Do you divide your wages immediately?

Rob5342

Ergates said:

HeatherWillDo said:

Hi all,

I recently graduated and started a new job and I'm wondering how best to budget and organise my money every payday.

Right now, I am paid into my current account, put a little in a help to buy ISA and a little into another current account which I don't use regularly so it's building up. For expenses I just pay out of my primary current account.

I think it would be better to change the second current account I'm putting some savings into each month into some kind of savings account, but I'm unsure of my options - can anyone recommend something? (I bank with NatWest).

And for your expenses, do you just keep everything in your current account until it's time to pay bills/go shopping, or do you split it all into separate 'pots' right away?

Any advice/tips would be appreciated!

If you've budgeted for savings, then it's best to do it as soon as you get paid - the longer it sits in your "main" account the more likely you are to spend it.

Yes that's what we do. We bank with Monzo and as soon as I get paid we split it into pots for savings, bills, pocket money, and pots for each week of the month. The direct debits and standing orders come out of their associated pots automatically and every week we transfer that weeks spending money out of the relevant pot. We used to have seperate bills and spending accounts but we find this way easier as we can set up pots ad-hoc if we want to put money aside for a day out, or an upcoming car service etc. 

Malchester

Some people are very sophisticated with this!!!! I have a current account. 2 pensions go in and all bills being paid from it  during the month. An easy access savings account is used for cash flow (in and out). I use MS Money to keep track with all bills going onto MS Money regularly and automatically 30 days in advance. I can then see where any pinch points are and adjut cash flow accordingly.

Nebulous2

There are about as many different ways to budget as there are people doing it. 

Some thoughts / tips though:- 

If you're earning more than you have done, money will seem plentiful now, but expenditure has a habit of creeping up to match it. Find a way to ring fence savings and pretend they don't exist as far as budgeting is concerned. 

Natwest has a regular savings account which allows you to save £150 a month and pays better interest than most options. 

Keep an eye on regular payments. Try to find cheaper options as deals run out. Its easy to let subscriptions / monthly fees build up - make sure you use them. I'm not very good at planning a budget - but I'm quite ruthless in screwing down my expenditure. 

gd55

I have a main Santander bank account, into which salary goes and all bills come out via direct debit. Also from this savings are transferred each pay day - some to a general savings account, some to a LISA for a future house purchase.

After all this, what's left goes into my Monzo account. From here, I siphon some out into pots for my regular spends or short-term savings needs. These pots help me budget for  food and petrol, getting my nails done, going in holiday etc.

anotheruser

I don't bother with "pots" for this or that - to much work (yes, even to set up in the beginning).
I just get paid on a set Friday, on the following Monday Standing Order some to a savings account and the rest stays in my account for me to pay bills.

I understand others prefer to split stuff up but I am simply too lazy for that as I see no gains over my current system.

Rob5342

anotheruser said:

I don't bother with "pots" for this or that - to much work (yes, even to set up in the beginning).
I just get paid on a set Friday, on the following Monday Standing Order some to a savings account and the rest stays in my account for me to pay bills.

I understand others prefer to split stuff up but I am simply too lazy for that as I see no gains over my current system.

How do you keep track of money you have available to spend vs money you need to keep aside for when the direct debits come for the bills?

Angelica123

It's great you are starting to think of this. Whenever a wage increases, it's natural for expenditure to increase as you chase a better lifestyle so good to take stock. 

I have a second current card that I use just for bills. I use that account for switching account for best deal. 

I think whatever budgeting tool you use - make sure are clear what are non negotiable expenditures (eg bills) so you always have enough to cover them, and what your saving goals are (for a house, for an emergency fund, holiday etc). Calculate how much you could put aside each month and set up standing orders for savings accounts to leave soon after payday.

Because I pay primarily by credit card for rewards, I have been using a budget app called YNAB which uses the pots mentality. Unfortunately, it's a paid app - I was considering quitting it now they have increased its price but yet to find a method I like as much. 

wmb194

Rob5342 said:

anotheruser said:

I don't bother with "pots" for this or that - to much work (yes, even to set up in the beginning).
I just get paid on a set Friday, on the following Monday Standing Order some to a savings account and the rest stays in my account for me to pay bills.

I understand others prefer to split stuff up but I am simply too lazy for that as I see no gains over my current system.

How do you keep track of money you have available to spend vs money you need to keep aside for when the direct debits come for the bills?

I use Microsoft Money. There are a few ways to it but essentially it will forecast your cash flow. For most people it isn't hard to forecast anyway because many bills and outgoings are regular so it's fairly easy to know what you need to keep aside.

IvanOpinion

All these 'pots' only make life complicated. I see the younguns in work spending hours with their fancy apps moving 50p from pot A to pot B because they have overspent on gerbil food but underspent on multi-coloured socks. Split your money to chase deals and best interest rates - not specific purposes, and ensure money is available when it is needed (i.e. do not put it into a 5 year scheme if you need it next year).

Then simply use a spreadsheet to determine how much of your overall savings (that should now be working hard for you) relates to each of your goals. It does not matter where the money is, just that you understand how much you need for what purpose.

Rob5342

IvanOpinion said:

All these 'pots' only make life complicated. I see the younguns in work spending hours with their fancy apps moving 50p from pot A to pot B because they have overspent on gerbil food but underspent on multi-coloured socks. Split your money to chase deals and best interest rates - not specific purposes, and ensure money is available when it is needed (i.e. do not put it into a 5 year scheme if you need it next year).

Then simply use a spreadsheet to determine how much of your overall savings (that should now be working hard for you) relates to each of your goals. It does not matter where the money is, just that you understand how much you need for what purpose.

I use pots as a day to day budgeting tool  - eg all bills are in one pot so I don't have to remember to keep £1200 aside to cover direct debits that come out on various days through the month.