Budgeting is crucial to your home, health and happiness. Especially in the current climate we all need to ensure that we are managing our money well.
I tend to do our monthly budget just after we have been paid but before we have spent anything. I then update throughout the month to see 'where we are'.
Both Allan & I have our own current accounts. This originally was due to Allan being in an IVA, but it still seems to be working OK. Although there is always room for improvement.
Our Budget Is:
Allan Income = £XXXX
Stacey Income = £XXXX
Allan Expenses out of current account:
Half of Rent & Council Tax = £180.00
Transfer to Godson = £5.00
Water Direct Debit = £38.50
Sky TV = £42.00 (our treat and this includes broadband and all landline calls)
Mobile Phone = £25.00
Fuel = £100.00
Allan Spends = £75.00 (Allan plays skittles for our local team which accounts for £50 of this)
Total = £465.50
Stacey Expenses out of current account:
Half of Rent & Council Tax = £200.00
Mobile Phone = £15.00
Charity Donations = £14.00 (See my other post!)
Fuel = £80.00
Food Shopping = £100.00
Stacey Spends = £25.00
Total = £409.00
I then transfer the following to a 'Bill Account' (once a month for both of us):
TV Licence = £13
Dentist = £33 (Unfortunately we have been unable to get an NHS dentist yet)
MOT's & Services = £42
Car Tax = £25
Car Insurance = £96 (This is the best deal we could get at the time!)
Garden/Seeds etc = £10 (Max limit £100)
Electric = £25
Water = £17 (As the bill is often more than the DD Payments)
Chimney Sweep / Boiler Service = £10
AAT Registration = £10
Christmas Savings = £50 (Max Limit £600)
Emergency Bill Fund = £150 (Max limit £2000)
Pet Fund = £42 (Max limit £500 - this is for her boosters/flea/worming etc)
Birthdays = £35
Contents Insurance = £10 (We managed to get a years policy for £9 last year but it is normally £120 so that is what we will save up)
Millie Insurance = £10
Baby Fund = £150 (Max limit £2000)
Total = £731
The balance we have left after deducting our expenses goes into our house deposit account.
I have a spreadsheet set up and I record all of this information.
I have one bank account for the bill account but I have categories on my spreadsheet so I can see how much I put in and take out for each one. I.e I put in £10 a month for gardening x 10 months = £100 and I then spend £25, so after 10 months the balance on that category is £75.00.
I have a limit on each account so for example the pet fund account limit is £500. Once this balance is reached I stop paying in.
Things I would like to achieve in 2009.
1) Reduce water usage and therefore bills!
2) Reduce electric usage and therefore bills!
3) Stick to grocery budget and try to reduce if possible.
4) When car insurance renewal comes about - try to reduce.
5) Find an NHS dentist and use it instead of private...much cheaper but quite difficult!
6) Try to only use a maximum of £50 for gardening etc Try to save seeds for next year.
7) Try to spend a lot less than £600 at Christmas by making gifts and shopping around)
8) Try to get a competitive quote for Millies & Contents Insurance.
9) Start using cash to pay for fuel & food shopping where possible to help track spends.
Tips on doing your own budget:
General.
When doing your own budget make sure you do it weekly/monthly/fortnightly etc but ensure that everything you list is for the same period.
If you are not sure how much you spend on 'stuff' (clothes, magazines,books, newspapers tea/coffee,music, dvds etc etc all the non essentials) then keep your receipts or a spending diary for 3 months to show your spending habits
Make sure you have to hand 3 months worth of bank statements. If you withdraw cash quite often then make sure you keep receipts or a spending diary for the same period so you can see what the cash is being spent on.
1) Make a list of your income from every source.
Next to each type of income write whether it is guaranteed or not.
For example your basic wage may be guaranteed but a bonus or commission may be on top and you may not always get this every month.
2) Make a list of your expenditure.
List everything.
Next to each item mark whether it is essential or not.
Deduct the total of list 2 from list 1.
If you have money left then you are not going to get yourself in debt but you still may be able to find ways to have more leftover.
If you do not have money left then you must address your budget urgently as if you ignore the situation you will end up getting deeper and deeper into debt.
First of all go through your list of 'non essential expenditure'. If you didn't have any money left on the first budget exercise then I'm afraid a lot of this will have to go. I do not think it is healthy to get rid of absolutely everything. After all you have to live. But needs must and you need to look at your spending and adjust this until you have money left in your budget (if you remove it all and you still are in a negative position I strongly suggest you speak to a government funded company on how to sort the situation out. The CAB is a good place to start).
If you can afford to have some non essentials think about how to cut them down...
If you buy a scratchcard twice a week it will cost you £104 a year why don't you put this £104 into premium bonds,you will still have a chance of winning big but you can get your money back.
A newspaper a day costs £185 - Why don't you read the news online and save this money
Two magazines a month costs £84 - reduce to one magazine as a treat and subscribe to it as it is cheaper.
Two DVDs a month costs £180 rent movies instead (lovefilm is £10 a month for unlimited rentals) watching more movies and still saving £60!
That coffee and sandwich every weekday costs £1250 take packed lunches to work and use the £700 you save to go on holiday
Eating out or getting a takeaway once a fortnight costs £480 why don't you spend £10 a month on fabulous ingredients and cook a delicious meal still saving £360!
Then go through the list of essentials this will typically include:
Food shopping
Insurances
Vehicle Costs
Phone
Etc Etc
As you go through this list think again about how you can cut down the cost of these, even though we HAVE to pay them we do have control over where we shop and how much we pay.
Can you change to a cheaper supermarket, drop a brand on the products you use, use homemade instead of convenience/disposable.
For insurances use a comparison site and also check cash back sites for a better offer.
Vehicles costs find a reputable mechanic who you can trust, drive the car more economically, walk to places under 2 miles.
and so on.
Once you have gone through all these changes - ACTION THEM - It is the thinking about it and planning it that takes the time.
Once you have actioned all the immediate changes rewrite your budget with the new figures. This will be your budget to stick to.
I find that my budget can always be tweaked taking a bit more off here and some more off there so do not worry if it is not perfect straight away.
Also it is better to start off with small reductions in 'your spends' and 'food shopping' and target yourself to cut down £10 a month rather than £150 now as you need to have a realistic budget.
I'm sure I can post many more posts on this subject so watch this space.
Good luck!
