How best to sort out personal finances. Would a financial review or advisor be worth considering?

[Whatliesbeneath707]

My DH & I are trying to sort out our finances. We both work full-time & have one teen dd. We have enough to pay our bills but really struggle to save for holidays & Christmas etc.
We have various accounts & Monzo pots etc that we divide the money up into, when we get paid but we seem to spend a lot of time pinching money back out of the pots to pay for things.

On paper things look healthy, but come the end of the month & the reality is very different.

Can anyone recommend any top tips or things that helped you get a grip on your finances, please?

Do you follow anyone useful on social media/blogs?

I do wonder if a financial adviser would be useful, but I don't want someone who is going to try to sell us things. I do think it would be helpful to have advice about life insurance, pensions, the possibility of paying of the mortgage early etc but not sure where to start, (we do have pensions etc).
Any good suggestions?
Thanks.

Have a look at the Martin Lewis money saving website, tons of info on there to help with setting budgets etc, theres also a really good forum that might be able to help with some of your questions.

If youre pinching from your savings pots do you need to start with looking at your budgets and logging everything you spend, the odd £5 here and there soon add up!

Log all income and spending for the last 3 months. Categorise it.
Fixed outgoings vs variable.
Now you know what you spend, you can set a budget for future.
With a budget you can set savings goals.

I simplify our finances further; eg;
Wages paid in 20th, all DDs out 28th. Transfer difference to savings on the 1st. (All our spending is on credit cards which are paid in full by the DD on 28th)

I second Martin Lewis website. I changed mine around a couple of months before the pandemic using his website. For me, it made a huge difference and I was finally able to build a few thousand quid in savings up.

Try that for a while. If nothing changes, suggest you try a financial advisor.

What are you pinching from the pots for.

Maybe if it's essentials,put less into the pots?

Another vote for looking at Moneysaving Expert, not need at all to pay someone to help you with this. You're either forgetting some of the essentials - many 'unexpected bills' aren't always unexpected. If you have a car, house or pet, it will need money spending on it every so often so you need to put aside money for things like car repairs, MOT etc, washing machine repair, vets bills and the like.

The other way for money to 'disappear' is frequent small purchases like coffee and lunch out. It might only be a few quid, but if you do it often enough it can be a couple of hundred pounds a month or a significant 3 figure sum each year.

Most accounts offer spending review functions or allow you to download transactions into a spreadsheet so you can see how much you're spending on this sort of thing, or anything else that adds up and you might not have accounted for.

Have a look at:

www.moneysavingexpert.com/family/money-help/

www.youneedabudget.com/

I used the You Need a Budget approach where you give money a job before you use it, rather than only adding up what you’ve spent. (There’s an app but I found it fiddly. I did however read a lot about the approach.)

I made a spreadsheet with everything: income, regular expenses, irregular or variable expenses. I used this to draw up a monthly budget template which I copy and restart at the beginning of every month. And then I write down all spending. This means I always have an accurate figure for money left over, rather than looking at a bank balance that doesn’t reflect things like next week’s food shopping. For variable things like food shopping we set a budget per shop based on what we know we’re likely to spend.

So much of this is about habits. Writing down what you spend. Saving as much as you can. Resisting those small purchases that add up. And buying things after you’ve saved the money, not before.

I’d start by writing down everything that comes in, and everything that has to go out, and seeing if the way you’ve divided things between accounts makes sense or is overly optimistic.

The other thing you could do is split your money into different accounts.

One for direct debits.

One savings for annual and irregular spends (or more, it's up to you, or you could use the pots feature that a lot of accounts/banks have)

One for essential day to day spends - food, travel etc, maybe things for DC if you're fairly disciplined and not always buying clothes/bits/hobby shopping.

After all above is accounted for, spending money for you and DH to cover lunch at work, clothes, grooming, hobbies etc. Once money in these accounts is spent, it's gone. You have to wait until next month.

Set up standing orders to feed each account just after pay day and don't touch accounts in the first two categories unless for things in those category.

Achieves a similar result to YNAB but a lot less faffy once set up and free, rather than an ongoing cost.

I use the Fudget app for a running budget the adopt the YNAB approach of allocating all money - I refuse to pay for YNAB

The meaningfulmoney podcast has been invaluable to me .
They also have a really good Facebook page where there are a lot of really helpful people to ask questions

I definitely don't think you need a financial advisor - you really just need to get a good handle on what you're spending your money on.

So, I've got an Excel sheet with all of our different weekly / monthly / annual spending on it, so I know roughly how much we should be able to save per year. Some people use different pots to save into, or have different accounts etc. I think you need to find what works for you though. I give myself a relatively small personal allowance per month that I can spend on the things that I'd feel guilty about otherwise.

Agree with PPs, you are a long way from needing, or being ready to talk to a financial advisor.

The first step is to work out where your money is going. Go back a good few months to work out what the unexpected expenses were that meant you had to borrow from savings to cover your costs

Once you know what your actual expenses are, you can work out a budget which you can stick to.

That budget will ideally allow you to start building your savings cushion.

The money saving expert is really useful, make sure you are following all their advice to make savings on your outgoings. And look to see what opportunities you make have to increase your incomings.

Once you have six months outgoings in cash, you can start thinking about building your longer term savings, too

Good luck.

Martin Lewis, and also Alan Donegan from rebel finance school have resources that could help you.

Thank you - some great ideas here. I will allocate different accounts for different needs, eg, one for variable spending like food & petrol and then I think if I keep the Monzo pots separate & in a different account, I'm less likely to pinch from them. I also think I need a savings account that I can't access easily with a card. I almost need to just forget about it.
Thanks for the website/people to follow suggestions, I will take a look.

You need to think about what you spend over the year. So holidays, car insurance, birthdays, a contingency fund, Christmas and divide the money for that over the year.

the MSE site really helped me, as did tracking my spending on an app. My husband has a home made version of YNAB.

it means nothing is a surprise….

I think The Budget Mom on YouTube is quite helpful.

You need to budget based on what you actually spend, don't just make up a budget based on what you "think" you should be spending. You've had some good advice here about going back through 3 months of transactions to see what you've been spending on - you need to start there to be able to set a budget.

Yes, I agree. My planning has probably been more idealistic than realistic. I do need to plan for the 12 months ahead, rather than just the here & now!