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  • FIRST POST
    • lightbulbtime
    • By lightbulbtime 12th Jun 19, 10:00 PM
    • 31Posts
    • 51Thanks
    lightbulbtime
    How best to budget
    • #1
    • 12th Jun 19, 10:00 PM
    How best to budget 12th Jun 19 at 10:00 PM
    Hi,


    I would like to put forward my initial step in my plan of attack for budgeting and see what everyone thinks.


    When it comes to my banking situation I have the following three accounts already in place:


    • Current account with a debit card where all my wages go in and direct debits come out of. I currently use this for everything and do not use the other two below.
    • Second current account with a debit card, no wages or direct debits on it.
    • Savings account with no debit card but still have instant access.


    I was planning on using them as follows:


    Use account 1 for wages going in and payments that are fixed such as; mortgage, council tax, phone bills etc. In other words direct debits and standing orders only. This would mean that anything above a fixed amount would be transferred out to account 2 or 3 at the start of each month after payday. This account should hit zero once all bills are paid (I would leave £50 as a buffer so it never goes negative). I would no longer use my debit card on this account.


    Use account 2 for food and fuel only. Only my allocated budget for fuel and food would hit this account at the start of each month and once I run out of money, that’s it till next month. This would be the only account I would use my debit card on.


    Use account 3 for two things;


    First, things I currently pay monthly for but could pay less as a lump sum such as; car insurance, road tax, car maintenance etc. and;


    Second, any other budgeted item that I should not have direct access to such as; holiday fund, dentist, clothes etc.


    I still have to figure out what the budgeted amounts I require are going to be, but what are your thoughts on this initial strategy?


    Thanks, Lightbulbtime
Page 1
    • Socajam
    • By Socajam 13th Jun 19, 1:29 AM
    • 500 Posts
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    Socajam
    • #2
    • 13th Jun 19, 1:29 AM
    • #2
    • 13th Jun 19, 1:29 AM
    Account 1 for all bills as you stated - mortgage, council tax, phone bills etc. In other words direct debits and standing orders only.
    Acct 2 for - car insurance, road tax, car maintenance, holiday fund, dentist, clothes etc.
    Account 3 for life happens fund and emergency fund only .
    • lightbulbtime
    • By lightbulbtime 13th Jun 19, 4:12 AM
    • 31 Posts
    • 51 Thanks
    lightbulbtime
    • #3
    • 13th Jun 19, 4:12 AM
    • #3
    • 13th Jun 19, 4:12 AM
    Account 1 for all bills as you stated - mortgage, council tax, phone bills etc. In other words direct debits and standing orders only.
    Acct 2 for - car insurance, road tax, car maintenance, holiday fund, dentist, clothes etc.
    Account 3 for life happens fund and emergency fund only .
    Originally posted by Socajam

    Thanks for the response Socajam. My theory behind using account two for fuel and food only was to insure I didn't use the money set aside for car insurance etc. as it was limited in funds. I would just keep the third account for everything else as I couldn't touch it by accident. Is this theory flawed?


    LightBulbTime
    • warby68
    • By warby68 13th Jun 19, 5:09 AM
    • 1,362 Posts
    • 10,875 Thanks
    warby68
    • #4
    • 13th Jun 19, 5:09 AM
    • #4
    • 13th Jun 19, 5:09 AM
    Or you could increase the amount you leave in Account 1 to also cover the annual bills as that isn't being touched either under your plan?
    • lightbulbtime
    • By lightbulbtime 13th Jun 19, 6:07 AM
    • 31 Posts
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    lightbulbtime
    • #5
    • 13th Jun 19, 6:07 AM
    • #5
    • 13th Jun 19, 6:07 AM
    warby68, very true. Am happy with the way I've laid things out, seems straight forward and simple to me. Thanks for the option though, that would also work very well.
    • Yellow_mango
    • By Yellow_mango 13th Jun 19, 7:08 AM
    • 368 Posts
    • 640 Thanks
    Yellow_mango
    • #6
    • 13th Jun 19, 7:08 AM
    • #6
    • 13th Jun 19, 7:08 AM
    That’s similar to what I am doing. Fingers crossed it works for us!

    My only comment is that it’s probably a good idea to have a budget, however small, for discretionary spending. The odd coffee or drink or birthday present or takeaway or other small unplanned purchase. Or is the plan to take this from anything left in the food and fuel account?
    • lightbulbtime
    • By lightbulbtime 13th Jun 19, 7:34 AM
    • 31 Posts
    • 51 Thanks
    lightbulbtime
    • #7
    • 13th Jun 19, 7:34 AM
    • #7
    • 13th Jun 19, 7:34 AM
    That’s similar to what I am doing. Fingers crossed it works for us!

    My only comment is that it’s probably a good idea to have a budget, however small, for discretionary spending. The odd coffee or drink or birthday present or takeaway or other small unplanned purchase. Or is the plan to take this from anything left in the food and fuel account?
    Originally posted by Yellow_mango
    Hi YM,

    I know I can reduce my monthly food bill, so I'll take these small items from there right now and adjust my budget figures as I go along. I have no birthdays to consider till October and by the looks of it I will have plenty in my savings by then to cover it. Just finished looking at my budget plan, feeling good about it and it's more than achievable providing I get a moderate, but not overbearing amount of overtime each month.
    • warby68
    • By warby68 13th Jun 19, 7:51 AM
    • 1,362 Posts
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    warby68
    • #8
    • 13th Jun 19, 7:51 AM
    • #8
    • 13th Jun 19, 7:51 AM
    warby68, very true. Am happy with the way I've laid things out, seems straight forward and simple to me. Thanks for the option though, that would also work very well.
    Originally posted by lightbulbtime
    My reasoning is that with your current plan for No 3 you will have a mix of fixed bills and variable stuff and therefore have to recheck what is available for what quite often. Totting up the annual stuff and allocating it to bills can be an annual exercise.

    You could also do food and fuel on a credit card if you are disciplined. A low limit can work as a budget backstop and you can have some kind of reward card. That would leave No 2 account for any discretionary spends you might have.

    Just other options to consider.

    I think a bills account, a spends account and a savings account (sometimes more than one of each) is a popular set up for lots of people which works well and, over time, can virtually run itself.
    • lightbulbtime
    • By lightbulbtime 13th Jun 19, 3:19 PM
    • 31 Posts
    • 51 Thanks
    lightbulbtime
    • #9
    • 13th Jun 19, 3:19 PM
    • #9
    • 13th Jun 19, 3:19 PM
    You could also do food and fuel on a credit card if you are disciplined. A low limit can work as a budget backstop and you can have some kind of reward card. That would leave No 2 account for any discretionary spends you might have.
    Originally posted by warby68
    I like your idea of using a credit card to pay the fuel and food, I hate using credit cards. Haven't used one in over a decade although I've always had one sitting at home. I'll check if there are any credit cards that provide cash back or some other incentives. I would set up a direct debit to pay in my budget amount each month. Hadn't thought of that, thank you
    • EssexHebridean
    • By EssexHebridean 13th Jun 19, 3:47 PM
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    EssexHebridean
    The drawback of using a single account for "everything else" effectively is that you will have to keep very disciplined records to ensure that you always know exactly how much is in each "pot" within that one account. We run a joint account which is basically the "bills" account - so it covers everything in terms of months expenditure. Our own personal accounts are for our personal spending, and what we do with the contents of those is entirely personal to us, but those accounts cover anything that is "me" rather than "us" if that makes sense. Off the back of the joint account we have a whole set of savings accounts - all online opened and operated only so "virtual accounts" if you like - which get fed monthly with regular transfers for things like car expenses, holiday fund, christmas presents for the family, household expenses - which covers home insurances etc. Our bank lets us re-name each of those accounts so we can recognise what they are at a glance on the online banking. Finally there is a couple of (higher interest) accounts for longer term savings so one is effectively our emergency fund, the other is even longer term than that. The first gets topped up again when needed, the second gets a regular monthly transfer. This way everything is in it's own place and we can see at a glance what is in each "pot".
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    • lightbulbtime
    • By lightbulbtime 13th Jun 19, 4:46 PM
    • 31 Posts
    • 51 Thanks
    lightbulbtime
    Thanks EH, wasn't aware i could create multiple 'pots' online like that, although I'm vaguely aware of Intelligent Finance providing something like that. I'm phoning them now to find out how they can help.
    • lightbulbtime
    • By lightbulbtime 13th Jun 19, 4:55 PM
    • 31 Posts
    • 51 Thanks
    lightbulbtime
    Thanks EH, wasn't aware i could create multiple 'pots' online like that, although I'm vaguely aware of Intelligent Finance providing something like that. I'm phoning them now to find out how they can help.
    Originally posted by lightbulbtime
    Spoke to IF, they no longer offer the pots as they used to. However, I do have a current account, savings account and an ISA with them. So the ISA has become my emergency fund, the savings my everything else pot and the current account for fuel and food, no longer any need for a credit card. I get what you mean regarding keeping track of how much is allocated to each fund, I'll contact RBS to see what they can do. It may be that I have to move bank altogether to get what I want and if that's the case then so be it. The bank should work for me, not the other way round.
    • Yellow_mango
    • By Yellow_mango 13th Jun 19, 5:08 PM
    • 368 Posts
    • 640 Thanks
    Yellow_mango
    Spoke to IF, they no longer offer the pots as they used to. However, I do have a current account, savings account and an ISA with them. So the ISA has become my emergency fund, the savings my everything else pot and the current account for fuel and food, no longer any need for a credit card. I get what you mean regarding keeping track of how much is allocated to each fund, I'll contact RBS to see what they can do. It may be that I have to move bank altogether to get what I want and if that's the case then so be it. The bank should work for me, not the other way round.
    Oh I used to have an account with IF (complete with pots!) YEARS ago. I’ve not come across them for ages. Quite surprised they’re still going tbh!

    Anyway. My new Starling account has “goals” which work just like that. You can have up to 10, and make either manual or regular contributions. You can even have one of them funded by rounding up all transactions on the main account :-)
    • lightbulbtime
    • By lightbulbtime 13th Jun 19, 6:38 PM
    • 31 Posts
    • 51 Thanks
    lightbulbtime
    Oh I used to have an account with IF (complete with pots!) YEARS ago. I’ve not come across them for ages. Quite surprised they’re still going tbh!

    Anyway. My new Starling account has “goals” which work just like that. You can have up to 10, and make either manual or regular contributions. You can even have one of them funded by rounding up all transactions on the main account :-)
    Originally posted by Yellow_mango
    That sounds like a really good plan, I'll check them out this evening and see what they can offer.
    • lightbulbtime
    • By lightbulbtime 14th Jun 19, 7:26 PM
    • 31 Posts
    • 51 Thanks
    lightbulbtime
    Today I trialled something out. Instead of driving the 1/2 mile to the shop, I walked there and back. Certainly had me limiting how much I bought as I had to carry it home again instead of just shoving it in the van. I'd say this was a win, so I'll do that as much as possible from now on, weather depending of course lol
    • girlatplay
    • By girlatplay 25th Jun 19, 8:22 PM
    • 2,767 Posts
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    girlatplay
    I've just spotted this thread. I have numerous accounts for various uses. Salary gets paid into current account, I have a note (spreadsheet) of how much I need to cover dd's and that amount gets left in the account. All the rest gets moved to the relevant account on payday. My accounts look like this:

    - Current account for wages in and all bills out. It has a card but I don't use it and don't know the PIN.
    - Cardcash account with card for withdrawing cash/transfers to other people/receipts from other people/etc.
    - Savings account 1 for the grocery budget.
    - Savings account 2 for yearly payments (insurances/tv licence/car/etc).
    - Savings account 3 for credit card payments (I spend on the cards all month for points, transfer over the funds from the relevant budget at the time then pay off from this account when the statement comes in).
    - Savings account 4 is a slush fund for any extras/entertainment/mini emergencies/etc.
    - Savings account 5 for holding funds before overpaying the loan, to be sure I definitely don't need them before they're gone forever.
    - Savings account 6 for birthdays/occasions.
    - Savings account 7 for bigger emergency fund, it's with a different bank so harder to get hold of.
    - Savings account 8 was a spare account which I am now using as part of a challenge that I have unofficially joined.
    - Savings account 9 is a joint account with my sis for monthly Christmas savings.

    I know it's a lot but it really works for me.
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    • lightbulbtime
    • By lightbulbtime 24th Jul 19, 10:03 PM
    • 31 Posts
    • 51 Thanks
    lightbulbtime
    Hi GAP, looks like you have quite the system there, looks amazing. Thankfully I'm working with just two current accounts I can use debit cards with (although I'm only using one now as the other is for bills only) and I have a good grasp on what everything else is being used for. Both my loans are just bills to me and when one is done the amount will snowball onto the other then both will go towards overpaying my mortgage.


    I have realized that my BofS loan was very high, taken at the last minute in a rush. I realize now I could've had a much better deal. So I'm off to speak to the other lenders this week to see if I can get a lower rate loan to pay off the higher rate one. So 3.4% instead of 7.7%, which would save me around £350 in interest over the time of the loan. That coupled with snowballing the smaller loan payments into this one should reduce it further.


    All adds up!
    • lightbulbtime
    • By lightbulbtime 31st Jul 19, 10:52 PM
    • 31 Posts
    • 51 Thanks
    lightbulbtime
    So quick update after getting paid. All my money has been allocated and I feel I'm in a far better place now. Thought I had a few months to pay a large dental bill, turns out the work will be complete this month and I'll have to find an extra £150 from somewhere to pay it, total bill is £800 but I have most of it saved already. Thankfully the end of the dental procedures, 9 months worth, and I can look to building the emergency fund instead. So all good.


    Felt great to allocate and move money around today, everything went how it should've. Normally I'd go mad spending money on meals or buying stuff I don't need at the beginning of the month, but not this time. I waited till I got home to cook food and have no desire to buy anything unless it's necessary.


    I love this budgeting lifestyle combined with minimalism. Wish I had done this years ago when I was making serious money, but I can only go forwards and I'm finally beginning to be happy with what I have instead of always wanting more and being unhappy.
    • Calling14
    • By Calling14 1st Aug 19, 9:24 AM
    • 2,946 Posts
    • 21,224 Thanks
    Calling14
    I took out a medicash policy I pay £17.50 a month and has worked well covering my dentist, optical expenses. There is a cheaper version but with lower benefits. It also pays out for physio/ chiropody 50% of your claim. Works well for me and a great way to budget.


    I did the Martins budget spreadsheet yesterday, horrified how many items I overlooked at in my budgeting lately.



    Need to better use of the 3 bank accounts I have but as Santander pays out a percentage of bills you pay, I keep most of them there. Gain £9 each month.


    Good luck with the budgeting.
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