I've just done a budgeting spreadsheet - shocked!

[Allnewtometoo]

Where does the money go?? I do know i have a bit of a "frittering away" habit. Buying a drink at work, getting the dc snacks from the petrol station, that sort of thing but jesus I cannot believe how much I should have "leftover" each month. I know that on paper can be different to reality but even so, this is mind boggling.

Can anyone recommend a way to sort myself out? Is there a plan/program/book?

I know some of you will say "just stop spending" but I feel like I need more than that.

I've previously read about sone sort of budgeting app but can't remember what it was called.

It comes up as Budget Planner ! Snoop Money

One thing to note about Scoop, there are a couple of types of bank account that can’t link up and give a live balance, so you add them on as savings then manually update the balance (eg some online only savings accounts and isa’s) If you forget to occasionally check the balance directly with the bank and you get interest paid or something you might find the balance is incorrect or out of date so make sure you routinely check it! I was £500 better off than I thought!

YNAB is life changing but it’s a whole budgeting method, it’s not like Snoop, Emma etc which are mostly about tracking where you’ve already spent money, which I think is of limited use personally.

YNAB is about proactively assigning money to basically every expense you have so that you are never caught up or taken by surprise by life. So by the time I reach my boiler service date, the money is waiting for it. Same for birthdays, Christmas, holidays, my hair appointments, when I need new tyres, house repairs, new school clothes for the kids. It’s a whole philosophy shift. It’s a learning curve for sure but when it clicks, it changes your financial outlook forever. It’s called zero-based budgeting and you don’t need the app for it although it makes it much easier. It’s basically the envelope method but digital ‘pots’ that are bank account agnostic.

It does sound great, but I found it hard work working out what to do given I have sn overdraft.

I think it would work better for me once im out of my overdraft.

@Allnewtometoo I think it would work better for me once im out of my overdraft.

Overdrafts are the devil to deal with ime. The YNAB method is to treat it like another debt and assign money to it each week/month. Someone up thread had a good idea which was to open another account for day to day spending money and leave regular bills and an assigned amount for the overdraft in the account you are currently using for day to day spending. You need a positive plan to get out of the overdraft or it will never happen,

I can't remember what YNAB says about overdrafts. Alternatively you could ask your bank to move your overdraft amount to a loan and agree how much and how long for to pay it off. I think that is what I did. Also, cancel the overdraft facility. After that you know how much money you actually have to spend each month. If you have credit card debts you could add those to the loan and then close them. Maybe keep one strictly for emergencies. The loan will be cheaper than the interest on an overdraft and credit cards.

It does require a little setup with an overdraft as that’s not a common thing in the US where the software is made. Someone did a good guide on it on Reddit though, including strategy for getting your way out of it. I’ve put it below in case anyone else is interested but struggling with the overdraft thing. Nick True has a really good beginners video on YouTube that unlocked the way the whole thing works really well for me,

’YNAB's advice is to use a credit card account type to represent your checking account. The problem with that is you can't budget because you have no cash. Every transaction will result in overspending, with the goal being "overspend less" as time progresses. IMHO, you might as well use Mint if the budget section is going to be useless.

Fortunately, you can work around this limited viewpoint. Since you're obviously going to spend with overdraft/credit, it would be wise to budget those overdraft funds so you can have realistic spending guidance. This requires that you add an auxiliary account to represent those funds within the budget.

Setup:

1. Make a checking account starting with the correct (negative) balance. (This may already be in place.)
2. Make a cash account with your full overdraft limit as the starting balance; you won't interact with this account again.
3. Make an Overdraft Reserve category, and set a goal in the amount of the overdraft limit.
4. Budget what you need in various categories (i.e., make a spending plan). Keep in mind that every dollar of that TBB you budget is planned debt increase, so don't go overboard! Budget whatever is left (what you don't need) to the Overdraft Reserve category.

As you go on with life, try to budget a little each month to the Overdraft Reserve category to gradually dig yourself out of debt/overdraft. Occasionally, you may need additional credit and would have to take money out of the reserve category, but generally, you're trying to grow it. You are making progress if the Overdraft Reserve category Available is larger than it was last month.

Lastly, once this is in place, ALL your spending should be budgeted. If you happen to overspend, you MUST cover it by reallocating from another category (converting it into budgeted spending after the fact). Don't be sloppy and ignore it! (Reallocate from the Overdraft Reserve category as a last resort.)’

I found is strangely confusing

I just have an account for bills-rarely keep much money in there, just enough to cover all payments
Then Monzo pots for other expenses
So I have Personal for daily spends
Utilities
Car
Vet
Treats
Christmas

Since I started doing this I have saved so much as I prefer to put any bits and bobs of odd money into my pots rather than it being spent randomly
I think accounting for every penny is the way to go

I did the free version of YNAB to get my head round it, then adopted the method- I don’t see the point in paying for it.

I replicate it with Monzo pots and then a separate bank account where I open lots of savings accounts and rename them in the app, Christmas/ Holiday etc etc - if I have an event coming up (Horse of the Year Show usually) I estimate how much it will cost and add it as a goal and it tells you how much per month/ week you have to save to reach the target by the end date

This is exactly what I did, although I did the numbers in my head !
I found that I knew what YNAB was going to tell me already and I found it really irritating
Maybe I have the sort of brain that holds information so when I used YNAB I expected all bells and whistles but was disappointed and a bit " is that it"
Plus I'm not really a fan of DR

I have 40+ categories on YNAB but if you are only doing a basic version version of the method with a handful of categories then quite a few of the banks offer digital pots. It does mean moving money manually between them when you need to cover spending, but that’s not too bad if you don’t have many. It would be a nightmare with my Budget but might be a good entry point. I did do a version of the bank pot thing previously and it was a good start.

There’s a free version called Budget with Buckets IIRC but you have to host that on your own server I think.

Don't forget that if your kids are used to having takeaways now then they are likely to rely on them as adults and have the same financial problems.

This is a good point. They have recently started wanting to buy things like minecoins online, they just don't see it as money i don't think.

I did a quick shop on my way to collect them yesterday, so when I got the inevitable "im hungry..." I had something to give them.

I am finding that im very very anxious about money since starting this thread, which is probably a good thing. I've just paid my home insurance in full which is going to make me very poor this month , but saves me nearly 10%.

Maybe what you're looking for is the YNAB app? It was recommended to me and I think it's very, very useful! It's made a difference to my family!

Yes DR did my head in. I joined the Facebook group and there were posts along the lines of ‘reduced debt by 30k this year, so no excuses, anyone can do it’ - then they admitted that they had sold one of their cars…..

Start now and put money aside monthly for it so when the renewal is due next year you’ll have the money available.

Also, with your overdraft, ring your bank and ask them to reduce it by £x a month (an affordable amount for you). They did this for me years ago and it was the only way I could get out of it.

@iamnotalemon I can reduce my OD myself on my banking app. Re things like home ins - am I not better reducing the OD first? Rather than trying to save towards other stuff?

I have a save the change facility in my current account and it's amazing how quickly it builds up - goes into savings account.

Basically work out how much you need to cover bills, mortgage, food, petrol et etc and see what’s left. Decide what you will leave to start reducing down your overdraft Put half of that into a savings account, I use one you can only access three times a year or you get basically no interest. The rest divide by the number of weeks to next payday and that’s what you have for coffee, snack step. And that can be further reduced by taking your own

Do the same with food money, set a budget work it out weekly and that’s all you can spend

i follow the budget mom American but the principles the same it works

https://thebudgetmom.com

Oh that’s good you can do that yourself. I’d just reduce by a little each month.

Yes I guess you are better off clearing the debt first - it depends on what your disposable income is like.

It's normal to feel shaky and anxious when you face up to your debts
But you have made the first step in acknowledging that it's serious and you need to take steps to sort it out.
Well done

Top tips
Work out a realistic budget and on payday keep your bills money in one account and spending on a prepayment, no OD and ideally one that pays you cashback or interest

Check all your CC debt is on 0% and set up a SO for the minimum plus £10 then chop up the cards

Work out how much your OD is and a realistic plan for paying back
So if it's 2K then if you have £400 leftover after bills food etc leave £200 in OD and £200 on your prepayment for spending money
So 200 x10 months= 2K
If you get any extras then as pp said half to OD half to you.
I think it's probably best to clear your OD first if it's a big one
Once you get to say £500 gone contact the bank to reduce it and every £500 after that until its a £200 so that you don't respend it

Once the OD is gone then divert that money to CC
Slow but steady progress
Meal plan -stop top ups and splurges

Now as regards treats-once it becomes something you can't afford then it's not a treat-its depriving you and your children of stability.
Is that worth it?
For quite frankly dreadful coffee?
No
The trick is to replace with a nicer but budget option
Get a good thermal mug -make decent coffee at home
Children's snack
Buy a huge multipack of crisps and stash some plus a pack of apple juice boxes in your car

You still get coffee, kids get a snack
You just swap to what suits your budget

I get the oh I'm OD and fed up so fuckit a Costa won't hurt but it all adds up horribly and the constant in and out of OD is demoralising

There are some great online communities
MSE debt free wannabe and some great Insta accounts

It helps you feel less alone and some great tips
All the best 💐

You need to do both, otherwise the probability is that you will arrive next year having to do an overdraft or leave yourself very short of cash in order to pay the home insurance. Trust me, I speak from experience. It is better to reduce the overdraft more slowly and be saving something towards known future expenditure.

Someone once told me that Christmas is not an unforeseen financial emergency, it happens every year. It sounds obvious but it wasn't to me.

Make a list of things like home insurance, birthdays, christmas etc that happen every year and start saving towards them now.

Similarly, reducing credit card debt (you don't mention this and may not have any) it is the same principle. I was told to focus on not increasing the debt, paying off the smallest ones first in manageable amounts, then putting that money towards the next one etc.

it's surprising how fast it goes once you set your mind to it.

@CatCollector and @Vaxtable thank you so much for your replies. Im cautiously optimistic about going forward. Its trickier I think with it being the holidays and having a couple of short breaks away, but I can still make a start. We've utilised the National trust membership today, I did buy a coffee but took snacks and drinks for the DC, and had an early lunch before we left.. So £3 ish. I also didn't buy a bottle of wine despite it being Friday. Equal parts ridiculous and pleased about those things. I do have a coffee flask so will start using that too.

I want to have a very "light" month for grocery spends, I had NO IDEA how much I was spending.

I always take a thermos flask of tea to work, £4 a day for a cup of tea might not seem like much, however adds up to £64 a month. Buy the sort of snacks that you get from the petrol station from Aldi and take them with you. I bought a little tin of Malibu from a train station shop last week- £5! Own brand which tastes the same from Aldi is 99p.

Amazing op. Now make it’s about making it a habit.
Have you hot a specific goal in mind? It always helps.