how much to save opposed to enjoying life!

Rich1976

Hi Caroline

My thoughts were to have a separate account for each category because it is then easy to see how much has been saved up.

However the issue is what happens if something comes up but there isn't enough money saved in the relevant category to pay for it.

So for example there might be 300 in the car fund but what happens if the car needs an urgent repair that hasn't been foreseen and is more than the 300 in the account? The repair still needs paying for so the money will have to come from elsewhere, namely one of the other accounts and therefore the holiday fund or the home fund will need to 'pay' for the car repair.

This will then mean potentially there is less in the holiday Fund than needs be and the shortfall there will then need to be made up with extra saving to achieve the target.

But the Car Fund has also been completely depleted but a car service may be due in 3 months so again there needs to be savings to pay for that.

My other half wants just one savings account and regardless of what needs to be paid for the money will be in there and as long as we dont try and spend more out of it than necessary.

Notepad_Phil

Rich1976 wrote: »

My thoughts were to have a separate account for each category because it is then easy to see how much has been saved up.

However the issue is what happens if something comes up but there isn't enough money saved in the relevant category to pay for it.

Yes this can be a definite problem - a possible answer for you is below.

If you are familiar with something like Excel then you can fairly quickly build up a spreadsheet that you can use that deals with everything going into the one account and shows how much of the savings account is accounted for by each category.

If you don't use Excel then you can write everything down or use something like Notepad to keep track.

Then at least once a month update it with the amounts going in for each category and what has gone out.

Some categories might go negative, but hopefully the savings account will have enough plus categories to never go negative over all.

phillw

ianbar0 wrote: »

i kind of wondered if anyone put a certain % each month rather then a set value?

I don't budget for savings at all, because once you do that then you'll look at what you've got left over and spend it.

Instead of hitting a spending budget and then curbing spending, I personally think you're better off curbing your spending and saving what is left. I still maintain a standard of living in terms of food and certain activities, but I'm frugal in others & I always make sure I get the best deal.

Once you let go of the idea that spending money automatically makes you happier, then things become easier.

enthusiasticsaver

ianbar0 wrote: »

i have inherited a fascination with budgeting from my mum. although almost all of mine is online,i remember her having a tub full of jars!

i have been wondering however how much to save (rainy day and life/retirement) opposed to spending on enjoying ourselves (holidays or nice items).

i do currently put a small amount every month into a rainy day account and we put a little more into life savings. the amount i earn depends a lot on overtime etc so some time si have a fair bit of extra cash compare to the month before.

i kind of wondered if anyone put a certain % each month rather then a set value?

We aimed for an emergency/rainy day fund of 3- 6 months expenses when we were working. Now we are retired it is full at £10,000. Once we had that we diverted money into investments beyond our monthly budgets. 50% of our income is allocated to 4 savings envelopes held within our savings accounts for car, house, holidays and gifts and the other 50% is our normal household expenses. We no longer put money into investments.

Getting the balance right between saving for the future and spending in the present is much easier if you are not paying for things you bought in the past (debt) so I would get rid of that if you have any. When we were working we adopted a three prong approach. One third of spare money went to long term savings/investments or overpaying the mortgage. One third went to medium term savings for new car, long haul holiday, home improvements, kids expenses etc etc. The last third was more short term (within one year) and used to pay annual bills, Christmas, birthdays, car repairs, annual holiday etc etc. That always worked for us. We only do 50/50 now as we are already early retired so reached our long term objectives and are mortgage free.

enthusiasticsaver

Rich1976 wrote: »

Hi Caroline

My thoughts were to have a separate account for each category because it is then easy to see how much has been saved up.

However the issue is what happens if something comes up but there isn't enough money saved in the relevant category to pay for it.

So for example there might be 300 in the car fund but what happens if the car needs an urgent repair that hasn't been foreseen and is more than the 300 in the account? The repair still needs paying for so the money will have to come from elsewhere, namely one of the other accounts and therefore the holiday fund or the home fund will need to 'pay' for the car repair.

This will then mean potentially there is less in the holiday Fund than needs be and the shortfall there will then need to be made up with extra saving to achieve the target.

But the Car Fund has also been completely depleted but a car service may be due in 3 months so again there needs to be savings to pay for that.

My other half wants just one savings account and regardless of what needs to be paid for the money will be in there and as long as we dont try and spend more out of it than necessary.

There are a few ways you can sort this out. You can do as your other half suggests and just have one saving account and adjust each year. We did that when working and building up our savings envelopes. If you have a substantial car repair then you go for a cheaper holiday or up the amount going in each month. Similarly we opted for one major home improvement project in the same year as just a weekend away or staycation rather than holiday abroad. We used to plan at the beginning of the year and still do that now.

Now we do have separate envelopes and in the main separate savings accounts too. If there needs to be an adjustment and one pot needs to borrow from the other luckily the pots are now big enough for it not to be an issue.

LobsterMemory

For me, the urgent car repair would come out of the emergency fund. As far as I'm concerned, that's what it's for. That way it doesn't affect the other pots in the way suggested.

Then build the emergency fund back up in the following months (I halve what I would normally put in the discretionary spending pots like holidays and put it in the emergency fund).

Hopefully, you won't have so many crises that the emergency fund doesn't get depleted while you're building the fund back up

jackoftrade

Well I have also been doing a lot when it comes to budgeting. I have made several cut backs and I ask myself Do I really need this product? Will I use it? Is it a necessity or a luxury? It's those sort of questions that make a difference. Here is what I do, I set all of my Direct Debits to come out of my account a few days after I get paid. Once that is dealt with, whatever I have left over I can play around with it. I make a split approx. 50/50 between my accounts but sometimes 60/40 or 70/30. I keep some for everyday expendables, such as travel costs, food and some luxuries, such as clothes, health products if I decide to spend a little bit of money. I do put the rest into my savings account (currently 0.90% with Metro Bank) so it generates interest. I also have a money pot and have been doing £4 each week plus any loose change I have left over during the week. I have been putting it to one side and I usually put it into my account at the end of each year. I find it helps to separate your food shopping and shopping for cleaning supplies. I use Sainsbury's because of the Nectar card, which you can use in other stores and online and they usually run double up events which are handy if you want to get money off when you do a big food shop, ideal around this time of the year with Christmas and the New Year around the corner. Places like B&M and Wilko are good for cleaning supplies. Be warned though, pay close attention to pack sizes and the value. For example I was browsing for dishwasher tablets in Wilko the other day and it worked out much cheaper to buy 3 x 18 pack (54 washes in total) compared to buying 1 x 48 'mega' pack. It's simple things like that can make a difference, don't be afraid of taking a calculator and/or the old fashioned method of a pen and paper when you go shopping. I recently took advantage in some black Friday deals and made several cut backs, saving me a fortune in the longer term, such as reducing my Three mobile deal, changing electricity providers, reducing my water bill. I am saving up so I can get new furniture for my place, I don't need it just yet so I am waiting to see if I can shop around during the January sale (I love a good sale, but only if I feel it is worth it!). If anyone has other budgeting tips I'd like to know!