Any tips for how to keep control of money?

Hi all,

This may seem like a stupid post to some people, but having just had a conversation about it at work, turns out I'm not the only one struggling with this one.

Basically, while I am not in debt and I do have money in savings, I find it a constant struggle to keep control of my money.

I have set up so that DD comes out each month for my savings, my rent, my bills.

I suppose what I have been pondering these last few months is my financial plan. I am saving towards eventually buying a house, though in the current climate that's not something I plan on doing any time soon.

Are there any good books out there that could teach me about money? More in a 'if you splash out and book that weekend away, how will that impact your overall goals?' type of a book. I have read the book 'Can't buy me love - Merryn Somerset Webb' and found it very thought provoking. I want to keep going along that road!

What happens me is that I lose self control when/if I see a bargain - and will purchase something on credit card as I wont have the money saved up for it. Now ok, I will always pay off the credit card when I get paid at the end of the month, but it does mean I never seem to have a full month's wages to start with - always a few hundred that has to be paid off from the month before.

In a nutshell, as I am rambling a bit, I need to learn what consquences my actions cause and how to know when it is worth taking a risk or not.

Anyone?!

It’s a difficult one ... just when you think you are doing well and sticking to your budget, something unexpected comes up like a doctor’s visit or your boiler needs servicing!!!

It just takes two or more of these things in a month to throw your whole budget out of kilter and make you feel like it’s all a waste of time.

I suppose the best thing to do is to include a 'contingency' figure in your budget to cover those unexpected costs like having to get new glasses when your 2 year old breaks your old pair or replacing that broken window!

Sorry I can’t be of more help!

I'm not so sure that a "readable" book will help you so much as having setting a financial plan/goal and sticking to it. If you set a goal you need to have a way of reminding yourself of it.

Key tips would be to leave the credit card at home or put it in a place that you have to use effort to get at - this stops impulse purchases.

I only take out cash one day a week and it's a set amount which means I have to live within this. This eliminates spending beyond your budget.

We've invested in a simple to use household accounts book which means that we always have access to our accounts (even when we don't have a computer). That way we always know what our financial position is.

thanks.

I am currently keeping a cash diary, so seeing where any unnecessary spending is happening and this has helped me cut back on things like lunches out etc.

However, I suppose its not only impulse buys that throws it - like self build, its the unexpected expenses that come up.

I am probably wrong, but I absolutely hate taking any money out of savings for 'living expenses' - be that presents for weddings, birthdays etc. or as selfbuild says, unexpected medical bills.

Also, I find myself torn when faced with a situation that is a genuine bargain but which I may not have the 'spare' cash for. If it is something that I know I will use in the future and it is cheaper to buy it now than to wait & buy it when I need it - what do I do?!!

Overall I dont consider that I'm 'bad' with money - but like a lot of us, there's always room for improvement!

Well you need to have a contingency fund.

Our fund includes amounts for birthdays, special events, car maintenance, tax, insurance, doctor's fees, house maintenance. We then hold a separate fund for savings.

It helps to have individual accounts for each so you don't feel like you're dipping into savings for this very reason.

The thing is to have two savings accounts per say, one for actual savings and one to act as a budget account - I have these set up. In the budget account you put money aside for all bills and known expenses as well as a small amount for unknowns/unexpected expenses. I put money aside for things as simple as hair cuts/birthday presents as well as the usual bills, phone, car tax, service etc etc, I find that I usually have the small bit of cash for the presents say and so small amounts are also being saved long term in the budget account.
A bargain is not a bargain unless you NEED it now.

Crossed with Green Queen. It is a great method isn't it?

Maybe something that would show me how much longer it would take to reach a certain short term goal if I spent 100/200/500 might be a good idea?

At times, it feels as if I'm robbing Peter to pay Paul - except I'm both Peter and Paul!!!

Good point - I think 2 savings accounts is a good idea. One for long term, no touching unless absolutely essential and one for the other stuff that I dont feel bad about taking money out of.

Yes, def going to do that and see how it goes.

To answer your original question - the impact of spending, my father has a great saying - "A pound saved is better than two borrowed."

This really concentrates the mind, because it works in two ways - for every pound (euro) you need to borrow, you will probably end up paying back 2, especially in the case of a mortgage. And when applying for a mortgage, every pound (euro) in the bank is one less that you need to borrow, and is worth more than 2 in terms of the amount you will be allowed to borrow. I hope this makes a bit of sense...

If your goal is to save for a house, I would recommend making that your number one priority - then every other discretionary spend needs to be thought about - whether it's the magazine, the trip to the cinema, the takeaway - they all add up, and when you cut them out and keep them for real treats the savings grow and the experience is worth more when you have it, no matter how simple. That's what I did, and when you put your mind to it, it's amazing how much you can save while still enjoying life to the full. And as it's building up, you won't mind the occasional splurge for a friend's wedding etc.

I think you're a girl? You can still shop for clothes etc., just be very clever about it - go to the sales and buy the 'capsule' bits or investment pieces that you know will get you through months - e.g. the good leather boots, the decent handbag, the good jacket, instead of the tops and bits and pieces that you'll throw away after wearing a couple of times. I have some coats, skirts, boots that I've been wearing for 3 or 4 years that I got in sales when I wasn't particularly flush. I would also recommend doing as much of your beauty stuff yourself as you possibly can - a shop bought face mask, pore strips, bit of fake tan and nail polish, hey presto, who needs to spend a fortune down at the beautician? The stuff might cost a bit to start out, but again, I have tubes of good face masks (brand ones like clinique) for over 3 years and they are still working perfectly. Probably cost around €20 to begin with, but how much is a facial? €40/50?

Best of luck!

Thanks for all the suggestions, def food for thought there.

Yes, I am female, though to be honest I'm not much of a clothes shopper really - apart from shoes & handbags which I have managed to cut waaay back on

I'm a long way off being able to get a mortgage, and I suppose sometimes I do allow the thought 'why am I even bothering?' to creep in to my mind. It can be so hard to stay focused on something that needs another few years saving.

I think myself that its mainly about discipline - until I actually set up the direct debit for my savings so that they go out at the beginning of each month, I never had any savings! I used to say that I would put whatever was 'left over' into savings at the end of the month but there never seemed to be anything left over. At least now what I dont see, I can't spend, lol!

Also my rent & bills going in to a seperate account each month means that I'm not usually hit with having to come up with say, 500 euro in one month for a humongous gas bill.

So considering that my current savings & my rent & bills work well that way, you'd think that I would have realised that my discretionary spending & things like weddings etc. would benefit from the same treatment

Just one last thing, when I am setting up my contingency account (for things such as birthdays, weddings, doctors, etc.), should I get one which has an atm card or not? Considering that I will probably be using some money out of this account most months, I'm guessing yes?

I don't know if this would work for everyone...

When I started saving I did the "save whatever is left at the end of the month", but with a slight difference.

I set myself a target of saving more than the last month (even if it was only 1 Euro).

This really focused my mind on spending as I was always concious of beating the target.

Needless to say it didn't always work out but for me it was the best incentive I could have had.

I definitely noticed the difference between save first and save last. How I think about it now is that it is another bill I have to pay (to my future) so it enforces the same discipline that I keep with other bills. Like anything else I pay for I view it in terms of what I get for my money and I second Mel's response - what I am getting is cheaper money in the future. As to whether to get a card for accessing your contingency fund, I'd be inclined not to. For one thing - that means another hit of annual stamp duty, for another it naturally enforces a discipline. If I need accessibility on my contingency savings I transfer an amount back to my current account rather than giving myself too easy access to the funds. With internet banking today the requirement to have a card on each account diminishes.

Ok, I've spent almost all of last night thinking about this. I think I have a problem, in that the only way I can see this working is if I set up seperate accounts for pretty much everything.
So at the moment I have my current account, my long term savings account and my rent & bills account.

But now I'm wondering if I need:

1. contingency account for car related expenses (tax, insurance, maintenance/services, new tyres)
2. Holiday account for future hols

3. Account for unexpected items such as trip to doctor, dentist, unexpected wedding.

Even that still doesn't cover it all! Maybe I need to just go back to the envelope method and put money in to several envelopes each month

Unless you can set up and run all those accounts for free at some point it becomes an expensive way to enforce a budget. However people have saved like this in the past and it can work (supermarket stamps were basically a way of saving for christmas with the supermarket, christmas clubs are a similar arrangement). I'd rather just label particular events "contingency", work out how much they cost me per annum and then divide by 12 to get my monthly payment (if I want a regular outgoing) or divide it into 12 unequal sums amounting to the same amount to be paid in over the year, planning in say Christmas and summer holidays as low payment months.

You should have a pretty good idea what your car costs, holidays are fairly costable, the hard part will be other incidentals.

Things to note, these things may not conveniently fall at the end of the year (when your contigency would be replete) they may fall before you have fully built it. Be sure to note where in the calendar these things are likely to fall. Unequal payments, loading at the start should help with this.
The other thing is that after all the calculations you might want to also consider a float, say add 10% to your calculated per annum incidental spend in order to provide a cushion.

No you don't need that many accounts. You need to budget correctly.

Our current account (x) takes care of mortgage/bills/day to day living expenses. Our first savings account (y) takes care of long term savings and our second savings account (z) takes care of contingency items that don't come up in a "normal" month.

Like other posters have suggested, save first, not last. You then don't have access to the money.

A good example of how to manage is:

Account X
Incoming €2,000 per month
Bills (including mortgage) €1,400 per month
Withdraw €200 at the start of the month in cash for living expenses

Account Y
Save €200 per month at the start of the month

Account Z
Save €200 per month at the start of the month

Your problem sounds like you're not budgeting correctly and that you don't have the confidence to stick to a budget that you do set yourself.

I am doing this method of budget,also called piggybanking. I have one savings account for long term, one for annual expenses - car insurance, house insurance etc, one for car/house/garden maintenence, one for Xmas, holidays, presents. Everything else comes out of joint account by dd, so or laser charges - no cash withdrawls. Cash comes from personal account with X amount per week for sundries. Sounds complicated but simple really. Rabobank allows you to open 3 savings accounts under one customer number. HTH Jane

Cheers Jane.

I already have 1 Rabo account, so this is something I must look in to. Is it free?

Its almost like I need an account, and then sub accounts, so that I have a clear pic in my head of exactly what is in what account.

Marcellaf
I am in the middle of working this out as well. What I am doing is making a budget in an excel sheet with our income and costs on it. I am dividing our costs on a yearly basis into fixed and variable costs. I am including saving for the future as well into variable costs.

It's actually not too hard to foresee things like car insurance. I have also totted up all our holidays and weekend breaks this year and will budget accordingly next year. Also weddings you can plan for.

I guess then it would probably be a good idea to set up an account for those and you'll know how much to save monthly for future and for variable annual stuff.