I used to be terrible at managing budgets; always having just a few dollars left in my account before the next paycheque rolls about. So I am wondering what sort of systems you use to manage your budget and savings.
I have a bad memory for numbers and frequently am at a loss when trying to remember how much I have spent in a day; things changed when I got an Android application (EasyMoney) that allows me to key in expense on the spot. It allows me to specific different accounts with different budgets, so it gives me an idea how much I have spent. However, I still have to check up my bank account and see that the balance in Easy Money is not too way off.
I use a spreadsheet and have comprehensive internet banking with my bank (HSBC). The sheet runs on formulas and contains my standard monthly budget broken down into items by line plus additional expected expenditure. All these are added up and that figure subtracted from the “monthly income” cell at the top leaving a remainder at the bottom for my disposable income/spending money, and that divided by four as my weekly proxy spend.
As the month goes along and I spend money/bills get paid I just remove them from the sheet whilst changing the “money available” cell at the top. That way as the month progresses I know how much money I’ve got and how much money is disposable income rather than fixed outgoings.
My tax, National Insurance and pension payments are removed before I see the money each month, so I don’t need to think about those. As soon as my wages go into my account, about half of it goes to the (joint) household account from which bills are automatically paid. What we pay in more than covers the mortgage, bills etc., so if there’s a big expense (or we need a holiday!) we know there’s some extra sitting in there. Some more of my wage goes straight into my savings account in case of rainy days. Three days after I’ve been paid, when the standing orders have gone out, I know that whatever’s still in my own current account is available for spending, and if I feel the need I can check that balance at a cashpoint or online. At the end of the tax year, if there’s money in my current account, I take most of it and pay it into my ISA (tax free savings). It works for me, no spreadsheets or software required.
I do all my budeting and bills online. I pay myself first, pay all bills and put some in savings and the rest is my mad money. Online banking makes budgeting fun for me and I have been able to save in this way. I got my Mom on it because she goes to Florida and was traveling and in this way she took care of her bills on the road. She has a laptop.
I pay all of my non-credit-card bills on the same day, online. Some bills are auto-paid a little bit later. That all takes 2 paychecks. Then, I pay off my credit card bills after 2 more paychecks and the rest goes into savings.
take all your normal expenses and break them down into a weekly cost. What usually bites people in the ass are quarterly expenses that aren’t withheld weekly.
If you don’t have Excel than download openoffice and use the spreadsheet program that comes with it. It is a very powerful program.
Note: when working on a budget you have to make seasonal changes for power consumption. That can very greatly. My utility companies provide a running 12 month consumption record with each bill.
I usually go by monthly expenses, but I always get screwed by yearly expenses (car registration, taxes, etc.) I read a newspaper article saying that this is a common error and that if you calculate by the year, you make fewer mistakes.
What I usually do is calculate fixed expenses (same every month,) and then make estimates on groceries/living expenses that change every month. Both of those subtracted from my salary is my savings or play money.
We incredibly anally track every single purchase (itemizing even groceries) in a spreadsheet; this is a new thing, as we are “practicing” living on one income and saving a lot of money. It’s really been interesting to watch exactly where everything goes. We charge purchases against accounts and we roll over any surplus to pay for things like car insurance.
I’ve been using the spreadsheet version of PearBudget for about a year. It’s worked really well for me so far; I’ve been able to save a decent amount of money despite being on a grad student’s salary.
I use a Google spreadsheet, which allows me to keep it up to date wherever I am.
The first sheet is an annual overview, with months in columns and the regular expenses in rows. That gives me an idea of how much money is needed each money to pay the bills. Mostly it’s the same things each month, but there’s stuff that gets paid quarterly instead of monthly, so it helps to see the annual view.
The second sheet is the current month, I copy/paste the bills to be paid this month from the annual overview into here, and have credit, debit and balance columns. I log into my internet banking every day or so and regularly update this sheet.
My husband is freelance, so our monthly income is variable. I tend to do a calculation at the beginning of each month in terms of how much money has come in, and how much needs to go out. From there, we both agree a monthly ‘allowance’ that each of us can spend as we please. I know that as long as I stick to that allowance, we’ll be fine.
For about a year I kept track of all my spending in a google spreadsheet. I think I need to go back to that. I’ve become too complacent; I can afford just about anything I want, but I think I need to be careful anyway.
We spend less than we earn - and have an income that makes that pretty easy to do as long as we don’t go hog wild (we live in a modest middle class home, drive ‘reasonable’ cars, I don’t maintain an extensive designer shoe and handbag collection). So we have enough in savings to cover months where we spend more and in months we spend less, we replenish the savings. We are huge savers though - 10% of my income and 20% of his goes into Employee Stock Purchase Plans so four times a year we get big lump sum disbursements out of there. Plus 401ks, 529s.
But back when our income was a lot tighter, I liked the “envelope system” - put the money for each item into an envelope and only spend that. Some envelopes would take months to get full enough to be able to buy what you wanted.
In my young, poor days, my “system” was basically: never spend money, on anything, unless it’s something you need, or it’s something you want AND have the money to pay for in your wallet or checking account AND you want it more than whatever else you might spend that money on.
As I’ve gotten a bit better off, this system has never quite been abandoned, though it has been loosened/modified.
We each have a current account, a credit card in our own name and a savings account.
We also have a joint account.
Salaries go into personal current accounts, most bills come out of the joint (some exceptions- like my medical indemnity and GMC registration or his SKY subscription which each come out of our own accounts).
Each month we transfer our share of the bills, plus 10% contingency into the joint. We each put an agreed minimum into the savings.
Anything left in our current accounts is ours to dispose of as we see fit- save, spend, whatever.We try and pay the full amount off the credit cards each month.
All our bills are paid by direct debit and I keep on top of everything with online banking.
So we always have 4 backups for unforeseen overspend- overdraft, contingency, credit card, savings.
Two linked bank accounts and a simple spreadsheet.
In the spreadsheet, I create a monthly budget of all expenses. I also add in “Cash” (misc. random daily expenses, fun money).
I designate one bank account as “savings” and one account as “checking”. Paychecks are deposited to the savings account only. A couple days before the end of the month, the monthly budget amount is automatically transferred to the checking account. Money is withdrawn from checking to pay bills at the beginning of the month, and the leftover amount is the money I have to spend for the month. Money is never spent directly out of the savings account, ever. No memory or extensive record-keeping is required; at any point, I look at the calendar date and checking balance and ask whether I’ll make it to the end of the month before my checking balance hits zero.
If it’s too hard to budget for the entire month, you could always divide by 4.x and budget weekly instead. That way, you only have to wonder if you’ll make it to Friday.