What am I doing wrong on this salary?!

[Llkkg]

I earn enough money, around 3100 after student loans. My mortgage is 950 and council tax 180. I have some credit card payments of around 120 but that’s it. I will need to get a car soon though as that’s around 350 a month.

For some reason I constantly run out of money and I don’t know where it goes. I don’t buy clothes often or anything like that. I know I have enough money and I feel shit that I can’t seem to keep on top of it. I don’t feel like I spend a lot but I’m obviously going wrong somewhere?!

Looking forward to the red arrows flying over my garden. Hoping to catch the Lancaster too. Makes me tearful.
Then I’ll dash in to watch tv as they reach London

Wrong thread !

I'm a terrible fritterer so can identify with this problem. I really like skincare and beauty and find the 'cheap' bits I pick up in boots really add up. Sadly, I also find going out for a few drinks here and there and lunches or dinners with friends really add up unless I plan ahead for the month and set an allocated amount to spend. It's dull and a bit annoying budgeting it out and I still fritter but feel more in control and am mainly sticking within y financial goals.
Life has become quite expensive and I don't get many cost of living increases so I guess I have to make choices.

I was going to say Starling too. It’s helpful (although not infallible, as sometimes things are categorised a bit oddly, and you can’t allocate things to categories)

I would go through your bank statements (via the app, obvs) and make a list of essential costs. Leave that amount in your bank account and take out the rest in cash (or transfer it to a separate pot or bank account. Starling lets you have different spaces within the same account. Cash is better though, especially at first). Take out a little bit for any unexpected emergencies, and any planned social events or known spending and put it aside in a labelled envelope. Divide the remainder into 4, and out only this week’s in your purse.

Each week, do your food shop at the start of the week from your little pot of cash and the rest is your spending money for the week. When it’s gone, you can’t spend any more, full stop. If you don’t have it with you, you can’t spend it on impulse. If there’s very little, you need to look at your essential spending and see if you can reduce it. If there’s a lot, you’re spending a lot on incidentals and need to think about if that’s how you want to live.

You’re also going about the car spending backwards. You don’t just decide you’re spending £350 a month on a car. You look at your budget and see what you have have spare (or decide what you are willing to give up for the sake of your car) and then look and see what is available in your budget, and choose from those options. You don’t know what you can afford yet, because you don’t yet know how much of your money is going on essential spending and how much is recreational.

You can buy cheap cars for cash, that you can save up for on your salary. Or you can get a loan and then buy a car outright with it. Both may be a much better deal than PCP style finance. Debt (especially car debt) is so normal these days, that people seem to jump straight to it, without even considering the alternatives.

I am broke, but have no debt. The reason I am broke is because covid changed my income and then I lost part of income. Things can change so easily, and I’d be fucked if I had even a car debt to service. I don’t do the cash envelope thing myself, but I also don’t spend on non essentials at all, and I know where every penny goes (sadly!). I use a numbers spreadsheet, which I’m happy to share but there are probably much better ones out there.

Another one here saying ‘use a spreadsheet’ or ‘pen and paper’.

Why £350 pm on a car? You could bring down that monthly payment by putting down a bigger deposit, but you’d have to save some money in order to do that.
Look into getting an electric car.

Are you living above your means?
Cut down on takeaways, coffee and prepare some/all of your work lunches at home. If you have enough clothes, shoes, etc. don’t buy anymore until you actually need them. Do your research, buy as much as you can in the sales and avoid paying delivery charges if possible. Cancel the subscriptions that you hardly use, eg. Sky.

It’s difficult living as a single person. If you’re not an established household I guess you may have had to buy furniture etc.
you don’t clarify what you are including in the £350 per month for a car. If it’s acquisition, fuel, insurance, tax, maintenance and repair costs I think that’s a fairly conservative estimate, people must be presuming you mean just for the cost of the car to be saying it’s expensive!

The little things all add up.

Nails, lash lifts, haircuts, travel, coffees, lunch from the shop. The "I just need a..." from Amazon.

Another one here voting for you to do the money saving expert budget template.

And shop around. If you think £350pm for a car is ok, then you're wrong.

Martin Lewis' Money Mantras
Skint: Do I need it? Can I afford it?
Not skint: Will I use it? Is it worth it?
Money Mantras

Try the demotivator tool on the website too. Very useful to put things into perspective.

Yes, you need to track every bit of spending for a whole month. You'll soon see where it is going. Either use a tool online or make your own. Make sure you split food into "Food In" and "Food Out". Food In being groceries etc. Food Out = meals out or takeaways. You can include coffees in food out or maybe even list them separately to see how much is going on that.

Budget. Add up all your essential direct debits, they are non-negotiable. Open a separate account for groceries, transfer a set amount when you get paid and stick to it. Open another account for your ‘pocket money’, again - stick to it!

You can know where it goes by doing a financial audit.

So just live normally for a month except you track every single penny on a spreadsheet. Now there are lots of free apps or templates you can find online to put this into a pie chart, bar chart, etc. etc.

I mean every single penny. Then end of the month once all the money is gone you look at what you've put down and see exactly where your money goes. Then you make adjustments accordingly.

Food shopping is a huge one and it can be streamlined by doing things like batch cooking, not buying anything processed, growing own food. In fact food is where we really keep our costs down as I cook everything from scratch and I'm very good at this and what comes with that is a very healthful diet also.

I'm a big fan of charity shop clothes too and mending. You can mitigate this cost of living crisis if you prioritise the right things.

The audit will help with the prioritising.

Only £900 left for the month?

Crikey.

You need to sit down and work out what you are spending it on because to be worried about that suggests you are out of control.

common things that money disappears into
unused gym membership
amazon/Netflix/Disney+/sky/spotify
take out coffees
take aways
phone contract
not shopped around for internet
not shopped around for insurance

Log everything you spend for a month and you’ll soon see where it goes.

Unless you were in your overdraft, you haven't got down to £900 by the second of the month with groceries and takeaways. Check your bank statement for direct debits, recurring charges (direct or through paypal) and standing orders - all four categories. They add up and it sounds as if you have more than you think.

The mortgage is a bit chunk of it before you even start paying for everything else. Which leaves 2 grand for everything - food, car, bills, phone, internet etc. It's probably more than what a lot of people have but it's still not a huge amount.

we have a family income of about £3000 pcm, 2 adults, 2 kids and it doesn't go far and our mortgage is only £350 pcm. We get by and don't have much left at the end of the month, often go overdrawn and don't spend above our means.

To start, I would look at your bank statements and see exactly what you are spending on everything and see where you can cut back!

350 pcm for a car is one ninth of your total income. If you think you can find the funds for that then do it today, and start saving up for the car. If you can save up 12 X 350 and maybe take out a loan for the next 12 months' payments you'd have a healthy £8.5k budget to buy a car outright.

That's a bit by the by, but my broader point is it can be really helpful to think about total costs of things rather than pcm. You have a credit card debt, could you pay that off quicker too? Unless it's interest free and you're sure you'll pay it off before the interest free period ends, the quicker you pay it off the less it will cost you. People who sell you credit encourage you to think of it in terms of minimising pcm to make it seem cheaper, but that can mean you pay for longer and it ends up costing more.

Energy bills
Council tax
Food shop
Insurance (car, house, pet, travel)
Phone contract
Broadband and landline
Gym or other memberships
Netflix, spotify etc?

Do you have pets? Do you work at an office and take a packed lunch or buy your lunches?

Make a proper budget you've missed out more than half of your regular bills.

You say you need a car for work- is that to commute to work or do you travel as part of your job?
If you are using your car for work your employers should be contributing.

Also travel costs what do you spend on public transport or petrol?

You haven't listed any bills in your OP? Most of my money goes on electricity, gas, water, broadband, phone, insurance policies, private pension and other fixed costs like that. Food and other essentials have gone up in price a lot too. I also agree with previous comments that being a single income household is really expensive!

I do this occasionally, when I can't figure out where our family income goes. But then, we have 2 kids who swallow up a lot of it.

Personally though, it's things like:
Contact lenses ( you pay way more when you have stupid, astigmatic eyes)
Union membership
The odd stop in home bargain.

Write down everything you spend. Every last little thing. Don't try to change your spending habits, just spend as normal and note it all down.

Then at the end of the month, divide everything into categories.

Mortgage, council tax, utility bills, transport, food, credit card payments, clothes, socialising, coffee, phone contract.

Do you have a gym membership? Netflix subscription? Note it all down.

If you think a lot of it is going on food, divide food into subcategories. Ingredients to cook from scratch, ready meals, takeaways, work lunches.

You'll soon figure out where it's going and where you can cut back.

Do you spend on your credit card or are your monthly payments going towards paying off an existing debt? If you're spending on your credit card you need to note all of that down too. If you're just paying off an existing debt, can you pay it off faster? For example, when deciding whether to get a takeaway, could you perhaps have some pasta and sauce and chuck 14 quid at your credit card balance instead? Or in the morning, if you'd usually buy a coffee on your way to work, can you go without and pay off 3 quid towards your credit card balance? It'll soon add up.

If you have a phone contract, can you keep using the same phone when it ends and move on to a cheaper SIM only contract? And when you need to get a new phone, can you buy a handset outright using an interest free credit card if need be and get a SIM only contract with it? It'll be cheaper overall. If you have an iPhone, ditch it. You can get perfectly good Xiaomi and even Samsung phones for a couple of hundred quid.

My banking app shows my breakdown (if I want to see it) so see if yours does. The small things do add up quickly.

I kept a log for a week several years ago. I was amazed at how much money was spent on 'the odd' coffee, magazine, chocolate bar, and take away; they don't cost much individually, but over the course of a week/month it adds up to quite a lot if money.

Agree that you really shouldn’t be planning to spend £350 monthly on a car.

Of course the most economic way would be to buy up front and buy something 3-5 years old. Move on from the idea that new is the only reliable way to have to car. Your income isn’t suited to a new car that is £350 per month. You need to have what you can afford and what won’t cost you far in excess of what you should be spending on cars over many years.

This is all a mindset thing. You can either take on Baird the very good advice given here about tracking spending and which isn’t very time consuming, or you can keep frittering. The consequences of the latter will be that you always have less money than you could have and spend more on things than needed, and over the years multiple thousands are wasted. The consequences are likely to be less good accommodation, holidays and options for your kids, plus working longer and having a less secure retirement.

You need to become more frugal and savvy. It won’t mean you go without necessarily, but that you get better value and don’t waste cash. After all, who wants to spend more than they need to??

Before you buy anything (especially online), wait 20 minutes and then ask yourself if you really need it. You might only need 3-6 months of living like a miser to get on top of it, and that's doable over summer.

Sign up for online banking and go through your last 4 weeks spending, then the last 4 weeks before that. You need to know when your money goes in, when its taken out for bills, and where the rest goes.
From now on keep a note of everything you spend.

One thing I've found that makes a difference is the date I get paid. If I get paid just before the direct debits go out I can mange much more easily. So I change the dates the DDs are paid to fit my payment cycle, and I keep an eye on it. Its a nuisance, because I'm paid every 4 weeks but the DDs go out on the X date of the month.