To ask if you WERE financially clueless but are NOW quite savvy

[AmanitaRubescens]

what steps did you take to move from clueless to savvy?

What goes in(income) vs what goes out (expenses).

What has to be paid (rent and associated bills)

Then you have how much is left and what to spend it on (food and transport being the most important).

What do you need help with?

What’s your goal?Budgeting and planning is the key.
MSE website is very helpful.

So not sure I'm savvy as such, but I had to literally write down everything I spent. I spend £2.49 per month getting office for my iPhone and each month I project what I am going to spend based on what I know, both what I have done in the past and what I know about the coming month (Xmas/birthdays/holidays etc) and then I try and stick to it. Just writing down what you spend is weirdly liberating. But if what you're looking for is someone who didn't have a clue and how has amazing investments ... that's not me. I just manage my income better!

Quite simply, I chose to change my attitude of money being meaningless numbers on my Barclaycard statement, to something real and tangible that I have complete control over. That simple.

Stopped wasting money by watching the pennies so the pounds take care of themselves.
No coffees to go, finding somewhere free to park and walking a bit further, using money off vouchers and shopping in lidl, farmfoods and homebargains rather than Tescos.
Phoning Sky and getting my monthly payments right down by getting rid of channels we never watch.
Setting up a direct debit so a chunk of salary goes straight into savings on payday. Putting any money left over at the end of the month into savings.
Overpaying the mortgage to bring down the payment term more quickly.
Switching to giff gaff and only paying £6 per month for my phone.
Shop via Quidco where possible. Always go through price comparison sites for car insurance renewals.
Not wasting money buying new clothes but wearing stuff I already have.
Batch cooking and using the freezer more sensibly. Buying yellow label reduced foods and freezing them.

I just decided to concentrate as I was sick of not being in control.

Oh, and made Martin Lewis my King!

If you mean in terms of every day budgeting:

1. The 50/20/30 rule. 50% on needs, 20% into savings, and 30% on wants. We save loads of money this way but can still go for a coffee or lunch at the weekend etc.

1. Projecting ahead to things we'll need to pay for, and saving monthly as far in advance as possible. We use joint vaults on Revolut for this. I know lots of banking apps have similar features.

For example, if our car insurance next year is going to be 900, we spread that out over 12 months and save 75 monthly. We do this for everything - holidays, electricity bill, hairdressers, Christmas, birthdays, TV licence, petrol, takeaways. It was a bit hard when we started as we didn't have as long to save for things but it's so much easier when we start 12 months ahead. It's such a good feeling when a big bill or event rolls around and the money is just there already.

I started to invest in cryptocurrency last year and my investments started going crazily up so I stripped back on everything lavish and put into crypto and this year the portfolio is great and I have changed my crazy spending habits!

Sounds stupid but I started off with a budget. Tallied money coming in and all recurring monthly expenses. Then went back and found all annual expenses to keep track of those as well.

From that I could see where I was overspending and how I could cut down (Netflix instead of sky etc).

After that, I set myself a target for a minimum amount per month I wanted to save and set a Standing order to go out to a separate account as soon as I got paid.

The rest I knew I could have as “spending money”.

Since then I’ve expanded and now have short term goals/savings; long term goals/savings; have an Emergency fund; and have dipped my toes into Investments and even some Crypto.

Money Saving Expert is a great website to look at stuff; also handy for checking best rates for utilities etc.

I also lurk on Reddit’s UKpersonalfinance sub; they’ve got a great flowchart to get you thinking and are a good resource for me.

I am sure it wouldn't work now and this was over 30years ago 😳 I was about 25 and a newly qualified nurse I was in a muddle with money, constantly over drawn , robbing Peter to pay Paul, I started drawing all of my money every month and I paid everything by cash , this was in the days when we all would go to the bank to pay our bills, for some reason this got me straight over a period of time , I think it was seeing the cash in front of me that helped me , I know this wouldn't work for everyone

I used to be terrible with money. Always paying bills late even though I had the money, never looked at bank statements, always lived a bit beyond my means which added up.

What I changed:

A budget spreadsheet and reconciling each account every month.
Writing down actual spending so it didn’t go above budgeted spend.
Different accounts for bills, discretionary spend etc.
Automatic reminders for payments/setting up direct debits or standing orders.

Read the "meaningful money handbook" it's life changing

Thanks for your replies. I fell asleep as soon as I'd posted then I woke up this morning and posted this message on a completely random thread

As well as budgeting advice, I'm interested in how you know which ISA to invest in, should you overpay mortgage or put into pension?

It's just overwhelming for me and DH is even more useless!

We are not young either ...

In terms of investments etc I read a few books in my early / mid 20s to get a sense of how it all worked. Can't remember any specific titles though one was aimed specifically at women and the others were more general. I have always invested my savings and have done it all myself (rather than through a guided investment account with a bank etc) since my late 20s. I would start by ordering a couple of books online or from the library.

should you overpay mortgage or put into pension

Oh I'd like to know this too..

Realised I wasn’t helpless and I could change my circumstances.

Pay myself first - so save money before buying luxuries. When income increases don’t increase lifestyle to match the increase - maybe spend half, save half. Or save it all, just don’t fall into the trap of spending your new income.

Work smarter, not harder. Think about passive income streams wherever possible.

Learnt about investing.

@AmanitaRubescens

Thanks for your replies. I fell asleep as soon as I'd posted then I woke up this morning and posted this message on a completely random thread

As well as budgeting advice, I'm interested in how you know which ISA to invest in, should you overpay mortgage or put into pension?

It's just overwhelming for me and DH is even more useless!

We are not young either ...

Investments/Pension vs Overpaying mortgage can be a very personal thing; it depends on how happy you are with your pension projections; and your attitude to risk.

Some people take the view that it’s better to go into a pension; as it’ll get tax efficiency plus if it’s in a fund earning 5% growth per year that’s better than saving on the mortgage interest of 3.5% or whatever.

On the other hand, investments can be risky, plus putting into a pension locks the money away until a certain age. Some people like overpaying the mortgage as it gives them a “guaranteed” return of the interest savings without the risk, plus means you’re closer to owning your home outright and having more disposable income to play with.

It may be worth a chat with a financial advisor to go through your specific finances and retirement goals - find one that works for a one off fee rather than one to manage your portfolio for an ongoing cost.

@ThreeLittleDots

should you overpay mortgage or put into pension

Oh I'd like to know this too..

Whichever gives you the better return interest wise

Eg if your pension is giving you 20% return and your mortgage is costing you 2% then better to put into your pension

If your pension is giving you under 2% or losing money then overpay your mortgage (and look to move your pension too)

Forgot to say; another middle ground could be rather than locking it away in your pension you could stick money in a Stocks & Shares ISA choosing a mid-risk Index fund. That way your money is slightly more accessible than a pension but you’ve got it there to chuck at the mortgage if you wanted a better LTV at the next remortgage for example.

I’ve always been rubbish with money - I spent over my means in my 20s, living off credit cards (I lived in London on 15k pa in the 2000s - it’s not possible to do that for long without accruing some debt!) It took me all of my 30s to slowly pay it all back (literally, 10 years) & once I had cleared it all it really helped. Not only in that I haven’t got to pay out on loans etc anymore, but it was just so stressful, I never want to be like that again.
I don’t earn loads now (self employed, hit very hard over the pandemic but wasn’t entitled to any grants etc I am still bitter!) so I have to really curb my spending so that I don’t get back into my overdraft. I constantly ask myself ‘do I need this’ when I buy something, & if I do, can I get it cheaper or second hand elsewhere? (Usually I can… I buy all my clothes on eBay for example, or in sales) I’m lucky in that I’m not a huge impulse buyer either, and don’t have expensive taste which helps, but when I do want to buy something nicer I’ll get it on eBay.
I think the main turning point for me was getting out of debt. When you already owe a few grand on your credit card, it’s very easy to just chuck another hundred on it without thinking. It all adds up really quickly & it’s quite terrifying. Even my husband never really knew how much I owed as I was really ashamed (we have a joint account but also separate) & I’ll never tell him. I sleep much better at night now, even if I’m in tatty second hand clothes - thrift is the way forward!

if your pension is giving you 20% return and your mortgage is costing you 2% then better to put into your pension

Ha, I don't even know what this means! My employer doesn't pay into a pension but I have a few £££ in Nest from previous employers so I would have to pay into it myself. How do I find out what the return would be? Is it the money the gov would put in? I need to research it more!

Our mortgage is £85K and can be paid off in I reckon 10 years via overpayments. Current interest rate 1.99%.

But don't want to hijack thread!

Get interested in pensions and compound interest

1. Dave Ramsey

2. You Need A Budget software.

I've gone from being a financial mess to being pretty shit hot. Even if I do say so myself.

15 years ago I was in debt and had a mortgage and a campervan savings dream ..

Got into the Money and credit crunch treads here on MN ( especially the Frugaleers and the debt pay down ones.

Started using YNAB and then started overpaying paying off debt and starting a small additional voluntary contributions saving to my pension which I gradually increased over the years ( by ignoring all pay rises) until i was paying almost half of my earnings into it (and have retired early now because of it ) .

Still use YNAB and put money into 'pots' to make sure I have enough for bills etc and budget budget budget.

15 years on and now no debt ,use credit cards but pay off every month .. and because of doing the AVCs I have a decent enough pension income to match what I earned in work and enough fun money ..

I only had a mid-level local government job , so it can be done, but i did give up things like doing up the house , buying new cars and technology etc etc .. but not clothes or holidays but everything was on best deal or in sales