eye on the spending.

Bruce11

Thank you!

18cc

One way to help is to not use a card but withdraw cash and pay for everything with cash.

ValiantSon

18cc wrote: »

One way to help is to not use a card but withdraw cash and pay for everything with cash.

Not necessarily. As long as you are keeping track of spending there is no benefit in using cash. Conversely, there is a benefit in using cards due to Chargeback and Section 75, plus possibly cashback on credit cards and/or other rewards e.g. Tesco Clubcard points.

Furthermore, if you withdraw cash then you increase the chances of going overdrawn, unless you are absolutely ruthless about paying all of the change back in to your current account.

datlex

A big part of keeping to a budget is not buying on impulse. It's highly unlikely that you have to buy today and hence tomorrow you will know whether you really need it.

I use excel to manage mine. How many accounts do you have. Can you post a SOA?

dawyldthing

One other thing is if you think of something you need write it down, go back to it a few days later - is it a want or a need. Use group on and the like for events. See if your work does a scheme for reduced cinema etc (like I can go to the cinema for £6.50)

Bruce11

good luck with your weight loss goals

Bruce11

datlex wrote: »

A big part of keeping to a budget is not buying on impulse. It's highly unlikely that you have to buy today and hence tomorrow you will know whether you really need it.

I use excel to manage mine. How many accounts do you have. Can you post a SOA?

thank you - impulse purchases can be lethal! what's an SOA?

Poppy1984

I have an app on my phone called “spending app” it’s a godsend. I track every single penny that comes in and every single penny that goes out.
It makes you think about buying something when you know you have to record it lol. I have one main profile that’s my bank so all my bills and direct debits standing orders and savings are recorded there, then I have a shopping budget for food, toiletries & house cleaning stuff. And a spending budget for things that don’t fit into the shopping budget e.g a take away, cinema trip, makeup, clothes, treats when they’re gone they’re gone and because I can see how much I have pay day to pay day it makes me think more