How do you stay motivated with budgeting?

MattMattMattUK

My motivation is the reward, my finances stay in the black, my mortgage goes down, I have no other debts and savings grow. Financial safety and stability is to me the biggest motivation. 

kimwp

I think having a constraint (limited money available) or savings goal is how most people stay motivated. 

horsewithnoname

I’m motivated by how much worse my life was when I was juggling every penny and living on pasta; budgeting is a small price to pay for peace of mind. 

Octagon

IvanOpinion said:

Keep it simple. I see the young whippersnappers with their fancy apps spending half their days moving trivial amounts from one pot to another and breaking into a frenzy of excitement when their latest multi-coloured pie-chart tells them they can afford to buy another spiced latte with a double shot of whipped twiglets.

Mwhahaha, Ivan!!

[*^Laughing at seeing myself in your comment*]

If that’s ones’ type of fun, then it is a good way to stick at it, it must be said.

Bonus points for spending hours and hours of time, researching random referral codes/cashback offers, to make a few bob off of opening all the fintech apps..!

You’d be horrified at my ‘savings bond collection’, that when finished, will be a beautifully elegant collection(!), of sequential, trivial amounts, all featuring my lucky number (but none of my unlucky numbers)… (!)

Keeps me vaguely entertained, and uh, seem to have managed to save a bit, as well as, largely, stopped running over my budget, I guess!

Urban_knight11

MSE’s Piggy Banking Tool approach which tends to involve more than one bank account, maybe quite difficult to manage for some individuals. The principle of using different accounts for different expense topics can work for some. But for those with numerous income and outgoings it can prove rather complex to manage when you have multiple bank statements.

Instead the easiest way to manage a budget is to do a variation of the 50:30:20 rule from your net income total which is 50% needs, 30% wants and 20% for savings and investments. It’s well documented by financial advisers but here is a variation of how it could be used. 

1. For the 50% wants, try to automate all the essential expenses in direct debit. Assuming you are debt free, use a rewards credit card to function as your bank account to pay other essential expenses. Link the credit card to Apple Pay, and set up a direct debit on the credit card so that balance is paid in full by your bank account every month. That way you earn rewards but are always debt free each month. For this to work, you need to know what your average monthly essential expenses are, and then you can use your banking app to check your credit card. For example if your expenditure is £500 per month, than you monitor your credit card online your balance every month just needs to stay below £500. Noting this will not include luxuries or days out which is to be under point 2 below. You are effectively using a reward credit card to replace current account use in theory. All you need to do is just stay below your maximum expenditure threshold of £500 per month. This method creates plenty of flexibility so might spend less on one thing like coffee grounds or increase costs on train commuting. If the direct debits costs for your primary expenses like gas and leccy go up, proportionally adjust and reconfigure your reward credit card expense limit. Easiest way is to annually add inflation to all categories which should help you stay proportionate.

2. For the 30% wants, this is effectively ISA savings which could be siphoned off within your current account to a high earning interest unlimited withdrawals account to help you earn some interest. This is effectively your fun pot for all the leisure things. You could also allocate a 10% within it for a mini raining day fund for unexpected costs and emergencies. This pot can also be used to offset any unforeseen costs in point 1 above. It’s like an intermediate fun pot and emergencies buffer. The idea of this is to safe guard the longer term savings and investments for point 3 below.

3. For the 20% savings and investments. This is your lifetime and pensions savings pot. Setup accounts that make it hard to take out the money and automate using standing orders or DD. This makes it hard for you to miss the money, and it will be like a tax deduction. That way you will be saving without needing to remember. This is for the really big items like weddings, home buying, pensions and child costs. You want to try to keep all short term intermediate savings for holidays and days out in point 2.

I appreciate this only works above a certain income. So if you have average or below average incomes. Reduce the percentages for point 3 to give you more room for point 1 and 2. The point of point 3 is to guarantee your financial future. Point 3 is very hard to achieve but start small and when your income increases remember to adjust point 3. The above method also allows one to avoid debts but of course when you first start it will seem uncomfortable in the first few months. But over time it should build some resilience in the budget. 

blue.peter

Urban_knight11 said:

Instead the easiest way to manage a budget is to do a variation of the 50:30:20 rule from your net income total which is 50% needs, 30% wants and 20% for savings and investments. It’s well documented by financial advisers but here is a variation of how it could be used.

The 50:30:20 rule was discussed in this thread. The consensus view was that is of little general merit. If it (or a variation of it) works for you, that's great. Keep on with it. But don't assume that it's appropriate for everyone, or even for a majority. It certainly doesn't work for me. I'm on a fairly modest income, but I can (and do) comfortably save a good deal more than 20% of it. What's right varies a lot from one person to another.

Urban_knight11 said:

 Link the credit card to Apple Pay

Why? That might work for you, but what's wrong with using the card itself? Oh, and what's wrong with Google Pay? Even for those that do use smartphones, an Apple phone is not obligatory. Android devices work just as well (and are, I think, generally less expensive).

kimwp

I'm just reimbarking on trying to keep to a budget. I think the key things are frequently reviewing your spend against your target and good planning - I'm getting caught out by not remembering the things I have planned to do. 

Sarahspangles

itsthelittlethings said:

As above really. How do you stay motivated with budgeting long term. I tend to do it for about a month and then slip back to bad habits which is what I've been doing recently. I have pots for spending and saving but what else? A job for every pound? Write down all your spends? Both are things I don't do. What would you recommend to keep control?

Thanks.

It depends what you mean by ‘bad habits’ really. If you’re giving yourself permission to ignore your budget the advice you need is different from a scenario where your budget was never realistic to start with. I think the latter is really common.

I like YNAB (You Need a Budget), which is an envelope/pot system app. I’ll acknowledge up front that the cost puts some people off, but I like the ‘it just works’ convenience of the app. The method involves giving every $ or £ a job and then tracking spend against the categories. I don’t see how a budget can work if it’s not based on the money we actually have, and our actual spending.

The thing that makes this app different is that when I/we exceed the budget for a category there is a nudge to deal with this by reassigning money from another categories. Since ‘stuff happens’ reassignment is actually a win rather than failure. We’re simply managing our money. There were times in the past when there would be real consequences if I overspent, nowadays there are pots to deal with unexpected expense.

CrickJon

itsthelittlethings said:

As above really. How do you stay motivated with budgeting long term. I tend to do it for about a month and then slip back to bad habits which is what I've been doing recently. I have pots for spending and saving but what else? A job for every pound? Write down all your spends? Both are things I don't do. What would you recommend to keep control?

Thanks.

Quite easily. Because I like seeing my savings grow.

twopenny

Apps, are they like the old fashioned savings book?

There was something very positive and grounding about physically going and putting money in an account, getting the book back with the total amount - but also seeing a long list of figures which you'd achieved in savings.

Then if you weakened and decided to remove some savings, you had to make the effort to go and request. Often before you got there you had got a grip on yourself again.

I don't think just seeing a number on a screen has the same encouragement. Too easy come, easy go. At least that's what I find.

My keeping on track was to pin a photo of the thing I wanted above my desk at work. Everytime I thought the job wasn't worth the hasstle I'd stare at the photo until I'd calmed down   

Of course this works fine for something like a house or special holiday, not so much for a fuel bill.