To ask for your help getting my finances under control

[SpikeyFloof]

I have always lived hand to mouth and often fallen into the trap of having a spend up on payday, then counting pennies to buy milk at the end of the month.

I need a spreadsheet for household finances and a spreadsheet/income expenditure sheet for my business. I jot down my business ingoings and outgoings in a notepad at the moment which is not the best system. I'm self-employed and have an online shop where I sell things I make. I usually get a small top up from UC at the end of the month if my income was low.

I'm on a dmp after my other business had to close during first lockdown. Ex DP is about to press the self destruct button and quit his job so the cm he has been paying is likely to reduce or stop altogether in the next month (right before Christmas ffs). I'm really worried about money so any advice greatly appreciated.

If you use part of your home as an office/workshop, you can recover part of your household bills (rates, water, insurance, utilities, broadband etc) as business expenses. Check on the HMRC website under self-employed, there's loads of information on there.

When you fill in your weekly incomings and outgoings on your UC account, how does that work exactly? (sorry, never done it myself). I would have thought that since you are self-employed, then your income is after business expenses have been deducted, not your turnover before expenses.

Otherwise, if you were bringing in say £1,000 a week and business expenses were £900 then your earnings are only £100 so they should be using that figure of £100 for the calculation of your earnings, not £1,000. Because that's all you have earned.

The first thing you need to do before taking any of the budgeting tips above is to track every penny you are currently spending. You need to know where every penny is going. Atm you don’t actually know where you can cut down, because you don’t know where it’s going in the first place.

To do this:

Print out 2-3 months of bank statements. If you spend cash, then you need to start collecting every receipt: card payments are much easier to track.

Set up a very basic spreadsheet. You’ve already got the most common categories of expenditure in your previous post. Start with the and add categories so the you are accounting for every single penny. Knowledge is power: there’s nowhere to hide once you start tracking properly.

Do you know how to use a spreadsheet? Google Sheets or Excel?

You should also be doing this for your business. Track every penny.

I don't know how to use spreadsheets. I've just ordered an ingoing and outgoing ledger from amazon for my shop. I wonder if that would work for household income?

Seconding Monzo (not used it but others swear by it)

Doesn't have to be fancy just list and amounts where you can keep track. Spreadsheets can add it up for you but just as easy with calculator. Long as have record that’s what counts.

Learn how to use spreadsheets, really easy, they do all the sums for you, and will make a massive difference to how you run the business as well as your personal spending.

Martin Lewis has a really good budgeting thing you can fill in too, will prompt you for all the expenses you should be thinking of.

Your ledger will work for your home.

I’d start at the front for work finances and the back page for home finances. If it’s a fair size ledger it will do you some time.

If you decide it’s not working you can just rip out the back pages of home finances and shred, and just keep the ledger for work.

Start at the next pay day.

B/f or c/f (depending what acronym you use means brought forward or carried forward)

That’s the first thing you put, what your starting with. So if you have a tenner left in the bank unspent you put that.

And then you put all your Ins and Outs and tally it up daily to get a running balance.

It won’t stop you overspending though it will record what shop you overspent on (like Asda £74 when you knew you only needed £39 of groceries so you know at the time you shouldn’t have bought that new cost you didn’t need etc). But as you won’t likely itemise everything you will forget. You could try keeping the receipts though.

You could also note how much food you throw out as that shows if you need to plan better meals to use up stuff.

PS Id have all my direct debits for contents insurance, debt repayments, council tax, tv licence, electric etc come out the week I get paid. So for me that’s the first week of the month. Then you know if you look at your bank the second week of the month or thereafter what’s there is your own money not money you need to not touch as it’s for bills.

If you possibly can afford it, think about one of the more expensive items of shopping ( eg washing powder or coffee) and stock up a bit when it's on offer. Or identify the biggest offer savings on items you use and stock up on them.
Eventually you will end up buying most of your shelf stable products on offer if you continue to apply this rule.
You may need to swap brands a bit, but it saves a fortune.

I have 4 accounts. It took some working out but now I have worked out the best amounts to divide it by:

1 x account for all bills money, including an amount set aside for yearly bills such as car service so it adds up over the year.
1 x account with correct amount for food and fuel for the month (account for whether it’s a 4 or 5 week month!)
1 x amount for savings
1 x amount of “free” spending money e.g. clothes, shoes, day out.

I found that by separating the amounts needed for other things I could still accommodate for my own habit to have a payday spend up!

Have you got a Gmail account? It's free, and Google Sheets is easy to use. You could sign up to a workshop or watch YouTube videos to get the basics under your belt. I honestly think it would be time very well spent, both for personal budgeting and for your business.

I also use multiple accounts to manage things:

Bills account that never gets touched, salary paid in and all DDs etc go from there
A Current account for travel costs
A Current account for food money
A current account for spends
Savings accounts

If your credit is shot I’d try for basic accounts rather than currents if you decide to open multiple accounts.

Bills account that never gets touched, salary paid in and all DDs etc go from there

I think this is key, along with accounting for annual and irregular essentials like car maintenance, broken appliances etc.

Using one account for bills, essentials like food, and non essentials must be so hard to manage, yet so many people seem to do this.

@BarbaraofSeville

Using YNAB or similar software allows you to run multiple “pots” in a single account - including for future spends. You do have to keep it up to date and properly reconciled, but once it’s up and running you can pretty much ignore your actual balance and look only at your YNAB categories.

This only works if, as I say, you are always keeping track and checking frequently.