How do I budget?

undercover_angel

Ok, I think this is going to make me sound a little stupid but I need help so I'm gonna ask anyway.

My partner and I moved into our first home together in October and to be honest have just been spending without thinking these past couple of months but now, i know we need to work out a budget and stick to it because the pennies are getting tight now we've spent all of the excess money we had in our accounts that you accumilate when you live at home with your parents and don't have many outgoings.

My question: How do we budget?

I obviously realise we need to sit down and work out what outgoings we have and how much we spend on what (which we have done and our incomings do exceed the outgoings). But how do we know we are sticking to what we have budgeted, do we write everything down that we spend, do we need to budget for every little thing? How do we budget for yearly things like the TV liscence and MOT and service on the car for example? and unforseen stuff like the car breaking down?and stuff that comes every few months like gas/electric and water? I'm confused and think I'm reading too much into this but I really like to have a system that works for things and I guess what I want to know is how do i make the budget work and keep track of it all easily on an everyday basis?

Does any of this make sense at all?!

Help Please!

Tracey x

C_Ronaldo

My mum has a spreadsheet with all the direct debits listed, how much each one is and when it comes out, and she lists any money that comes into the account and whats left once the direct debits go out is what is available for food, anything unexpected eg car tyres etc,

some people do write every little thing down that they spend,

daveyjp

Just as you have said - know what you have coming in and on what dates and what you have going out on what dates. What's left is what you have to save for the unexpected - car repairs etc and spend on essentials such as food, travel to work and anything left is for luxuries such as clothes, leisure, holidays etc.

TV licence, gas, electric, water, Council Tax, mortgage, insurances can all be monthly direct debits so this makes budgeting easier.

The key is not to spend anything whilst at work - no nipping out for some clothes, a sandwich or a sneeky pint.

I also advise checking your bank account EVERY day online so you can track spending so you aren't caught out by any surprises.

CopperPlate_2

Have a read of this article:

http://www.moneysavingexpert.com/banking/Budget-planning

I have all the direct debits coming out at the start of the month - a separate account for all direct debits, so pay into one current account with a standing order into another current account (the DD one!) with enough to cover all the payments, plus a little bit extra to build up a small buffer over the year.

Into various savings accounts goes money every month for Christmas, Birthdays, Car MOT/Tax/Insurance, Health (dentist/optician/etc), general savings (Ha!), etc, and whatever is left in the main current account is for food, petrol and spending as we want.

The best way is to establish your fixed costs - i.e. council tax, tv licence, home insurance, etc. The things that you can work out over a year when and how much it's going to be, divide it by 12 and that's how much you need to put away each month to pay for it (very simply). Either use a spreadsheet (there are loads on this site or other MSE'ers who would be willing to send you a copy) or perhaps a money program like MS Money or equivalent.

Have a look on this site, there's loads about budgeting, and good luck.

anna42hmr

C_Ronaldo wrote: »

some people do write every little thing down that they spend,

i do this, as i got into a bit of trouble with overspending whilst at uni a few years back, thankfully my parents bailed me out, but my dad set me up with a budget and a "finance" book so i could control and know what i spend,

he got me one of those small accounts books that you can get from places like whsmiths etc, and have it broken into the following colums
Date
Transaction
£ amount in or out
account balance

on pay days i write how much is paid in and list each direct debit/standing order/loan payment etc etc due out between that pay day and the next payday,(therefore i know what is left after the essentials have come out) and then each time i use my debit card or withdraw cash i list that, so i then know what money i have available

it is an effort at the start, but once you get into the habit it takes seconds, i have been doing it since 2003, i also keep a list of how much i am spending on each of my credit cards that month in a seperate book, so i dont get any nasty surprises

another good thing is that it makes you consious of what you are spending and if there is any place that you can cut down etc

fiveyearplan

daveyjp wrote: »

TV licence, gas, electric, water, Council Tax, mortgage, insurances can all be monthly direct debits so this makes budgeting easier.

Thats great to pay your utilities monthly by direct debit but be careful that your direct debit is actually enough to pay the bill. Read the meter regularly (at least quarterly). I once paid by DD and was horrified to find that I had a huge balance to pay when they came to read the meter.

dollypeeps

If you can afford to always pay more on the gas and elec - at least that way you wont have nasty surprises and the companies will send back any huge surplus balances. Brit Gas did for me in Sept

undercover_angel

Just wanted to say thank you to everyone for all the advice, my dp and I are planning to sit down today and devise a budget and a system of how to keep it working everyday and I shall definately be remembering some of the advice I've received on here!

Thanks very much!
Hope everyone has a good weekend!

CopperPlate_2

Good luck! Just remember that you still need to have those small odd treats now and again (a CD, etc) as it can sometimes come as a shock once you've written everything down and outgoings, etc, to find that there's not REALLY that much left!! So just remember to budget for the small things in life that make it nice

margaretclare

Have a look at Martin's budget planner:

http://www.moneysavingexpert.com/banking/Budget-planning

I can't really improve on what he says. Except to say, what you're doing - sitting down together and working it all out between you - is absolutely the way to go, and very best wishes to you.

Margaret

undercover_angel

Thanx, well we've done it we've sat and worked out everything right down to birthday cards! And you're right...it's scary how much there isn't left over! Anyway, I'm chuffed because I finally have a system in place and I like to have systems for everything!!!

Just want to say thank you again for all of the advice, I've not been using MSE for long and I seriously can't believe how nice and friendly everybody is and I'm really getting into the MSE way- spent the afternoon, using up old bananas that were starting to turn by making things for the freezer- lol!!!

Anyway, I'll shut up now!

Tracey x