Why are we struggling to stay in our budget!

[Seasonofthewitch83]

I feel like every month we overspend (not on anything extravagant but everything seems to add up - a birthday card, a new secondhand pair of shoes for DD etc.

I struggle to budget on a granular level because I cant keep track of it - I dont think I would be able to budget so specifically e.g £10 a month birthdays, £20 a month toiletries.
On paper we have £400 a month left after bills/travel/food/nursery. So this covers DD activities, clothes, toiletries, a treat coffee out etc. Yet every month we seem to plough through this with nothing to show for it.

Is there an obvious way to manage this that I am missing? Would it be worth opening something like a joint Monzo account for the 400 so DH and I can use this for all additional spends to manage it?

Tracking spending is the best way. All of your spending, not just the excess.

And spend cash. £5 on a coffee / cake feels like nothing on a card but seems a lot more real when it’s cold hard cash

Why can't you budget specifically? It's how I do it. Before payday I look at the calendar and add up the birthdays, put it in the budget. I have an amount for 'food & drink' outside of groceries, 'clothes' and 'kids misc' so split your £400 between whatever categories suit you.

I have two columns, one for the month total, and one for 'still to spend' so food and drink starts at £100, if I spend £30 I reduce the still to spend column to £70. Then I know I'm covered. I go through my online banking once a week or so, it takes less than 5 minutes. If you have a big spend on one category, reduce the others until you're back to budget.

I guess I don't want to do fifty little budget pots because how we use the money changes every month and I dont want to do the mental gymnastics of moving pots about depending on what we are doing that month?

We do the small pots but averaged annually. So eg car repairs cost on average £50 a month when we had 2 cars, even though we would spend that only when the MOT came around. But by saving that £50 a month we had it there ready. Ditto shoes- if my kids need say, 3 new pairs of shoes a year each plus 3 pairs of wellies, then that amount gets added up then divided by 12 for the budget.

We do this for all things, including christmas and birthday gifts, which we have a seperate bank account for and whenever we buy a gift, transfer the money from the gifts account to the joint account. Eg we save £5 a week specifically, so when we need to spend it, we have it there. Then once everything essential is budgeted, we have a "fun fund" which is our things like coffees and cake out and we divide that between the two adults plus a small pot for the kids ones too, and then once thats gone its gone, we don't touch our other pots until the allocated time (eg MOT/ birthday/ etc)

I am not sure what you mean by budget pots.

I think you need to write everything down and categorise it, over a long-ish period to cover non regular expenses. That is the only way you will know where your money is going, you can review as a whole and decide what changes you can make.

We're the same. I think life has just got a lot more expensive. That extra money doesn't go as far any more. Plus it'll be another £70 on energy this month too.

Write down absolutely everything you spend over say two months, categorise it, and then check whether it's reasonable.

As the seasons change and kids grow, you take bigger hits on clothing when they suddenly have a growth spurt, so some things you'd be better budgeting for quarterly rather than every month.

But you're right, £400 doesn't go nearly as far as it used to.

True - in my head £400 is loads but it doesn't seem to stretch far at all these days. I dont think my head has caught up with that when I spend money.

Can you not just look at your bank statements ?

You need YNAB (You Need a Budget) it does exactly what youre talking about here - helps you budget to that granular level whilst also being able to move money between pots as needed. I’ve been using it for nearly 2 years and honestly it’s changed my life. They have some great videos on YouTube explaining the method. It’s on phone app and desktop and I use both.

I do look at my bank statement but its difficult to see what's left to spend when I have bills still to come out, travel still to spend, food still to buy...

Of course I can retrospectively look back and see where its gone, my question is if there is a better way to budget/split money.

Thank you!

£400 sounds like a lot, but to cover clothing (for a nursery aged child plus two adults) and activities, seasonal stuff like birthdays, emergencies, all parking, toiletries etc and other things it doesn't actually go that far. Do you have holidays as well? That will also effectively be coming from your £400 per month.

What's probably happening is that you're mentally going it's OK, we've got the spare £400, and you're not realising the fact that you've mentally allocated the same £100 (ish) 4x over and that's why there's nothing left at the end of the month.

It does help to get granular IME, either with an envelope method or some kind of software. If you will forget to input things, then you need something either tangible and physical (go and draw that £400 out at the start of the month, then use that cash) or digital - like an account with pots or some kind of software. I use YNAB and find it saves us more than it costs, which I didn't think could be true when I started using it, but it does. I just paid monthly for about 3-4 months and once I knew it worked for us I switched to yearly. (I did not originally link to bank - but the reconcile feature means you can cross check and keep it up to date always, even without linking).

If you will input stuff manually, you can also use a spreadsheet. There is a useful one on the MoneySavingExpert site under their Money Makeover. That gets you to break down all costs including lots of reminders for things you might not think about, and converts any weekly or yearly costs into monthly.

Look back over the last 3 months' worth - I bet you have spent more money on food than in in your main food shopping budget, I bet you have spent on things that come up 1x or 2x per year but hadn't had money put aside for.

Based on what we had set up originally I would do a rough budget/pots thing like this:

£100 "one off" costs
£50 savings

Some allocated to cover the recurring, known costs like activities - and consider cutting down if this takes up a lot of the budget

The rest divided between some pots like clothing, toiletries (that you can gain a rough average idea from the last 3 months) - and again consider cutting down if you're spending more than you'd like to here.

Hopefully - this should give you a more realistic idea how much you have to spend, and cover the things that come up infrequently, AND have a little to put aside for emergencies or savings.

With the £100 towards "one offs" this is stuff like anything that gets paid yearly rather than monthly, including birthdays, Easter, car tax, subscriptions etc, as well as less-frequent but pricier clothing purchases like shoes/coats. £100 a month for now because it's front loaded - ideally, you want to be putting money aside to cover things like this all year so that the cost evens out. But since you haven't done that previously, you'll need to keep some money aside to cover these kinds of things. IME it tends to even out at about £100-150 (though obviously this will probably depend on your income etc!)

Do you have Monzo already? If so are you annotating every transaction and assigning it a category? Are you reviewing all categories at the end of the month?
I do think and it’s eye opening where I spend my money and has changed behaviours.

I have a separate bank account to that into which my wages go and I calculate what I am likely to need for each day and transfer it in accordingly. That way I don't overspend, if I don't have it I can't get it. I take out some cash so if something unexpected pops up I can cover it. I have a similar amount to you left after all bills/food/petrol and I find it really tight. Kids are so expensive but they are starting to understand they can't have everything they want! I don't write down all I spend which I probably should do, I only write up my income/outgoings each month with the dates direct debits comr out so I know at least all my bills are paid! It doesn't help when everything bit my wages is going up though hopefully that will change soon..

Before I had YNAB, when I was a single parent reliant on benefits, I had one account with all my direct debits in and then my personal account. I had the housing benefit paid straight into the "bills" account and then my other benefits paid into my main account and did a standing order, just after the benefits came in, to the "bills" account to cover slightly more than the standard total DD amount and let it run.

That way I knew that what I had in my personal account was what I had to spend. I didn't need to worry about what date of the month the other stuff was coming out, because it was all covered by the other account. I also had an overdraft on that account to the amount of all my bills in case for some reason no money went in one month, but I think I never needed to use it. I just had to check it about once a month to make sure that everything was running fine, none of the DDs had increased etc.

Thank you to the PP.

I guess in my head its easier to ringfence that £400 off into a separate spending account so I can see what we have spent and what we have left.

Just this week I have had to spend money on a new marriage certificate we need for an application, my passport has expired and I need that for ID for my husbands visa, had to buy craft supplies from The Works to make a bloody easter bonnet after nursery emailed on the friday for a parade on monday, and £15 for DD to go to an easter activity. Last month we had to pay for a speech therapy assessment, and train tickets to see my sister. I have no idea how I would plan to budget for this, as it was unknown.

Ideally I would have a savings pot for this, but until free hours kick in I cant see this being too realistic....

My fucking tooth broke this month too and I had no choice but to pay for that on a credit card.

This is what I think would be easiest - I like to know what is in the account is actually available to spend, and not a balance that will change with bills.

It's very simple to keep track of. I know because I do it.

I have a spreadhseet:

days of the week down one side
then the date
bank balance
incoming (on any given day, so child benefit every sunday, it's all plotted for a year)

each bank balance then follows on to add that to it

same with outgoing - next column in red shows outgoings, rent, food shop, birthday allocation, travel, direct debits, all plotted for the year (you can tweak as you go)

and the bank balance tots up to deduct that.

This means that on any given day I can see ahead how much bank balance will drop down to. I can see when it's going to drop to say a fiver and then I do the food shop after that instead of before, after some more money has come in

If I didn't do this I would be left with nothing sometimes.

It's a simple spreadsheet and it shows exactly when you are overspending.

I have an excel spreadsheet with all of our outgoings bills, mortgage, phone, everything that comes out each month periodically. Then I have another few lines for birthdays, savings etc so I can work out how much I've got left to myself each month and it calculates it automatically. It's easier if you are on a salary rather than commission etc as you know what you will earn each month.

If you can do a Monzo account for the extra £400 and use pots in there, I think that will work well.

I started out with the £100 per month "emergencies" method and then with putting some money aside each month managed to build up a £500 fund for minor emergencies, that would probably cover things like train tickets. You're right that you can't always predict things like that. Then I try to keep that topped up but don't touch it unless needed.

I do have a YNAB pot for passport renewals but that's because we live abroad so we always need current passports. Plus there are five of us, so one to renew every couple of years. I probably wouldn't have thought of this before starting, but every time I get a "one off" cost I try to think OK, will I need to pay for this again, how soon and how much? I like that in YNAB you can set future goals and it automatically calculates for you, even if you put more or less in one month, it accounts for that.

I don't think that £400 is a lot to cover the things that you mentioned, so it's not that surprising that you're struggling.

I don't use separate pots of savings that a lot of people like on MN. I think the most important thing is to note down everything that you pay for over a year - you'll need to estimate some things to begin with, but you can hone these numbers over time. Then once you know your incomings and outgoings, you can work out how much you should be able to save. And if you can't save that amount, then you haven't accounted for everything properly. I think you're probably under-estimating some costs hugely - I think you said £10/month for birthdays, but do you really only spend £120 / year for birthdays? It's hard work to pin all of these numbers down, but it's worth it because then you know where your money goes, and you can work out whether you want to try to change that.

Good luck! Money saving expert has a spreadsheet that can be a good starting point for this I think.

How about having a month (month 1) where you don't spend that £400 at all. Literally do without, that month.

The next month (month 2) you you only spend on important things- no treats, but maybe DDS swimming fees or something. So you have maybe £200 left. Remember you have that month 1 £400 pot as well.

Month 3 you relax a bit. You can spend essentials, plus whatever is left from month 2. Anything left goes into the medium term pot.

By month 3, your standard of living is almost back to normal but you have a growing pot of savings for emergencies. That should mean you will always. Have a bit left each month to top that pot up.

I have a separate Monzo for my spending . I have £400 a month on it . Look At my app most days and when the money is gone it is gone . I’ve gotten better at accepting that if I spend £40 on new does for DD I’ll not be able to have any more coffees at the end of the week !
I tried to budget with cash but found it hard . Get a Monzo for every day spending . We also have a Monzo for food . It helps having those separate !