I wasn’t always a natural budget maker – I’d go month to month and if I had money left before payday, I’d congratulate myself for being “so good with money” that I’d treat myself and then the next month I’d exclaim that the electricity bill “came out of nowhere” and I’d live in poverty until the next pay day. Well, it’ felt like poverty.
Since having children, the luxury of a lean month just isn’t there and I know I just don’t sleep as well at night if I’m worrying about stretching my wages far enough to make sure I can get nappies etc in the last week of the month… though I feel like F would wholly embrace a bare bum lifestyle.
To get started, I decided to note all my expenses in a table (I used Google Sheets). I noted whether the bill was paid monthly or annually, who pays the bill and which of our accounts it is paid from. I note as many expenses as possible including even small ones like haircuts for the boys – £10 every six weeks.
If you don’t know where to begin with where your money is going, I downloaded a few free planners and worked through eliminating all the expenses we don’t have.
We find it works well for us to look at our finances over the year – we know our Rates payment is coming in April and we split that over 12 months and pre-pay it into our joint account so the money is there when the bill comes in. We could also pay monthly via direct debit, but there are discounts offered if you pay in one payment so we opted for that. We call this ‘Saving Ahead’ and it takes an unbelievable amount of pressure off once you get going. We Save Ahead for;
- Rates (Annual)
- House Insurance (Annual)
- Car Insurance (Annual)
- Car Service (Annual)
- Electricity (Every 3 months)
- Amazon Prime Fee (Annual)
- TV License (Annual)
- Heating Oil (Every 6 months)
So how do I manage my wages when they hit my account? Well, let me start by saying that;
Online Banking is an absolute must for anybody who wants to watch their outgoings. Not only does it stop you putting your head in the sand with regards to your outgoings, it allows you to move money around so quickly and lets you be flexible.
It works best for me to manage 4 bank accounts
1. Current Account – Day to Day Spending
2. Joint Account – Household Bills
3. Set Aside Money – My personal bills
4. Savings ISA – Our House Deposit Nest egg
When my wages land, I look down my budget excel and move my money accordingly – bills we pay together come out of the Joint Account (2), I move money for my own bills into (3) – this is mobile bills, grocery costs etc. Once I have paid all the bills, I know whatever is left in (1) is my ‘Free Money’. The money is far from free and there’s usually not that much of it. This was the hardest thing to come to terms with when starting this way – It feels quite panicky to have so little left, but knowing that accounts (2) and (3) have everything I need to keep the lights on is comforting.
Where this sense of budgeting really works for us, is that If I stay within the budgets I’ve set for myself, and lived frugally, chances are I have some money left over (usually in account #3) at the end of the month and that money is swept over to (4) and that savings pot is slowly growing into our house deposit 🙂