Tips for being less crap with money?
Discussion
Le-Mons said:
Thanks all for the tips, the 'cash' idea is definitely one I've been considering, and I'll put it into action once I get paid again (I'm paid on the 21st of each month, which is a weird one).
Also agreed on using 'pots' in Monzo, it isn't a function I've used, but I can see the benefit in keeping track of individual spending where cash isn't an option, like self-service petrol stations.
Of my wage, I'd say around 60-65% is unavoidable spending (bills, food etc), so I should have a decent chunk to put into savings/generally enjoy, although it never seems to end up that way!
I'd setup another account, perhaps even with another bank altogether. Some even give cash to start one and then a £1000 transfer in caveat or something, but just setup a dd from your current account to go out after payday. This also gives you options in the event of a bank IT failure/card loss/fraud freeze etc.Also agreed on using 'pots' in Monzo, it isn't a function I've used, but I can see the benefit in keeping track of individual spending where cash isn't an option, like self-service petrol stations.
Of my wage, I'd say around 60-65% is unavoidable spending (bills, food etc), so I should have a decent chunk to put into savings/generally enjoy, although it never seems to end up that way!
Then you have your current account running down towards nil earlier in the month and have to transfer to top it up (simple now with online/phone banking, the psychological effect of being close to nil can help you build a buffer in the other account. ie you probably won't be able to save the full £1,000 transfer but are very likely to save something. You can also save for a 'thing' as a goal and then perhaps when you've got enough you'll have changed your mind or be happy to save a bit longer and do/buy the thing later so it won't clear out all your hard saving work.
The danger is you become a miserable tightymctightface so as with all things strike a balance, but right now you want to save a bit.
designforlife said:
I used to be terrible, spent most of my student loans on crap and it took me about ten years to get out of a debt cycle.
Things that really helped me turn it all around-
-Create an excel spreadsheet of your monthly in/out, update it daily and keep a close eye on what goes in and where you are spending
-Don't carry cash, for me it was a lot easier to spend cash without thinking about it, rather than use a card (this goes against what others have said, but it's very personal)
-Make your lunches, i used to be a serial lunch buyer and was easily burning through £100 a month on lunch food when i was only on a £16k salary
-take a look at your outgoings and see what you are willing to cut back on or lose? Cheaper or sim free phone contract? Ditch one or two monthly subscriptions?
-Limit yourself with a "spending/pocket money" budget each month... I give myself about £100 PCM to spend on whatever crap I like, beyond that it has to be a justified need or expense
-Earn more money, or look at a second stream of income on the side, I work a full time job earning £40k ish, but for the last 5 years i've also had a part time job on top of this a couple nights a week, it's only an extra £100 or so a month but over the years its paid for quite a lot of bits and pieces
-Sell your old crap on ebay, look for bargains elsewhere that you can flip on ebay, i probably make £50-100 a month just flipping ebay stuff or selling bits and pieces off.
Ultimately, you'll get better with money the more you focus on it and pay attention to where it's going, and it'll improve naturally.
ETA - around 50% of my monthly salary goes on cost of living and essentials such as rent/bills/food/monthly costs, i'm now debt free and saving about £800-1000 a month, so you should be able to turn things around unless you're heaped in debt or living outside your means.
I'm on 28.5k, so 1700 a month after tax, but point taken on limiting lunch expenditure etc, anything I can save is a bonus!Things that really helped me turn it all around-
-Create an excel spreadsheet of your monthly in/out, update it daily and keep a close eye on what goes in and where you are spending
-Don't carry cash, for me it was a lot easier to spend cash without thinking about it, rather than use a card (this goes against what others have said, but it's very personal)
-Make your lunches, i used to be a serial lunch buyer and was easily burning through £100 a month on lunch food when i was only on a £16k salary
-take a look at your outgoings and see what you are willing to cut back on or lose? Cheaper or sim free phone contract? Ditch one or two monthly subscriptions?
-Limit yourself with a "spending/pocket money" budget each month... I give myself about £100 PCM to spend on whatever crap I like, beyond that it has to be a justified need or expense
-Earn more money, or look at a second stream of income on the side, I work a full time job earning £40k ish, but for the last 5 years i've also had a part time job on top of this a couple nights a week, it's only an extra £100 or so a month but over the years its paid for quite a lot of bits and pieces
-Sell your old crap on ebay, look for bargains elsewhere that you can flip on ebay, i probably make £50-100 a month just flipping ebay stuff or selling bits and pieces off.
Ultimately, you'll get better with money the more you focus on it and pay attention to where it's going, and it'll improve naturally.
ETA - around 50% of my monthly salary goes on cost of living and essentials such as rent/bills/food/monthly costs, i'm now debt free and saving about £800-1000 a month, so you should be able to turn things around unless you're heaped in debt or living outside your means.
Edited by designforlife on Wednesday 4th December 16:48
Ultimately it doesn’t matter what you earn, your outgoings grow too typically so you can still end up with squat, it’s about changing behaviours.
Download your latest statement from your bank and get it in excel format (I know NatWest let you). Then cut that data into expense type and then you can see exactly what you’re spending it on- I tend to find takeaways and daily spend habits like coffees or lunches out evaporate cash like the sun in a heatwave.
When saving, set your direct debits out on the day after payday and then when they’re taken, take out an amount for your savings (be realistic, no point leaving £40 to last you the next 30 days). Put that money in your isa or separate savings account that you can’t use as a current account.
Don’t be afraid to do big things to change money spend (e.g. paying off lump credit debts or selling an expensive car you can’t justify).
Quit smoking if that’s your thing- it’ll save you a good few pounds. When buying clothes, buy on quality not the label- get friendly with mandm if you must have designer gear.
Check your utility bills sound sensible, don’t have the heating on all the time and lights on when you’re not in a room.
Basically, cut as much spend on the things you’re not interested in to make sure you have the maximum amount of money to use on the things you do want.
Download your latest statement from your bank and get it in excel format (I know NatWest let you). Then cut that data into expense type and then you can see exactly what you’re spending it on- I tend to find takeaways and daily spend habits like coffees or lunches out evaporate cash like the sun in a heatwave.
When saving, set your direct debits out on the day after payday and then when they’re taken, take out an amount for your savings (be realistic, no point leaving £40 to last you the next 30 days). Put that money in your isa or separate savings account that you can’t use as a current account.
Don’t be afraid to do big things to change money spend (e.g. paying off lump credit debts or selling an expensive car you can’t justify).
Quit smoking if that’s your thing- it’ll save you a good few pounds. When buying clothes, buy on quality not the label- get friendly with mandm if you must have designer gear.
Check your utility bills sound sensible, don’t have the heating on all the time and lights on when you’re not in a room.
Basically, cut as much spend on the things you’re not interested in to make sure you have the maximum amount of money to use on the things you do want.
Personal finance really simply boils down to spending less than you earn. Controlling your spending is far easier/quicker than increasing your earnings. and chiefly, you cannot improve what you can't measure. So do as others have said and understand where every single penny you earn is going.
Do a spreadsheet of all your regular, guaranteed expenses. You could also use Apps like Money Dashboard which link to your accounts and associate purchases with groups.
There is an absolute wealth of financial advice out there for free. The 2 best resources i've found are Dave Ramsey and MeaningfulMoney. Ramsey is very american and very religious but the baby steps work and make sense.
Do a spreadsheet of all your regular, guaranteed expenses. You could also use Apps like Money Dashboard which link to your accounts and associate purchases with groups.
There is an absolute wealth of financial advice out there for free. The 2 best resources i've found are Dave Ramsey and MeaningfulMoney. Ramsey is very american and very religious but the baby steps work and make sense.
They say the best ideas are the simple ones.
This one helped me get started, and my children are now keen on it.
On the day you receive your net pay cheque, immediately put 10% to one side.
Use the rest to live your life.
You would probably still have accepted your own job for 90% of the salary, so it should not be a hardship, but good discipline.
Eventually, as your savings grow, they ought to produce an additional income for you, but be patient with that.
One step at a time.
A little building block, which hopefully will be the beginning of a financially happy future for you.
- Spreadsheet budget is essential, sadly. Accuracy is key in the first months of doing it - as accurate as possible.
- Move all DD outgoings to the days immediately after payday.
- Move out savings first (standing order, automate it), before allowing any other spending. Don't touch it, ever.
- Have an aggressive savings target to aim for to give some motivation (ie, a new car..). I became a little obsessed with it, but ended up with the car i was dreaming of at the time as a result, and in half the time.
- be realistic about savings targets, don't forget to allocate a savings pot for annual outgoings like car insurance/servicing/home insurance if you pay annually else you'l have to dip in to the pot to clear it.
- Ask for a pay rise. Be bold, they can only say no. It's hard to save anything if your income isn't greater than basic essential living costs.
Might not work for everyone, but i put all spending through a CC, thus can track the monthly 'life bill' just by way of looking at the CC balance, and i pay it off on payday every month rather than waiting until it's due. If pro-active, you can be smart and earn cashback rewards or airmiles(and companion vouchers) etc as a side benefit here. It's also a stark reminder every month how much money you waste on stuff that isn't essential, and i mentally cap my CC spending at the remaining balance on current account after the committed outgoings.
I personally never spend cash, ever. It's too hard to track and too easy to spend.
That said - I have an odd habit (from student days) of envelope based 'cash' savings, only a small amount each month but i make a point of taking it out, putting it in an envelope with a label for a purpose. Makes for a nice bonus each Christmas to pay for unexpected stuff (alongside redeeming nectar points, rewards points, etcetc).
Edited by jimmybell on Friday 6th December 15:41
jimmybell said:
Spreadsheet budget is essential, sadly. Accuracy is key in the first months of doing it - as accurate as possible.
Might not work for everyone, but i put all spending through a CC, thus can track the monthly 'life bill' just by way of looking at the CC balance, and i pay it off on payday every month rather than waiting until it's due. If pro-active, you can be smart and earn cashback rewards or airmiles(and companion vouchers) etc as a side benefit here. It's also a stark reminder every month how much money you waste on stuff that isn't essential, and i mentally cap my CC spending at the remaining balance on current account after the committed outgoings.
I personally never spend cash, ever. It's too hard to track and too easy to spend.
That said - I have an odd habit (from student days) of envelope based 'cash' savings, only a small amount each month but i make a point of taking it out, putting it in an envelope with a label for a purpose. Makes for a nice bonus each Christmas to pay for unexpected stuff (alongside redeeming nectar points, rewards points, etcetc).
- Move all DD outgoings to the days immediately after payday.
- Move out savings first (standing order, automate it), before allowing any other spending. Don't touch it, ever.
- Have an aggressive savings target to aim for to give some motivation (ie, a new car..). I became a little obsessed with it, but ended up with the car i was dreaming of at the time as a result, and in half the time.
- be realistic about savings targets, don't forget to allocate a savings pot for annual outgoings like car insurance/servicing/home insurance if you pay annually else you'l have to dip in to the pot to clear it.
- Ask for a pay rise. Be bold, they can only say no. It's hard to save anything if your income isn't greater than basic essential living costs.
Might not work for everyone, but i put all spending through a CC, thus can track the monthly 'life bill' just by way of looking at the CC balance, and i pay it off on payday every month rather than waiting until it's due. If pro-active, you can be smart and earn cashback rewards or airmiles(and companion vouchers) etc as a side benefit here. It's also a stark reminder every month how much money you waste on stuff that isn't essential, and i mentally cap my CC spending at the remaining balance on current account after the committed outgoings.
I personally never spend cash, ever. It's too hard to track and too easy to spend.
That said - I have an odd habit (from student days) of envelope based 'cash' savings, only a small amount each month but i make a point of taking it out, putting it in an envelope with a label for a purpose. Makes for a nice bonus each Christmas to pay for unexpected stuff (alongside redeeming nectar points, rewards points, etcetc).
We have both made suggestions Jimmy. Interesting, as we have both ended up owning Aston Martins, that our comments are so completely different.
Nothing wrong at all with what you have suggested, but I just wonder whether anyone who has no interest in finance, (quote 'but I'm absolutely terrible with money, living paycheck to paycheck' ) would ever enjoy sitting in front of a spreadsheet. Spreadsheets do help me with various tasks, and I also find it to be a useful form of mental exercise.
I also use a credit card for most spending (1% credited back once a year seems a reasonable deal for no effort), but if anyone might be at risk of not paying the full bill every month, overspending could so easily ensue. I missed a payment by one day recently and was charged over £30. It was entirely my fault by not realising a Bank Holiday was just before the payment due by date, but it did seem a steep charge for a single day. Anyway, I used a rival card for the next few months, so the card provider forfeited more than £30 through lack of merchant fees. As they say, it is the principle. -
Edited by Jon39 on Friday 6th December 17:47
https://www.youneedabudget.com/ might help. They tell you what to do, then they want to take money off you each month, so... I guess they must think their app is pretty special?
Jon39 said:
We have both made suggestions Jimmy. Interesting, as we have both ended up owning Aston Martins, that our comments are so completely different.
Nothing wrong at all with what you have suggested, but I just wonder whether anyone who has no interest in finance, (quote 'but I'm absolutely terrible with money, living paycheck to paycheck' ) would ever enjoy sitting in front of a spreadsheet. Spreadsheets do help me with various tasks, and I also find it to be a useful form of mental exercise.
I also use a credit card for most spending (1% credited back once a year seems a reasonable deal for no effort), but if anyone might be at risk of not paying the full bill every month, overspending could so easily ensue. I missed a payment by one day recently and was charged over £30. It was entirely my fault by not realising a Bank Holiday was just before the payment due by date, but it did seem a steep charge for a single day. Anyway, I used a rival card for the next few months, so the card provider forfeited more than £30 through lack of merchant fees. As they say, it is the principle. -
Edited by Jon39 on Friday 6th December 17:47
certainly agree a pay-off-in-full CC is a risk if you dont do it, but that is the rule for a reason. Mine is like 60% APR so it’d be carnage if i didnt.
Until you become a PH Director you need to be more obsessive with budgeting; so whilst it’s not fun or his thing - i think most have said spreadsheets are a very helpful thing to do. obviously it’s easier to be less cautious when you have a high income and more disposable, though spending definitely grows to match income if you aren’t careful.
i have mine generate some nice charts for savings predictions and disposable income each month (as my pay varies quite a bit) so i know how to treat each month. just i pop in the income and previous month’s remaining balance and thats all i have to do each month.
In the end you just need a plan, and to stick to it.
Hi all,
Sorry for the radio silence, but all of your tips have been really helpful.
Agreed that sitting in front of spreadsheets isn't my thing, I've tried it before but it fell by the wayside, saying that, I'll give it another shot.
In terms of regular expenses I do have Spotify and Netflix (£15 and £9 per month respectively) but got a sim only deal so my phone is only £17 a month. Car is fully paid for too, so just £25 a month tax and £40 a month insurance on that.
No credit cards etc, I do pretty much live in my overdraft, but since it's arranged that only costs me £6 a month. Not ideal, but not a huge cost.
Overall, I just need to be stricter with myself. Multiple little purchases on Amazon etc add up, as do lunches and the occasional breakfast.
Sorry for the radio silence, but all of your tips have been really helpful.
Agreed that sitting in front of spreadsheets isn't my thing, I've tried it before but it fell by the wayside, saying that, I'll give it another shot.
In terms of regular expenses I do have Spotify and Netflix (£15 and £9 per month respectively) but got a sim only deal so my phone is only £17 a month. Car is fully paid for too, so just £25 a month tax and £40 a month insurance on that.
No credit cards etc, I do pretty much live in my overdraft, but since it's arranged that only costs me £6 a month. Not ideal, but not a huge cost.
Overall, I just need to be stricter with myself. Multiple little purchases on Amazon etc add up, as do lunches and the occasional breakfast.
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