How to actually budget??

madaboutspots

For myself I see my CC as a really useful tool but I'm incredibly (boringly) disciplined. I check my CC account via the app every single day and know every purchase.

I pay the full bill every month and have done for years. I wasn't always like this - the threat of bailiffs years ago made me learn constantly knowing where I was at was the only real way to keep on top of bills and temptation. I'm now scared of losing control again. I keep that fear at bay by knowing where each penny goes.

I use our CC for points and purchase protection only. I've even been known to make a purchase and within 10 mins have the bill paid in full - just to get the points!

To me personally, any other way of using a CC is a recipe for disaster. Temptation is everywhere and zapping a card is nothing like as painful as parting with cash. 

Jami74

@kimwp I agonised over how to record credit card purchases for ages. I wanted to log them as spends at the time and log the credit card payment when it was taken, which screwed my spreadsheet up completely as on paper I was effectively paying for those purchases twice. Now, I just log them as I spend them under the relevant column (groceries, car/travel, eats). It means that my actual cash balance is always different to my spreadsheet balance because my cash balance reflects that I haven't actually paid for them yet but my spreadsheet shows that I have.

greensalad

kimwp said:

What are thoughts on credit card purchases? I usually account for these in the month the item is bought, but actually the money leaves my debit card account (which is where I do the summing up) the month after.

I have a pot and I transfer the spend into the pot as soon as it happens. Then when I come to pay the bill, the pot is ready to use.

kimwp

Jami74 said:

@kimwp I agonised over how to record credit card purchases for ages. I wanted to log them as spends at the time and log the credit card payment when it was taken, which screwed my spreadsheet up completely as on paper I was effectively paying for those purchases twice. Now, I just log them as I spend them under the relevant column (groceries, car/travel, eats). It means that my actual cash balance is always different to my spreadsheet balance because my cash balance reflects that I haven't actually paid for them yet but my spreadsheet shows that I have.

Yes, exactly, I had a similar system where I logged as I spent, but I never compared to my balance so it didn't bother me. I'm now working a slightly different system where I move money at the start of the month to cover upcoming outgoings so I'm taking more notice of my balance. Would it work to have an extra line for credit card spends on your spreadsheet, then the total for each pot shows how much you have left and the balance would be calculated not including this extra line?

Jami74

kimwp said:

Would it work to have an extra line for credit card spends on your spreadsheet, then the total for each pot shows how much you have left and the balance would be calculated not including this extra line?

Not for me it wouldn't, because I don't start with specified pots for my credit card spends (which is everything except direct debits/standing orders/manual transfers to savings). 

I have 'pots' for yearly expenditure such as car tax/insurance/MOT, professional fees, Christmas/Birthdays and Holiday and put the same amount in each month, but I stopped logging them as monthly outgoings on my spends sheet because I also wanted to log exact figures when I actually paid those things. I log the exact amounts I spend so at the end of the year I can see to the penny how much eg my car has cost me. I pay for the big annual spends on a credit card and then transfer the money out of the pot into the current account to pay it off in full when it is due.

I have a sheet of outgoings month by month and every single spend is listed (colour coded depending on which card or account it was spent on and under the relevant column). I also have a column for income where every 'in' is listed (wages, interest, refunds, birthday money etc). And a 'profit' column (Income minus outgoings). This sheet doesn't take into account money saved or bank account balances so is not reflective of, and often very different to, my cash balance.

I have another sheet which mirrors my accounts. For each month I put in the regular outgoings, the things that don't change. Eg mobile phone, rent, savings pots etc. Credit card statements come out in the month before they are due so I add these on as I get them, so by the end of one month I know what my outgoings for the next month will be. I get paid mid month and immediately transfer that money out, then 'pay myself' the required amount needed on the 1st of the next month to cover all of that months outgoings. If one month the credit card bills are higher I make sure less is spent the next month, over the course of the year it balances out. 

I have yet another sheet where I update the actual balance of every account I have. I update it nearly every day so at a quick glance I can see exactly how much money I have on that day.

It sounds complicated but it works for me, I've been tweaking it for 3 years now. 

kimwp

Thank you @Jami74, appreciate the time you took describing your accounts, it's really useful to hear about different approaches. I actually have the same as your second and third spreadsheet, though I update them monthly - I frontload all my dd's and SO's so there's very little change after the 10th of the month.
I'll stop hijacking the thread now, though I have hopefully not gone too far off the original question

Ellie_BB

Thank you all for your helpful posts - in particular I have to say thanks to those of you who suggested YNAB. Their resources have been unexpectedly amazing! I've learned more about budgeting and how to make it work for me since I started this thread than I have in years before! I'm still learning but feel I might just be starting down the right path for me now. :-D

I've tried to work out my budget based on what I spent last year, but the pandemic means I have more in some pots than I would normally - things like petrol, for example. Am very nervous that this will get harder when we're allowed back outside (!) but am learning every day and most of my pots are growing as I need them to, so hopefully I'll be ready when the time comes.

thanks again to everyone who posted suggestions :-)