Shock of 'corrected' budgetary situation - any suggestions?

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Paulone

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To cut a long story short, living within one's means is all very well, but has anyone any tips on how to adjust mentally to a 'corrected' situation?

For various reasons (some avoidable, others not) we have been spending way over our income for some time now and with no meaningful prospect of buying a house yet, have eaten a substantial way into savings that were being kept for a future house purchase.

I've taken a long, hard look at income vs. expenditure and find that keeping within the limits of my income and building in some saving means we're really facing some straitened times! First my budget was too tough, so had to loosen it up somewhat, but the 'eased' version is also proving problematic.

Trouble is that with savings in the bank and no debt (thank God) the expectation is that we can 'afford things'. The odd €10 here or there isn't seen as a problem when in fact it's a budget-wrecker and will either eliminate the ability to put money aside or worse still, continue to eat into the savings.

Has anyone else experience of radically changing things and if so, what tips are there to make the medicine easier to swallow?
 
you need a mentality change. you can surely keep to the budget for a month! if you can do that then it will make you feel good and this will create a snowball effect etc and you wont go back to your spending lifestle.

living this kind of budgeted lifestlye includes such small things as popping into centra on way home from work to get a jar of coffee for half price cos a flyer was sent thru ur letterbox. all these kind of things makes a huge difference . you will feel a lot better and happier when your spending is under control and your savings start to accellerate, believe me!
 
Recently I've slackened and gone for a few take-aways :( But, but yesterday I made my own pop-corn and watched a move on TV - best tasting popcorn ever !
 
Stick to your budget for a month and keep a spending diary - religiously, every day, every cent! I was surprised by how quickly it became normal to me and I actually found it quite addictive - it's alot harder to spend just a couple of euro on something you know you don't really need when you know you are going to have to account for it on your budget that evening. I kept a record of EVERYTHING - even a stamp or 50c thrown in a tip jar.

I did that for a couple of months, was really able to see where money was being spent needlessly and feel I've had that 'mental' shift that I needed. I don't keep the diary anymore but am alot more aware and conscious of what I am spending and I can see the difference.
 
Sad I know but I have spending diaries going back to 1985. Still keep it fairly up to date, dont count every cent nowadays, it becomes habit to think before you spend very quickly.
 
its not a bit sad. too many irish people just throw away their money and then go begging to the govt for help cos they have everything spent. as the poster above said it really does become addictive.

i was in the shop the other day, had something in my hand which was 3 euro, then said to myself do i have anythign in the freezer, reliased i had then put back what i had in my hand and walked out of the shop. i now am able to save 1000 a month
 
Paulone, I'd agree with Havana and spursman, the mental shift you need will be made by starting to record your spend. I noticed the slap in the face budget alright and I did use some savings to ease myself down a notch but am now back within my income and not touching my savings.
 
spursman said:
living this kind of budgeted lifestlye includes such small things as popping into centra on way home from work to get a jar of coffee for half price cos a flyer was sent thru ur letterbox.
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This depends on the personality of the person involved! Would work for some but others would go in to get cheap coffee and come out with 30 euro worth of other "bargains"! If the OP knows this is likely for them, then one big weekly shop with a plan and a list with no little trips on other days is the only way to go.
 
every monday i look online at the weeks ahead bargains/savings across all the stores and then if its something i use and need i'll buy it or stock up on it at the reduced price especially things for the freezer as will never go to waste..
 
Do make sure you build in some "treats", which need not be expensive, could just be taking a picnic to the park, but something to make you feel spoiled, not hard done by. Otherwise, it's like dieting, suddenly you splurge.
 
I think a lot of stuff is down to good habits. Like the others say, try the budget for a month and then maybe look back how you got on. You will notice that you've already managed to drop some bad habits you had before without even noticing, and that some things are a bit more difficult to get rid of so maybe you could tweak them by finding a less expensive way. Very like dieting, except, as with food/exercise it's a lifestyle change you're looking at not a temporary thing.
 
so-crates said:
Paulone, I'd agree with Havana and spursman, the mental shift you need will be made by starting to record your spend. I noticed the slap in the face budget alright and I did use some savings to ease myself down a notch but am now back within my income and not touching my savings.
Click to expand...

I will also agree with this. I moved to Dublin last year and about a month in, I couldn't figure out where my money was going. So I set up a simple spreadsheet to track how much money comes in every month and goes out every month and within a month my spending habits were turned around. I've it set up in such a way that shows how much disposable income I have every day (i.e after bills, savings, rent, etc) and, being the obessessive complusive that I am, I get a great thrill when I see the daily amount go up instead of down :D. It was also handy training for living in these more financially straitened times.
 
I think life is all about priorities and we all have different ones at different stages of our life. If you know what your short term, medium term and long term priorities are the it becomes easy to financially work towards these if they are important to you.

For example, taking yr own food to work could save you €4 euros a day= which is almost a grand a year. That would pay for eating out on holiday, some of the kids out of school activities, puts money in to a savings account for a rain day, new clothes etc. So every time you make yr lunch you know what its going to and thats yr priority.

If you find it easy to spend savings because you have savings, then make sure they are difficult to get to or are "locked away" for a set period of time. eg go for a saving plan that gives you a bonus after a set period of time or you lose out if you take money out before then.
 
The mindset change it one of the hardest parts of cutting back - I love going out, buying things and heading off on holidays - all of which require spending.
However, I've had to cut back on this alot over the last few months, as my personal finances needed urgent reshaping and I found adjusting to this change really tough.

While I understand that spending diaries work for alot of people it's not really 'my style'... it's a bit too much work for me I suppose.

The system I've used is simple and works for me. I withdraw €150 every Friday from an ATM and use that money to live for the entire week.
My rule is that this money HAS to cover all daily expenses for the next seven days i.e. petrol, food, going out etc. If I start to run out of money before the 7 days are up then 'tough' - I have to find a way of eating / living that costs the minimum.

While Im not advocaing that you live on €150 per week (it's the amt. that works for me) I do advocate the system I use as:
- I still feel you have money in my pocket in the early part of the week
- I dont feel I'm watching every penny - which wrecks my head.
- if for some reason I dont spend all my weekly allowance I can put the spare cash 'away' for a treat
- I dont have the 'burden' of maintaining a spending diary

I found doing this a bit tough for the first few months but once I saw it working and the debts I've got falling - I began to grow into it - so my mindset changed.

Best of luck with it.
 
If you are in a relationship,why not banish the word "just" from your vocabulary?As in x y or z costs JUST a certain amount of euro.The point is that every expenditure item is important from the smallest to the largest as they all add up.
 
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