Piggy banking: Returning to budgeting on retirement - how to piggy bank now we don't use cash

plumpplop

Hi everyone
Returning to MSE with my retirement upcoming at the end of April.  Used MSE over 15 years ago and  and the forum really helped in lots of ways so I'm back.  Really not sure how to piggy bank in a cashless world.  Already have a bills and a holiday account connected to bank accounts.
My key way was to draw out cash at the beginning of the month, allocate to envelopes, and spend from envelope or "repay" bank account if card (occasionaly) used.  The categories were:

• Groceries (any left over at the end of the month used for takeaway or meal out),
• Health (dentists, prescriptions and glasses),
• Car (fuel, MOT servicing and repairs),
• Gifts (birthdays, anniversaries, valentines etc.),
• Beauty (Hair, makeup etc and a treatment if there as enough available). 

It seems a bit of a faff to sort out a lot of extra saving accounts.  The budget planner associated with my bank account (lloyds - I know, I know) is not clever enough to undertstand the difference between Tesco groceries and Tesco fuel and I wonder if any are?

Any suggestions?  I'm a bit of a spreadsheet queen but less of an online banker.  I really like the idea of seeing the physical cash but don't seem to pay anything in cash these days.

In case you're wondering I was fortunate to be made redundant twice in the last 15 years, both times I had a payout and got a new job quickly at a significant pay rise so I have got a bit relaxed in my spending and need to reign it in a bit to have a comfortable retirement.

Thanks for reading and any suggestions gratefully recieved.  Also if this is not the right forum (it all seems to have changed) please point me in the right direction!

molerat

I'm a bit of a spreadsheet queen

There is your answer then.

I have one for an annual bills budget forecast which I can update as the bills come in and another monthly covering day to day spends (including 7 credit cards), budget and savings.  As to how I work it I use the savings amount to keep the current account at the minimum necessary, the savings is currently negative so that the excess from the current spend and budget is elsewhere earning interest. The actual bank account has only £133 in it but the current spend column has £1157 which covers all the credit card spends, £81 in the budget - which gets topped up monthly by 1/12 of annual forecast and the savings is at -£1105.  This means that the budget can go into negative on a borrow from Peter to lend to Paul basis which happens maybe a couple of times a year. All I need to do is ensure the current account stays positive by moving funds to and from the instant access savings account adding it to / taking it out of the savings column when necessary. If paying for a budgeted item on the credit card it shows as a minus entry on the budget, a minus entry on the credit card and a positive entry on the current spends - the money has gone from the budget column into the column that pays the credit card bill.

datlex

If you don't fancy multiple current accounts try savings accounts to set aside your money

enthusiasticsaver

I would use a spreadsheet and one or two savings accounts and either one or two current accounts. We have a current account for bills, groceries and fuel and everyday spends.  One current account each for personal spends like clothes, hair, beauty, hobbies.  A savings account for holidays, car, household, gifts. Emergency saving held elsewhere. 

The biggest issue is how is your retirement being funded?  If it is regular monthly pensions there is no issue.  If you have a DC pension and are funding through drawdown then I guess the best way is to arrange regular payments and transfer into your current account each month. 

Daliah

Several current accounts have savings, or secondary, accounts attached to it. You can name these as you please , and shuttle money about just like you would in physical piggybanks.

Starling, Monzo, TSB, Virgin Money, Chase all do. Virgin is best regarding interest (and switch offer), Chase probably worst as they still don't do DDs, TSB has a bit of a shoddy reputation, Monzo is for those who want to be religious about their current account (mind you, a bit like for Chase).Starling is good for foreign travel. You obviously don't have to change bank account if you don't want to - you could just add a current account or two. Keep a record of what you have where in your spreadsheet, or in specialist personal finance management software.

plumpplop

Thank you everyone for your comments and suggestions. 
Take your point about spreadsheets and I sure I could set up a good system, specially now you can download all the transactions from your bank statements. 
It's not so much keeping track of the payments, it is the keeping to the budget that I am wary of.  When it is cash in an envelope you have it or not.  When it is a general pot with money in I worry I will get into "debt" treating myself. 
You know "I'll just get that extra make up or whatever 'cos I'll repay next month and then next month you get an extra special birthday present that is "so perfect and pay that back next month" and before you know where you are, you are way off the budget.
Are you all so self-controlled this doesn't happen?

Daliah

You do not need to keep your cash in a general pot.

You can create any number of virtual pots, which is the modern day equivalent of having your cash in envelopes. The advantages of the virtual pots being that

1. you can get interest, which means the buying power of your money doesn't erode quite as quickly as physical cash. 
   
   
2. you can choose to lock some or all of your money away in a wide variety of fixed term accounts or notice accounts if you want to be certain you don't spend the money before a particular date
    
3. you also don't need to worry about hiding your envelopes from thieves and burglars. Obvs you have to keep your online access secure but I take it that's no issue for you.

You do need to exercise the same kind of control about spending from the virtual pots as you need about spending from your envelopes.

However, if you feel envelopes work better for you, there is nothing that stops you from withdrawing cash and stuffing it into envelopes.........

BooJewels

Whilst my circumstances are different, the net result is similar.  But my problem is rather the opposite - I have some money for the first time and am worried that I'll blow it ahead of schedule and leave myself short in the long term.  So I need to be disciplined in my budgeting - and my thinking.

I too like a spreadsheet and am meticulous about checking my banking every day and keeping the spreadsheet up to date - that habit was formed after years of not having enough money, so was a good habit to form.

I have a couple of current accounts and associated savings accounts - I just see these as digital envelopes.  I have a master savings account at each bank and several smaller pots for specific purposes.  I transfer what I need to live on each month into the current account - that covers DDs for utilities, phone, insurance etc and an amount for monthly spending on food etc. (anything I use a debit card for).   I must have been more generous with this allowance than I thought, as I am now am ahead of schedule and only transferred a reduced amount over the last couple of months as I'd got a better balance than budgeted.

One of my tricks is to allow a buffer of about 200 quid in the current account - "200 is the new zero" and I don't intend to spend this - but it acts like a fee-free  personal overdraft - just in case a batch of shopping mounts up more than you expected at month end.

I think the most important tool will be your own mind and getting into disciplined habits and thought processes.  Someone close to me got into a financial pickle with debts mounting (and excess credits elsewhere) - purely down to not being on top of it and keeping track of spending - she had enough money.  A spreadsheet was devised for her and budgets set, with a monthly SO set up to transfer an amount for spending to one current account and another for saving.  She's paid off her debts and accrued a nice lump of savings.  The only thing that has changed is her attitude and attention level to it.

Murmansk

I use Starling and they have "pots" which for some reason they call Spaces but fairly recently they refined their Spaces so that you can make direct debits come out of a Space, so you can put a certain amount of money into the particular space each month in order to cover your bills. 

I find this really useful but I guess it depends how your mind works whether this appeals to you. 

When I spend on my credit card I immediately put the amount spent into a Space called Credit Card so I will always have money set aside to cover the credit card bill. My mum used put money into cocoa tins to cover various bills, I think of this as the modern equivalent when everything's electronic rather than in cash

molerat

BooJewels said:

I think the most important tool will be your own mind and getting into disciplined habits and thought processes.  Someone close to me got into a financial pickle with debts mounting (and excess credits elsewhere) - purely down to not being on top of it and keeping track of spending - she had enough money.  A spreadsheet was devised for her and budgets set, with a monthly SO set up to transfer an amount for spending to one current account and another for saving.  She's paid off her debts and accrued a nice lump of savings.  The only thing that has changed is her attitude and attention level to it.

This 100%

Budgeting is more about your state of mind over it than the nuts and bolts of how you actually manage it.

400ixl

Another Starling account user with spaces.

You can have a space for your direct debits which you can set to top up each month (either by a certain amount or refresh the total to a set amount). You can round up purchases and have that go into a space.

You can even set up a space, say for groceries, and have a debit card which takes money from that space only.