How to budget

[wonderwoo]

I am fairly good at budgeting (at least I thought I was). I have many things sorted: I put money aside for bills, save monthly for things like christmas, birthdays, holiday, car bills, and put money aside each month for things like clothes, hair cuts, dentist bills etc. I also try to be fairly careful and do things like change utilities provider and don't pay monthly bills for things like gym/tv that we don't need.

On paper it all works out, but in practise we are overspending every single month. This has gone on for a while, and I have buried my head in the sand, but now realise I need to sort it out. I just don't know how.

I think that there are numerous problems with my money management, such as not budgeting enough for certain things, combined with buying things that we could do without. In addition, I have an idea that there are two main problems:

1. I buy most things online, and so pay by credit card, and sort it all out monthly - giving an ability to over-spend because it distances me from the act of spending money, and so I have slowly over time got into the habit of buying now, working it out later. (the benefit of the credit card is that I get some protection from online fraud and I do at least get cash back from it)

1. I do not have a plan for occasional or unexpected expenses. Silly things like batteries, books, school trips, school photos, postage etc etc. They really do add up! I am going to try and make up a small budget for school things (just estimate a reasonable amount) and with other things, I will try and write a list of what I need/want and only buy once a month once I have calculated a total cost, and prioritised the most important. Does this sound reasonable? What do you do?

I have just written all this out, in the hope of getting some advice on how to fix it, but I realise I do actually have some of the answers already.
Maybe more than anything I need some encouragement and a bit of a hand-hold. I do find it somewhat overwhelming and am filled with regret for how I have let this happen for so long. We are not in debt, but I have bled dry any money we did have and for that I feel terrible.

Can anyone help me out with how they manage these issues?

It takes time recording everything but when you see it written down then you will think before you buy

Meal planning is great... Makes you plan shopping and save money that way. If you make a list when shopping you are most like to stick to it and not overspend.

Have you done a budget? Do you know if what you have coming in actually covers what goes out? 2015s list is a good start, but have a look at the budgeting section on moneysavingexper for a full list and beginner's guide to how to budget.

You must allow for irregular purchases that will occur, such as Christmas, holidays, car repairs, broken white goods, insurances etc by putting away a monthly amount to cover these.

A tip on Christmas jumpers. I passed a charity shop the other day that had a whole rail of them in the window - see if you have anything like this locally.

Or ask around at school - does someone have an outgrown one left over from last year - perhaps set up a rail at school and encourage people to donate and swap, perhaps for a token contribution to school funds/charity?

Thanks Barbara. yes I do have a budget for all monthly outgoings and I save for christmas, car expenses, holidays etc... but its the unplanned miscellaneous things that are causing me problems and I don't know how to budget for them. Small things that add up, like christmas jumpers, books, batteries, just stuff. And also I am spending more than I have budgeted for on clothes (which is easily fixed now I am aware of it).

I think I have a plan now though, so am in the process of putting that into place. I have adjusted my budget to allow more for clothes, and added a school budget for photos, school trips, donations. And for miscellaneous things, that I cannot plan for I will have a set monthly amount and will not buy anything (unless urgent) except for once a month when I will work out what we can afford and prioritise it. I sounds very basic and obvious now, but I have slipped into some bad habits over the years, and its hard to see the problem/solution from within sometimes. This thread has helped me to step back and look more objectively at what is going on.

That sounds great - along the right lines, as you say, really basic and obvious, but so many people don't get it and end up in a mess because they have no money for an 'unexpected' bill but have spent money on discretionary spending instead of putting money aside for the car repair or vets bill, that will arise sooner or later, if you have a car or a pet.

The moneysavingexpert site is great for all aspects of money management, whether you have loads or not enough - check out their money mantras to get you thinking about any purchase whether you can afford it or not and have you made sure you have picked the best value option. If you're not used to it, it seems like a faff, but it becomes second nature after a while.

If you're struggling with the one off unpredictable things, but have managed to identify a budget for them each month, why not try and put off each purchase as long as possible, and not feel obliged to spend it all each month, so say if you have £25 a month for random bits (amount chosen for illustration, you may have decided on more or less), but one money only need to spend £15, mentally carry forward the unspent tenner, so that it is available in future, when your necessary random bits spending might be higher?

If it makes it easier, you could do this in cash, so put £25 in a tin once a month to pay for random bits and only allow yourself to use the money in the tin for those small items. If you find that you have loads building up, you could put some back in the bank or allow yourself a small treat.

I resisted this for years, but i have started using a traditional pots and envelopes method amd its really effective.

At the start of the month or when income comes in, i put my money for each category in pots and take it out of those pots to buy things. Its much harder to spend your last food £10 cash before the end of the month, and it reinforces that if you manage to get to the end of the month with some food money left, you can boost your leisure spend for nect month, or buy a bit more electricity etc. I also have a £1 pot by the door where if i come back from shops or leisure, with whole £1 coins, i put them in the pot rather than back into the category pot. Last night i took £20 from my leisure pot for a drink with friends, when I came home, £2 in pound pot, £5 back to leisure. My leisure spend is £50 per month, so I could do this twice more UNLESS i manahe to get all my food for the month for less than my food budget. I leave future savings for clothes etc in my account, but you could also have a pot for that too..

If i am going out to do more than one type of spending, i have plastic card wallets with the anount in for each.

its still tempting to cross over amounts, but the thinking time and agononising often is long enough to stop the purchase in the first place. I walked around a supermarket on the way home last night and nearly bought bread with my leisure money, but agonising over it was enough time for me to realise i had some bread in the freezer.. !

Oh by the way, i asked Christians Against Poverty to help. They will do a budget for you and negotiate with creditors and debt people to work out the best way forward. They also take control of part of your money and pay debts for you first. Its really good.

You are all brilliant. Thank you for taking the time to give me great advice and for not judging me.

Scarey That's sounds like a great system. You sound very deciplined.

Goodness. Why on earth would we 'judge' you? Plenty people here have had to learn the hard way. Myself included.

Actually once you stop fudging categories together in the same bank account and can see the cash, ot makes you disciplined. I have noticed that its important to put all the money for a category in. if i get say £40 less out and try to remember i have 40 more for leisure say that is still in the bank account, i tend to sort of spend it twice..it 'feels' bigger in my account. . so I feel like i can buy a couple of large glasses of wine (one for a friend obvs!) easily from it..more than three times in the same month..iyswim..so getting cash aside is really important. Its weird though as £100 cash for food for the month feels like i can get tons. . because i fantasise about how many months (years) worth of lentils i cpuld buy I

I hope your budget goes well OP
.:)