How to budget / best budgeting tips?

stressedette

I’ve always been terrible with money, and have been in debt for as long as I can remember. 

However, I’ve recently inherited some money, and for the first time since I was about 18, am no longer in any debt. 

I really, really want to keep it that way!! 

What are your best budgeting tips? Separate accounts? Cash? Spreadsheets? 

I think previously I have put my head in the sand in bills / how much I pay / have disposable each month. I don’t ever want to be in a debt cycle again. 

steven141

I find that opening separate savings accounts actually works for me. A savings account for each purpose. I also get paid monthly so I split my money over how many weeks I have until I am paid so it’s like I get paid every week. 

I do have my own spreadsheet and check all of my bills every month and update it if required. Then I work out how much money I need to put away in savings and how much is for spending and groceries. 

I found that using separate current accounts for each purpose can help so you could have one for bills and one for spending. It may be worth having both with different banks or have your savings accounts with a different bank to your current accounts then you don’t see the amount in them all the time and may forget they are there and be less tempted. 

There is also the thing that if you spend all of the money in one account then at least you have money in the others. 

It is different for everyone but that works for me anyway. I do have more than 2 current accounts but technically you only really need 2 if you want to separate the money from your bills and use savings accounts or pots to store the rest. 

Mark_d

I think it pays to be frugal.  I won't buy a £1.20 load of bread if I'm happy with an 80p loaf.  A £4.50 mobile phone tariff gives me everything I need.  I don't spend hundreds each month on hobbies/entertainment as it wouldn't make sense in terms of value for money.  I gave up car ownership because my calculations showed that the convenience was costing me £1000s each year.

Other than this I occasionally add up bills + groceries and compare this to my income.  Whilst there is a comfortable amount of surplus income, I don't feel the need to draw up budgets because I can't see how it would benefit me or change how I live my life.

ThePirates

Keep a simple spreadsheet, update it weekly to start with as you try to get the hang of it, enter every penny that goes in it or if your account. That way you'll be able to see exactly where it all goes. 
I have separate columns for each type of incoming and outgoing. 
I also forecast 12 months into the future by having all of my wage incomes, standing orders and direct debits pre populated.
So I can tell you exactly how much will be in my account on Christmas day!
Obviously things change as you go along but it keeps track of your money very well. 
Like you I was in a bad place once and never want to go back there.

Rob5342

What I do is have a spreadsheet that covers a whole month's spending. It lists all my bills, my saving amount and an allowance for each weeks spending. I bank with Monzo which lets you split your momey into pots which is bery useful for budgeting. When I get paid I split my money into pots for bills and for each week, my direct debts are set to come out of the bills pot and each week I empty one of the week pots into the main balance. That works very well for me, I can essentially forget about the bills and just concentrate on making the current weeks money last.

Starling offwr spaces ehich are similar to Monzos pots, they are much more convenient than having separate accounts. 

Using cash would make things very  hard to keep track of as you wouldn't be able to see where it haf been spent. 

steven141

There is also the Snoop app where you can connect your bank account/s and see where all of your money is going. It breaks everything down. You may need to recategorise some things at the beginning but it is quite handy and shows upcoming bills and how much you spent compared to last month on each category etc. 

gwynlas

Complete a SOA giving realistic amounts to every heading to see what you actually have left as disposable income and then try to keep a spending diary to see where that goes.You can decide whether you keep pots of savings for holidays or special occasions or to pay bills that are cheaper paid annually rather than monthly. There are lots of tips on the forum..

Nasqueron

I have a long spreadsheet with every payment in, direct debit out etc all the way to mid 2026. The budget aspect is the main reason but it also means I can move pretty much every penny I have to a savings account, then move it back the day before DDs are due. It's planned to the nth degree even allowing for bank holidays, weekends etc. I don't have every transaction though as I pay everything by CC and just have a monthly total for that - I don't tend to waste money and budget for things e.g. I know my average is £400 a month (which is on the sheet) so if I want something and it's 2 days before the statement is done and I have £50 free, I can get it; if I'm already at close to £400 I am disciplined to wait provided it's a want not a need.

Brie

gwynlas said:

Complete a SOA giving realistic amounts to every heading to see what you actually have left as disposable income and then try to keep a spending diary to see where that goes.You can decide whether you keep pots of savings for holidays or special occasions or to pay bills that are cheaper paid annually rather than monthly. There are lots of tips on the forum..

SOA can be found on one of the top stickies on the Debt free forum.  You could post it back on there for money saving tips if you like but if only for yourself it's good to have a look to see what's in and out and what's essential so as to avoid more debt in the future.  

Meanwhile = well done for clearing the arrears on stuff.  Sorry for your loss that led to the inheritance, however much of a blessing it is.

freesha

• I use the budgeting feature on this website, and make sure I stick to it - if I underpay on anything such as leisure or food, it immediately goes into my savings pot. Budget Planner | Free online budget planning tool | MoneyHelper
• My bank has the feature to save any spare change from transactions straight to my savings account - this builds it up surprisingly quickly
• I also have secondary current accounts with Monzo and HyperJar, that allows you to set up 'pots' of money for different things such as holidays and Xmas.

400ixl

Separate account for savings as you want the best interest you can get (and also look at tax efficient offers like ISA's iff that will apply). Once you have your rainy day savings sorted then you should be looking at longer term investment savings anyway.

For monthly outgoings there are accounts like Starling that can have really useful features like pots.
For example, set up a pot for all of your standard monthly outgoings (rent, utilities etc). You can then set up an transfer when you get paid that moves all of the money required to pay those bills into that pot. You then set all of your DD's that apply to take the money from that pot. That way it is a fire and forget for all of your bills. You just need to monitor the DD's for any changes to make sure the balance always covers them.

For food etc you can create another pot and transfer your budget into that. You could even get a debit card that only have access to that pot (physical card or virtual).

You can then create pots for other purposes. For example your car insurance, putting money aside monthly to cover it in full when it is due rather than paying a credit fee for then supplying you with credit through a higher fee.