Starting to budget after years of wishful thinking
edited 4 November 2021 at 12:43PM in Debt free diaries
228 replies 21.6K views
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I have made some immediate changes:
I will only be taking my bank card on my journey to and from work when i need fuel and I usually top up fridays on way home. Will completely remove any chance of me getting a mcdonalds.
All my monthly bills and income go in and out of my first direct account so I am going to stop spending in this account other than the monthly direct debits and the following transfers i have setup.
I have a halifax account I just realised I can create upto 5 savings accounts in so I have created two extra savings accounts. One account is for my yearly expenses car insurance, tax, service, mot, christmas, birthdays etc.. I am putting in what I estimate I need +20% on the 1st of the month. The other account is for savings/emergency. I am putting £200 /month into this.
The current account I hold with halifax will be used for all the random spending I seem not to be keeping track of. I will be using this for Fuel £107.50, Food £200 and giving myself £200 budget per month for anything else. I also aim to cut down my spending on unnecesary
I always got overwhelmed with all the stuff going out so took the advice to automate the money management. I will review all outgoings weekly because I am sure for the next week or so there will be stuff I have bought in last few weeks that has not yet come out of my account.
The suggestion for keeping a diary on the boards here is a great one for maintaining accountability as well - I'm Debt Free now but use a diary on here just for keeping track and keeping a focus on the day to day MSE stuff that helps to ensure we stay that way. This is the thing - you do the work to GET debt free in the first place, but that's not the end of it. It's a bit like people who go on a diet, lose weight, then return to eating as they did before and are surprised that the weight goes back on. The trick is to let the process of becoming debt free (or indeed losing weight) teach you the lessons you need to make the whole thing sustainable longer term. If you do that, then maintaining that debt free status is less of a problem as you understand about budgeting, saving etc.
I have been using the bullet journal method for getting all my other stuff done and have been amazed at how much I have achieved using it. I will put any tasks that have been suggested into this. For the budgeting log I downloaded an app on my phone just to start tracking any cash spends and any spending I make on my spending card.
Also changed my spending budget to be paid into my account weekly rather than monthly as I try and fill up fuel and do weekly shop on friday after work. So I have £117 going into my account each friday. I really should know that automation is the best way, as I am a software engineer... but have buried my head in the sand hoping for the best until now.
I will update on here regularly.
As is stands my budget for this month is about £381.88 over. I have set all the automated transfers up so dont really want to adjust these amounts. My first plan is to find something to sell in the next week. I have a simpsons lego kwik e mart sealed that should sort this or something else, otherwise in a week I will have to dip into the savings pot to balance the budget for the month. I need to get to next payday without going into my over draft.
Is the reason for the budget imbalance at this stage because you have already committed surplus to paying off debt, or simply that with it being right at the start of proper budgeting, things haven't quite leveled themselves out from previous spending yet? In either case, it's understandable and expected - and yes, having to dip into the savings isn't ideal, but it IS better than using credit. If you can offset as much as possible from selling things/cutting expenditure though, that would be great.
I look at my spend once a month unless I'm bored. Sometimes I'm well over my "free spend" (food, clothes, going out, purchases) by quite a bit, so I make sure to look at my spend more frequently and spend less in the months after. I can do it this because I have money going into savings which is more than I have planned to spend (basically a buffer), so I can be fairly relaxed.....as long as I don't consistently overspend ☺️
If you do zero based budgeting where every pound is allocated, you need to know everything you are going to spend and be willing to to cut back on something if you do overspend in one area. It takes a lot more effort, but really works for some people.
My partner and I share the coffee/tea budget - there is a tea shop on the way to work - a whole week of coffee can cost equivalent of 12 quid (work abroad). I have been paying for it for a few weeks because it is something that I willingly spend and budget for. However partner paid for two weeks this week so the 20 quid saved I would have previously just seen as money I can spend/launch. This time however, I have deliberately saved it. Therefore if you have incidents like this, don't see it as free money, save it.