Personal Finance and Budgeting

[MothersGrimm]

Dredging up an old user name for this so I don't out myself but realising I know fuck all about budgeting and finance and am honestly starting from scratch. I'm making a full commitment to sorting it out and I would like to learn the basics. I want to scrap what we've done and how we've done it and just begin again doing the right thing financially.

We have a brilliant base to work from - a high earning single income household in an area with a reasonable cost of living. I'm currently in the process of training so I should be able to start earning money in the near future.

How big should our emergency buffer be? What percentage of salary should go into the pension? How much do you set aside for big spends that are upcoming like Christmas, or trips.

If you know any great articles, books, work planners, podcasts please let me know. This is my next mission and I don't want to be uneducated and leave it all to my husband any further.

Hopeful bump for the night time crew

How big should our emergency buffer be? What percentage of salary should go into the pension? How much do you set aside for big spends that are upcoming like Christmas, or trips.

Emergency - 6 months is the usual guide, but it depends on what you feel happy with, what your circs are like, etc. For me it's much higher as I am a real worrywart!

Pension - as much as possible! Ideally as much as your employer will match as that's free money! Bear in mind esp if HR taxpayer that pensions usually taken from gross, so your tax and NI will reduce too.

Big spends - work out the total cost and divide by 12 (adjust that if you are paid on a diff frequency) ! You may have to "make up" conts for eg Christmas as we're already in April now so you've 'missed' 4 payments to that fund!

I make contributing to all those big spends a priority right behind my normal bills, so come payday, everything gets paid via dd or sto automatically. I bad go from hero to zero within 72hrs of payday but everything is paid and all my savings are accounted for.

I also make use of the Santander 123 lite as a second account and make around £10 cash back on the bills paid from there. And I routinely open fixed term regular saver accounts which net me chunks of interest in cash that would otherwise be sat in a low interest account.

How's that for a starter?

www.moneysavingexpert.com/banking/Budget-planning/

Thanks so much @buzzbobbly

I did read your response and went away and had a good long think about the issues. My DH have had numerous chats about finances, gone away and agreed on a very rough "big picture" financial plan and have agreed to "budget to zero" every month - which is to make commitments to pay into our savings (different pots) and big bills first, and then budget out spends on entertainment and food for the month so that the total equals zero before the month even starts.

I'm considering the cash envelope system for the rest of it to help me mentally portion out the budgets for the month and see financially where the spends are going.

I'll review how much currently goes into the pension etc and try and take as many advantages like that as possible. Possibly start an ISA?

We're genuinely excited! Long roads ahead but best to start now on weak footing than wait until life gives us a smack.

Download your bank account or credit card transactions to see where your money is going.

We do just about all our spending on a cashback credit card that is paid off in full every month and I have downloaded a year's worth of categorised transactions into a spreadsheet. I haven't done anything with it yet, but I plan to analyse the spending to check what we're spending on food, petrol, meals out etc.

We're in the fortunate position that we can just pay for more or less everything (Christmas, holidays, insurances, broken pets, cars or white goods) as they come along, but I'm aware that we don't really have as much savings as I'd like so it's probably a good idea to see what we're spending where and see if there is anything we can do to cut back.

Second the recommendation for the MSE budgeting planner. As well as helping with a budget, there are lots of tips to maximise your income and cut your expenses, which can end up with quite a lot extra spare money. Eg open a new bank account to get a switching bonus, switch your utilities to get on a cheaper deal. Use a discount voucher when eating out.

If I were you, I would try and save quite a bit 'just because' in case the high earner in your family loses their job, or can't work for whatever reason - if you have a decent amount of savings, that will tide you over if you/he can't get another high paying job.

Alongside savings, you should think about whether you have any debts.

DH and I followed the Dave Ramsey system- we started by earmarking a £1000 emergency fund, then we lined up our debts and focussed on paying those off. The next focus is on savings and pension. The only different approach to DR we've taken was paying off our highest interest debt first as it made more financial sense.

For your pension, start by thinking about the minimum income you need in retirement and the sort of income you would like to have. Then use a pension contributions calculator to determine what your contributions should be.