Getting into healthy budgeting/saving habits?

nicetomeetyou

When you first started budgeting properly and managing your money did you find that over a longer term you find yourself enjoying saving money and seeing you account balance grow bigger, Did this encourage you to continue budgeting/saving? Have you got into healthy habits now after having bad spending habits?

captainlongtoes

I'm only about 1.5-2 years into better money management, but for me one big motivator is no longer being stressed when bills arrive and no longer being afraid to open the post. My savings aren't huge compared to many at my age, but they're far more substantial than I've ever managed before and that indeed motivates me to keep going and to not dip into my long term savings  as much as possible.

Lockdown has really shone a light on my habits though. Beyond staying out of credit card debt, I realised I still had a way to go. I looked at previous bank statements and saw I still wasted needless amounts of money and can reasonably cut back even further while still enjoying some of the fruits of my labour and staying away from overdrafts as much as possible.

blue.peter

It's a long time since I was in any financial difficulties: over 30 years. What started the problem wasn't really particularly bad spending habits, but biting off a mortgage that was a bit too big for me to chew at the time. (£25,000 doesn't sound much now, but it was a lot for a young single person in 1984. Salaries were a lot lower and interest rates a lot higher than now.) The big motivator in getting me to manage my money better was the series of stroppy letters from my bank manager. I lost a lot of sleep worrying about my overdraft. The two best things that I did to resolve it were:

(a) setting up a second current account for bill payments, and dropping an appropriate amount into it each month (electricity and phone bills were quarterly, and mortgage payments were due half-yearly, so I really had to plan ahead a bit in my budgeting - I couldn't look at the next month alone); and

(b) getting a promotion at work. Suddenly, I had more money available, and it went to paying off the overdraft.

Yes, it was nice to see some savings building up through the 1990s. And yes, it was a bit of a motivation to continue good financial control. But the big motivation was, as for @captainlongtoes ,  the reduction in my stress level. I didn't want to get back to constantly worrying about money.

I still use the approach that I started in the mid-80s, though it's evolved a little and the tools have changed. I started with pen, paper and calculator. (Does anyone remember Filofaxes? I found their cash book pages perfect for the job.) I later moved on to RMR Bank on a Psion Series 5, and now use AceMoney on a desktop PC. The methodology that I started using 35 years ago has stood me in good stead. And it's lovely to look at the rising top line on the savings graph that I created in LibreOffice Calc a few years ago. Well, it is if you ignore the big drop in the S&S ISA caused by Covid-19 :-(

datlex

I found that strategy of at the beginning rather than at the end was key for improving my finances.

Roger.Wilco

I've always budgeted (to some extent) and have always saved (to some extent).

For the last 1.5 years - I've run my personal finances like a business with full accounting.  To be fair - I was doing the same thing six years ago - but fell out of the habit.  So now I've re-established the habit. The reason for re-starting was that my girlfriend at the time was freaking-out regarding the large sums of money entering and leaving my bank account(s) - to her I was spending recklessly. 

To explain: for international work travel - I have to pay personally first and then claim before being reimbursed - usually with a lag of a few months from initial spend to reimbursement (the amounts can be substantial - many £thousands).  So the reason to run accounts was to demonstrate to her that despite the bank account balance at times dropping by many £thousands - and the credit card(s) holding many £thousands - overall my position was sound. 

What I have since found is that I now have a much better grasp of what is happening and the first time I have an overall picture across all my accounts even those held in other countries in other currencies.  Therefore, I have been able to identify areas for optimization and have been able to optimize (pension, salary sacrifice, discretionary expenses etc...) so that I'm much better-off per month.  By spending time analyzing routine spend - I've been able to identify reoccurring patterns.  I've now got to the stage where in the accounts journal I have future reoccurring expenditure for the next few months and reconcile against this every week.  Therefore, I now know exactly what my position is both today and in the foreseeable future - whether I'm still employed or not and how long I can keep eating.  And like other posters above - that brings a huge amount of peace of mind.

I have also changed my behavior - in that now I have separate accounts for salary, reimbursement, monthly spend and daily spend and now I know the reoccurring monthly/yearly expenditure - I have setup standing-orders - so much of this is now automated.

The other upside is that I look forward to reconciling every Sunday and on the 1st of every month and seeing my Net Worth improve... the downside is that my girlfriend left me at the beginning of the lock-down.

discotek

I do think it's like anything - the less you know about it the scarier it is. I started my savings spreadsheet in May 2017 at the age of 24 but I'd already been saving since I was 22. Looking back on it now I feel immensely proud - in May 2017 I had £10,000 in savings and by September 2019 I had £25,000 for my half of a deposit. I never would have been able to achieve that without tracking my money and having relatively healthy spending and saving habits. I'm extremely fortunate though that my parents paid off my £1,500 university overdraft after graduating so I never felt forced to accrue bad spending habits out of necessity.

Always having a goal keeps me motivated and the MSE forum has been great for accumulating knowledge to help achieve those goals.