Budgeting

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Woo. I am obsessed with budgeting. And trust me, I’ve tried every sneak and tip and hint to help me improve even more. One of the best sneaks I did, was when interest rates were a bit better, I used to have a linked savings account to my current account. I would put everything in there, and just transfer the cost of every bill the day before it was due. I earned around 3% by doing that.

But budgeting an actual household budget is a bit more tricky. I often see people say stuff like: ‘write down/track your expenses for 6 months first’. I personally have never done this, as it doesn’t make sense to me. Surely the point of writing a budget is to see what you need, work out how much that costs per month, then try to stay within those figures? I guess I am more of a bottom-up investor/saver/budgeter, rather than a top-down one.

So for me, it just goes something like this:

Annual Income – Annual Essential Expenses/12

The amount is what I MUST stay within for my spending each month.

Why have I done annual expenses rather than monthly ones? Because some stuff just happens once a year, but I don’t want to forget about it and then get a £230 bill for house insurance right before Christmas, or I totally forgot about someone’s birthday (like my mum’s 69th, whoops!) or something like that. So you need to think about these annual expenses (e.g. holiday, insurance payments, birthdays, etc.) and factor them in to your monthly budget, because you can save for them throughout the year then. It just makes life a bit easier, as you don’t have to worry about how you’re gonna pay your car insurance, because you’ve already saved for a year towards it.
Everything left over is prioritised. For example, maybe you have a lot of spare cash and a not very cheap mortgage, or maybe you’re close to the end of your mortgage, so you can put extra into paying it off quickly. For us, our mortgage is really cheap, so we put our spare money into household savings, via our investments (we use a mixture of gilts, trackers, and stocks).
Helpful apps/sites
I used to use GoodBudget (formerly EEBA, you can find it on android, iphone, and on the web). You can monitor your money by choosing a monthly goal of how much you are allowed to spend in each category, then it will count down your remaining money, as you input your spending. It’s a really helpful app.
I also recommend you check out YNAB “You Need A Budget”. Jesse Mecham has made a fab product and it can help you stay on target and not waste money. He also gives a free course where you can learn the principles of the YNAB budgeting system. I have had YNAB for years and years, and I have never been disappointed with anything about this software. I moved back to YNAB after having used GoodBudget for a while. I found the YNAB rules very helpful and wanted to get my husband to be fully onboard with it. This seems to work better with YNAB.
There are many other sites of course, some people like Mint or Nutmeg, but I have not really found them to be particularly useful for one reason or another. I like to keep things simple. The only other site I would recommend is MSE ” Money Saving Expert” , for UK readers, or readers moving to the UK. This is THE place to get advice, help, or tips, on everything money-related. They write regular explanations of things like car insurance etc. and they have tons of voucher codes. They also have a very broad range of forum topics. Just don’t get caught up in buying things ‘because they’re on offer’!
So, check them all out. I don’t get any commissions or anything from these sites, they literally just what I have found to be helpful to me, and I hope they are helpful to you too.

Photocredit: stuart miles/freedigitalphotos.net

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