Budget help!

[AmericasTorturedBrow]

DH and I are crap at budgeting but aside from the mortgage and my student loan (he paid his off last year) we have no debts, have never owned credit cards since we paid them off and our overdrafts after uni.

We're comfortably off but still seem to never have savings because we constantly take it out again, feel like we're not much better off because we're shit at tracking our spending (also obviously our household expenditure has gone up since having DC)

So we prob need to create a budget but don't really know where to start. We need an emergency savings find built up over the next year (various lucky escapes over Christmas made us realise we really do need a buffer - not least because we live in the US so all that needs to happen is a freak accident and suddenly healthcare costs spiral)

Because of this we need to rein in our spending, so we've worked out what our usual monthly spends are in terms of childcare, rent, bills, car costs and now this savings aim - how do you create a budget for things like food and "entertainment"...prob sounds. Stupid but we just don't know where to start. Do you pick a random amount?!

I menu plan, so only buy what I am going to cook that week.

On a piece of paper, put in red pen what has to come out (make a list with everything, from petrol, insurance, rent) and in blue what comes in.
10% of your monthly income could be put aside for holidays and christmas etc. , give yourselves

Split the rest into 4, 1/4 for entertainment, 3/4 for savings.

My suggestion would be to 'pay yourself first'. The day after your salary is paid in put, say, 10% of it into a savings account - preferably one with some restrictions that mean you have to think a little before you can get the money back again. Now deduct your regular, fixed outgoings from what's left.

You should be able to work out a reasonable monthly amount for regular variables like food and petrol... these are usually big budget items in a household budget. So deduct these next and you'll end up with a final figure.

This final figure is your 'incidentals' money. Impulse & irregular purchases. What I suggest you do is divide it by four and withdraw that amount of cash at the start of the week. Use the cash to pay for these impulse/irregular things rather than credit/debit cards as much as possible as the sensation of dollar bills leaving your pocket is more tangible than handing over a card. If you run out of this cash mid-week, wait until the start of the next week before withdrawing more. If you have lots of cash left at the end of the week, only top up next time you make a withdrawal. If you are regularly running out of cash mid-week, reduce the amount you put into savings.

After a short time, you'll get a much better idea of where the money goes and you can refine your budget. But pay yourself first and work round what's left.

That's an interesting way round of doing it - we thought we'd try to not spend cash at all so we can see exactly where we're spending what but this makes sends too

Cogito, I like your suggestion of paying yourself first, thank you.

Moneysavingexpert has a budget spreadsheet and people on here use ineedabudget

we use 'you need a budget' (YNAB) - it had revolutionised our financial lives. We don't worry about money now and never have a late bill, etc.

We save for Christmas, birthdays, etc., all clear and easy to see.

Cog's suggestion is a good one - lock that money away before you have a chance to think of something to spend it on.

Normally what kills the 'we can spend it if the current account balance says so' approach to budgeting are unexpected or irregular expenses. Car repairs or MOT. TV licence. Annual fees, that kind of thing. Like lougle I use YNAB and this massively helps in terms of planning your spending in a less reactive way. Worth having a look at the site to get an idea of the method, even if you ultimately decide not to go with the software.

my budget spreadsheet is linked here
www.mumsnet.com/Talk/legal_money_matters/1715581-Cost-of-credit-cards-and-mortgages-the-spreadsheets?pg=2
feel free to download it and play

Thanks TiP!!

ATB : if you message me on FB or something I'll send you a customised version - posted on the thread before clocking you were the OP!

You sound like DH and me! It's the "skinny-fat" of personal finance: heads above water, not quite sure how, and always on the edge of going under! Our redemption is our workplace pensions, which make retirement saving a complete no-brainer. But we don't have a buffer to cover the medium-term expenses... That's what I'm working on now. This is what I've learned so far:

1. Write down everything you spend, what it went on, and whether it was a need or a want. Just doing this, in the first month I saved 15% of my take home just through the shame of acknowledging the crap I'd normally fritter it on.

1. Know what you're saving for. If it's for a household emergency, you don't get to blow it at the end of the year just because your washing machine has lived to see another day. If its for a birthday treat, then enjoy it, but be clear about how much you've saved for that purpose.

1. Go through two or three months bank statements and identify regular outgoings (direct debits, transfers to personal accounts, standing orders...) Added to what you've recorded in step 1, that should give a full picture of how much you're really spending, and how much is really necessary. From there, you can set personal allowances (pocket money) for each of your family (can be adjusted if it turns out to be too tight, but nobody should be randomly dipping into the joint account for a coffee here and a pair of shoes there.

Brilliant idea of putting away first! I always tried to spend as little as I could and save the rest - of course never happens!
Ive been trying different methods over 6 months: so far this is what's been working for me:
List incomings (for me: wages,tax credits,CB=£x)
List outgoings (DD's, rent,ctax,gas+elec,owe a friend £x)
Work out what's left.
Divide by 4 and that's what I have for the week , no more and no less.

It helps to have everything come out as near to pay day as poss

And defo meal plan...thats saved me so many times...I always found as soon as I got paid I would go shopping, but when I got home and meals started to be cooked, nothing matched meaning I would have to do another shop (expensive) I also found it stopped me buying take outs due to not having anything in the house as I couldn't conduct a meal from what I had!

But sticking to a weekly budget is what's helped me instead of 'guessing' what I need for the month before running out!

Once I kept every single receipt for a month and wrote down where a receipt wasnt available and you would be shocked when looking back where your money goes!!

Every pointless pound or so that gets spent adds up!

Asking questions when out: do I really need this?
Do I really want to buy one get one free? - do I actually need this or am I being realed in with this offer

Etc etc....doing this to cut back on spending saves a sum!

This is great, thanks all, I'll def check out You Need A Budget and will on you TiP

So annoying because we were great at saving before DC, had a regular saver we both paid into as soon as wages were paid but then we couldn't afford to and now we can again but are out of the habit. The scary thing is we have no pension provisions at all....

Also yes to meal planning - I'm getting much better at sticking to it and sticking to strict shopping lists - and getting in enough milk for the week so I don't need to do a top up shop. Had to give up farmers market though

We're jusT gone through the same thing. I looked at everything we spent for 2 months and then averaged out to get a typical month. It was relatively easy as wet our everything on credit card or debit so I can see where we were spending. I used the moneysavingexpert spreadsheet to input everything. Then I created a budget and, this is the revolutionary part for me, input it into Goodbudget which an app where you create virtual envelopes of money and every time you spend you input it and it takes out out of the envelope. We were overspending according to the spreadsheet so I'm finding it hard to keep to our grocery envelope for example but we need to rein in spending. I'm really enjoying the app and would highly recommend it.

Silly keyboard... 'We put' not 'wet our'

We're jusT gone through the same thing. I looked at everything we spent for 2 months and then averaged out to get a typical month. It was relatively easy as wet our everything on credit card or debit so I can see where we were spending. I used the moneysavingexpert spreadsheet to input everything. Then I created a budget and, this is the revolutionary part for me, input it into Goodbudget which an app where you create virtual envelopes of money and every time you spend you input it and it takes out out of the envelope. We were overspending according to the spreadsheet so I'm finding it hard to keep to our grocery envelope for example but we need to rein in spending. I'm really enjoying the app and would highly recommend it.

We do things a bit differently but it works for us. I have a spreadsheet showing joint income. Underneath are all fixed outgoings,ie mortgage, utilities, car, insurance and food. It ends with a grand total. Then i have a section of variable costs, ie household maintenance, savings, entertainment, clothes, shoes , holiday, birthdays, Christmas etc. This section also has a grand total.

The totals are deducted from the income anything that's left is our disposable. To initially work out how much went in i just played around with the figures until it looked right for us.

Money for fixed bills goes into joint account. Variable costs goes into a separate account with no bank card. Apart from savings which goes into a savings account. Generally we don't spend from our variable pot but it stacks up each month