Need to organise budgeting and saving more effectively

MoneyWorry

I wasn't sure where to post this as dealing with debt board is not really suitable.   I think my problems have arisen, because I've suffered a number of redundancies in previous years.  This understandably has caused me to be anxious with the result that I micro manage my savings far to much.  I definitely need a better way.  Anyway, here is my budget which I organise into basic and savings pots.  I am 59 years old and earn net pay of £1479 per month. Just me and one cat at home.

1. Mortgage Nil
2. Pension £87
3. Energy £73
4. TV Licence £14
5. Water £20
6. Council Tax £115
7. Car Tax £3
8. Car Insurance £22
9. Car Rescue £4
10. Broadband & Home Phone £27
11. Mobile Phone £12
12. Amazon Prime £5
13. Lottery £12
14. Groceries £135
15. Petrol £110
16. Misc £60
17. Birthday and Christmas £55
18. Home Insurance £14
19. Car Service and MOT £17
20. Window Cleaner £9
21. Hair Cut & Colour £35
22. Gym £35
23. MS Office Subscription £8

Savings Pots

1. Cat Health £20
2. House Maint £70
3. Beauty Treatments £22
4. Gap between occ pension & state pension age £22
5. Long term and emergency savings £23
6. Holiday £120
7. Car replacement £30
8. Clothes £28
9. Entertainment £40
10. In case of redundancy £10
11. Teeth and Glasses £14

To think of a good example, I was working out that if I need to replace the soffits on the house, it will take me over 2 years at current savings which is a little depressing.  Hopefully someone will, in a nice way, tell me where I am going wrong. Is it that I am just trying to cover too many bases?

MovingForwards

I micro manage my money too, although I prioritise my savings differently to you:

Communal repairs £250 (max pm)
Emergency fund £100
Home repairs £100
Home / Garden / Modernise £100
Car Everything / House Ins £70
Pension Cash £15
Pension £12.50
Float £25

I also have a spreadsheet for bills / outgoings.

Both spreadsheets are prepared in December and tweaked if bills go up / down, tweaked if there's a payrise. Tweaked because of recently buying my own home.

I have upper limits as to how much I'm trying to save in each pot overall eg
-- communal repairs £20k in case the roof needs doing (it wouldn't be that much but once I get to £20k I can ease up on it) realistically I put £200pm away.
-- home / garden I want £100 in each pot this year, then £100 in each next year, the modernising pot in want £3k by 2025. I can divert the home / garden savings to modernising when I reach the £100 in each.

In 2022 my savings plans will be different because of reaching some targets, again money will be diverted.

Do you already have savings and these are just top up, or are you just starting from scratch?

Do you pay insurance, TV etc monthly and is this the money for when they are due again? Or are you paying them monthly? If so, save up ready for when they are due as you are paying for the privilege of having instalments, that money saved could go into one of your pots.

My last car repair bill was over £500, how much was yours?

MoneyWorry

Maybe that is some of the problem and I don’t set ceilings on the savings. Currently, they look like this:

1. Teeth & Glasses £130 - just purchased new glasses
2. House Maintenance £2720 - this will go nearly down to 0 in October
3. Clothes £600
4. Redundancy contingency £1950
5. Cat Health £375
6. Car replacement £5800
7. Gap between pension and SPA £ 10800
8. Long term & emergency £ 6000
9. Beauty £650
10. Holiday £2100
11. Entertaining & Nights out £550

I suppose I would pay a car bill out of emergency or maybe just out of left over money at end of month. Writing all this down hasn’t made it any clearer, lol. 

MovingForwards

Is your job a client / customer facing role where you need to look very smart? 
Only asking as I would have a look at what was in the wardrobe / chest of drawers and see if it's sufficient for the rest of this year. If so, keep say £50 for smalls / tights etc and save the rest into savings pots.
-- that will then cover tax, car / home insurance, car rec, TV licence when they renew in 2021. 
-- that in turn saves you money because of not paying them monthly.
-- the money you would have paid each month, you put into savings ready for the 2022 renewal.

How often do you have your cut and colour / beauty treatments? Can you push it back a week or two? Eventually instead of going 12x a year it's 10x and you have them saved money, which again can go into savings.

Your redundancy pot isn't that big. Is that because you have been with your employer for 15+ years? 

If you look at your monthly savings budget pots, the holiday pot is getting a lot more money into it than your house maintenance. You probably do long haul which will be a lovely holiday, but as you've said you won't have any money in your maintenance pot at the end of this year, somehow you need to bump that pot up rather than starting from scratch.
-- perhaps put a hold on the holiday pot, unless you have something booked, and divert the money into your maintenance pot for this year, then 2021 your maintenance pot has a good start to the year.

Do you need the MS subscription? 
Do you get any TV packages or free calls with your internet / phone provider? If not, have a look at Plusnet as they are about £22pm.

If I'm completely off track, do say and let me know which part you want assistance with.

MoneyWorry

Any advice is good advice at the moment. I should have said earlier that I don’t pay for any insurances etc monthly, just put the money away each month. You’re probably right about clothes and the same for entertainment. I could divert the payments somewhere else. The holiday sadly is booked, but probably won’t happen. My guess is that it will be postponed to next year. As for redundancy, I would love to have been somewhere 15 years. I’ve been made redundant twice since 2013 which is how I got where I am. 

MovingForwards

Your entertainment budget is fine, covers coffees / lunch / meals out with friends. If you are not using it at the moment, bank it each month into a savings pot.

You have probably got loads of clothes that you can make many outfits from. Allocate yourself a weekend to go through them. If you do have enough, divert most of your budget to a savings pot.

Have you read through some of the savings diaries?
Many of us talk about how we save, where we make cutbacks, where we shop, what bargains or overspends we have done and then reconcile our accounts each month.
The support given helps us focus, keeps us setting goals, allows others to point out where we are missing a trick and also chat. 

LobsterMemory

While I actually struggle to see what the problem is with your approach as it looks fine to me, I would tweak it a bit.
I wouldn't keep an entertainment savings pot but have that as a monthly item on a use it or lose it basis. The fact you've built up a 14 month surplus suggests you don't need to put as much aside.
With Beauty (30 months in credit) and clothes (20), I'd combine these into a category for Luxuries/Indulgences/Self and you can alter the monthly savings amount to an appropriate level.
With the Cat Health pot, I'd shift the normal expenditure to a monthly budget item and pay any major costs out of the Emergency fund should they arise.

Coffeekup

I look at money a similar way to you, just more streamlined, being in debt made me look at money in a different way. I no longer have as many pots as you do but I organise them I'm a similar way.

Example money gets paid in to 'A' account, this money will then get shared across a number of account's..
Account 'B' is for all household bills (mortgage/c-tax/energy/insurance/water/Interweb/mobile phone and TV licence.) Tallied up these will cost £12,000 a year for example, I'll pay in £1,200 a month, which will leave me £2,400  in that account extra at the end of the year. I like to keep 4 months money in this account for if I hit hard times, and I know in 3 years time I'll have that buffer, if things go bad. Then once my target buffer has been hit, I'll reduce the payments from £1,200 - £1,000... Putting that £200 into another account/s I.e. 'C/D/E/F etc.

Account 'C' for example will be car payments, insurance, tax, fuel, wear and tear, and anything else, I'll also factor in the price of what "I would call a reasonable price for a new/second hand car every X amount of year's. Tally up the costs set a budget that increases the balance year on year till your happy.

Account 'D' for example I save in it for breakdowns, TV/food processor/boiler repairs and new boiler, settee, cd player, computer, fridge freezer, kettle and so on. Some of them I give a 6 year shelf life and some I give a 10 year shelf life total them up and assign the account some money per month ..  when the total for all of the above has been reached.

I have account's for holidays Inc spending, birthday's, xmas and occasions like mother's Day etc, and another which is just for savings which I just never touch and gets tipped up every month.
What's left in account 'A'  after all of the above has been paid goes into food, clothing, entertainment..... 

Try and keep it more simple if I were you, but do what work for you at the end of the day. As long as your balances are staying the same or going up it all good, and yes there will be times when accounts get hit like the Christmas and birthday account, but that's what it's there for.

getmore4less

This understandably has caused me to be anxious with the result that I micro manage my savings far to much.

This caught my eye because there is very little you can do about that you have a pot of saving that's it.

What you need to micro manage(just manage) is the spending.

A budget is the planned spends whats left goes to longer term stuff/savings.

You have the pot/envelope method but if we look at this, do the numbers stack up for a single year/cycle times neded

category	pot	annual	No of years
Teeth & Glasses	£130	£14	0.77
House Maintenance	£2,720	£70	3.24
Clothes	£600	£28	1.79
Redundancy contingency	£1,950	£10	16.25
Cat Health	£375	£20	1.56
Car replacement	£5,800	£30	16.11
Gap between pension and SPA	£10,800	£22	40.91
Long term & emergency	£6,000	£23	21.74
Beauty	£650	£22	2.46
Holiday	£1,200	£120	0.83
Entertaining & Nights out	£550	£40	1.15

Redundancy contingency what is that supposed to do

 net pay of £1479 per month

It might just stretch to 2 months outgoings but will take 16 years to replace or 8y to add another months spending.

once that is gone you will be eating into long term/emergency are they not the same thing.

I prefer to split into

Emergency  A small pot to cover an expense not on the budget maybe £1k-£2k

DIsaster  A pot to cover the loss of income, min 6 month spending more depending on how quick you think you can replace the income.

Beauty Do you need over 2 years worth of the annual allocation, why is the hair separate, could lump them together.

Clothes Also look to be a bit over,  heading to 2 years worth, do an audit of what you have then plan a years spends ahead keep enough back for any big ticket items that will be more than a year away.

Car    what sort of spend and renewal cycle do you have?  the pot is big enough but the time to replace may be to long. This tends to be tightly coupled with maintenance 

Holiday and Ent. look about right if that is what you are spending. As the Ent. is likely to be more regular do you need a years worth saved up, or is there a big ticket in there like an annual pass or big event that costs £100s could you cut that back to say 4 months in the pot for cashflow

The others depend on cycle times,  I would review the categories that need these pots some could just go on the normal budget an be manages as spending(over 12 months) rather than saving pots.

Remember the budget is mainly the spending plan just some is longer term.

(Even pension savings is just a plan of future spending)

As income and spending don't always match some buffer funds can be needed to even out the cash flow.

ON your list a few are really the same kind of saving just differnt timescales.

Emergency, redundancy, pension gap,  long term is what is left after none of the previous 3 eat into your pot of cash.

One thing not to do is because the pot is big enough take the allocation out of the budget, move funds from the pot and keep the monthly allocation appropriate for the actual spending.