Would welcome opinions on how dh and I should run our day to day finances; we are pretty hopeless at the moment

[Mintyy]

We are both self employed and our income varies hugely from month to month. It is all paid into a business account, then we pay ourselves an amount each month to live on into a joint current account. Anything left over in the business account goes towards the tax bill and occasional large repairs/refurbishments on the house.

The trouble is we are not disciplined about what we pay into the current account each month. I think we need a fixed budget and to stick to it, as if we had paye jobs, not just keep topping up the current account when we need it.

Our standing orders (mortgage, council tax, utilities, phones, tv, various insurances, charity donations) amount to £2,200 per month. We have no childcare costs.

How much more than that per month do you think a family of four (two adults, a 12 year old and a 10 year old) need to cover:

food

petrol (we don't use the car to travel to work, so probably use about £50 worth per fortnight)

running the car - repairs/MOT etc (it's a 10 year old car)

children's extra curricular activities

meals and nights out

clothing

presents for each other and immediate family

Christmas and

holidays?

Is there anything in that list I haven't budgeted for?

Any thoughts very gratefully received!

Sorry its so boring

Really difficult for us to say, because it depends on what you do and where you go for activities, meals, holidays etc.Can you keep a diary of what you spend for a month or two? MSE has a good budget spreadsheet.

Thank you for replying!

We are trying to rein our spending in a bit, so I'm looking for ideas around what is a reasonable budget, which we can aim towards or stick to.

Work out what you spend at the moment, and aim for 10% reduction. If you manage this, then aim for another 5-10% reduction. All families have different ideas of what is reasonable to spend, I can do a weekly shop for me, DH and DS (2.5) for under £30, others will tell you the least they could spend is £100 per week, and they would struggle to knock that down a lot without any gradual changes!

You need to roughly split your expenditure into fixed costs (food, petrol, clothing, transport, MOT, and the other £2,200 items you mentioned) and discretionary costs (holidays, extracurricular activities, treats, meals out). It would be a good idea to set aside a sum for house/appliance repairs.

Work out the total of the fixed costs, by monitoring your spending over the next few months.

The discretionary spending is what you plan and can afford. That is trickier and variable. But say you go on two holidays a year and your children each have 2 extracurricular activities and you eat out 4x a month, just add them up to see what is a reasonable budget for your family's lifestyle.

Sorry if this is a bit mickey mouse, but it is what I do.

Do you have enough information to go back over the last year/6 months and analyse what you've spent and then use that to decide what's a reasonable amount in future.

Are you newly self employed? I think you need to be stricter about putting money aside to pay your tax. I'd have a totally separate account with a standing order that you don't touch.

Ohh Me Me Me!!!!!

You Need A Budget! YNAB

The principle is that you assign every £ a job and only budget what you have.

I'm 5 days in and it's already revolutionised my thinking and our finances.

There's a 34 day trial, so no cost to try out the method.

Have a browse of the site and a read of the forum. It really does work!!

No, been self employed forever! Saving for tax is something we are good at. I would just like us to save a bit more (Uni fees maybe) and not fritter our money away.

Look at what's coming in (find the minimum amount and use that. Anything above is a bonus to be saved) and look at what's going out. Any cheaper phone companies/electricity etc?

I use a calendar so I can see what's coming in each week/month and what's going out. If there's more going out then coming in for one week I can make sure I've transferred enough over from the savings account to cover it. If there's excess coming in then I'll transfer most of that into the savings account.

Thank you all.

I've just sat and written down what I think is a reasonable amount for all those things (rather than what we've actually spent) and come up with

food £600
clothes/shoes £300
leisure/nights out £300
children's lessons ballet, swimming etc £200
petrol £100
car tax and repairs £80
save for holiday £330
save for Christmas and birthday presents £90

which rounds up to £2000.

£2000? really ?

Those figures are not out of this world. You could probably easily shave 10% off them without too much hardship, particularly for food. £600 is a lot for a family of 4.

Is that per month?

Do you really spend 1k a year on presents? 3.6k on clothes and shoes? I buy all of our clothes in the sale, it saves loads. I spend about £400 a year for ds (14) and I. 3.6k isn't reasonable if you're on a tight budget, sorry.

Have another think and break it down. Look at your bank statements to see what you actually spend, ie;

Monthly expenses (A);
Gas and electricity £100
Clothes £30
Christmas and birthday £35
Council tax £70
Water £28
Phone & internet £85
TV licence (150 a year so around) £12
Denplan £12.50
Insurance £20
Tax £whatever
Entertaining + children's activities £400
Petrol £100
MOT, car tax and car maintenance £80

Income(B)
Tax credits £something or other
Work £something more
Child benefit £whatever
Other £add it on.

B-A= £amount to save.

Darn, I forgot food. £600 is a lot, blueshoes is right. Can you cut this back to £100/£120 a week? Ditch the premium brands and quick foods. Quick = expensive.

Without any other info I'd say the food, clothes and presents seem high and the petrol seems low.

Can you break down the food and clothes further - do you buy a lot of alcohol, new clothes every week?

Thanks so much. This is exactly what I want - input on what is reasonable for a family of 4 to spend. As I said, we are rather vague about it all, and I'm just guessing really.

You could do with going through your bank statements and working out exactly how much you're spending and on what. Write it all down like the example I've posted above. Use your minimum income. You can't see where you can make savings if you're guessing.

You're quite right. Its bloody boring though!

I would say (not trying to be smug) that as a family we eat very well - lots and lots of fruit and veg, not that much meat though (but organic and free range only), lots of fish. I cook most things - pretty much the only pre-made thing I buy is fish fingers. We all have fruit and yogurt after meals. My husband eats lunch at work, but all other meals come out of my kitchen. My point though is that including wine, beer, cleaning products, toiletries, entertaining friends and fizzy water I spend about £80 a week.
I think your food budget is an easy target. I could def cut mine down if I wanted to save the money so £600 is loads.

this is a list we use with clients:

Income
Client 1 Net Pay
Client 2 Net Pay
Child Benefit
Other Income savings
Other Income Bonus'
Other Income rent

outgoings
Direct Debits/ Fixed bills

Mortgage 1
Mortgage 2
Insurance for mortgage
Life insurance for both
Life & Critical illness insurance for both
council tax
gas/ elec
water
TV
Telephone
Mobiles
House alarm monitoring
childrens nursery fees
Cleaning management
Cleaner
Charitable donations
Professional memberships
National Insurance basic bill

Provision for annual bills/expenses

House insurance - buildings
House insurance - contents
Car Insurance/Repair
House Maintenance
Car Tax
AA Membership

Monthly expenses

Food/nappies/toiletries
Kids clubs
Petrol
Birthdays
Christmas

Savings account
Spending
Spending
Hair
Toiletries/makeup beauty treatments
Camelot
Clothes
Kids clothes & shoes