How do you budget your expenses?

[loveonthebrain]

How do people budget their expenses.. have enough money for bills but also food and money for days out etc. Holidays? Treats?

Any advice

One word: Monzo.

It's completely changed the way we think about, spend and save money.

We got into some financial difficulty a few years ago which was partly due to factors outside our control (redundancy) and partly due to poor management of that situation on our part- but I'm honestly convinced that if we'd had Monzo we'd have weathered the storm a lot better.

We use Monzo pots. So I have loads of individual pots set, called 'Council Tax £216', 'Gas&Elec £150' and so on, one for each individual bill.

On payday I fill all the bills pots up. Then I have 5 weekly pots called 'budget 1st Jan-7th Jan' and so on...and I put our weekly budget for food, petrol, household etc into that.

Any left gets swept into different longer term savings pots called Xmas, Birthdays, April Centre parks, Aug summer holidays etc - all our events. I put the money where most needed and monitor monthly.

As each Monday rolls round I withdraw that week's money from the relevant weekly budget pot to our account and that's it to spend. If we piss half of it up the wall by Thursday then bad luck, there's no more till Monday and we're poor for half a week. We've trained ourselves never to dip into another pot.

It works so well for us. There are never any last minute dashes for money because everything we have coming up is listed with its own pot well in advance - seeing a big £0 next to your summer holiday fund staring you in the face is plenty of motivation to start adding to it well in advance.

Totally agree - Monzo.

I maintain my traditional bank, salary goes in there. I leave a buffer in there but on payday the majority gets transferred to Monzo and split into the pots. Eg my holiday this year is x amount, I'm not paying the balance until it's due because, Covid, but the relevant monthly amount goes into the holiday pot so when it is due it's there in full to pay.

I have Christmas, fun money, bills, clothes, pet etc and put the relevant amount in each month.

I don't do monzo... but I do do 'pots' . ...we put money into savings which we will not touch until retirement....then we have pits for everything else ....I never horrow from one pot for something else....what I haven't got I don't spend....though tbf I no longer have a mortgage and kids are grown up ....but ibdid this way back when we were young and hadc3vlittle ones....its served me well

I basically work out all bills so mortgage /rent, council tax, utilities, mobiles, insurances, Internet etc. That's one figure
Then I work out food shopping budget and petrol. I add approx £500 a month to that to cover anything we spend in the month so clothes for us and kids, days out, takeaways etc. All food, petrol and monthly Spends goes on a credit card which we pay off in full every month.
Then we put away £600 a month which covers annual holiday abroad, Xmas, birthdays and anything car related
Anything left is savings
In the past there has been nothing left after all this and we haven't been in a position to put away the £600 for holiday etc. But in a better position now with no childcare costs so we can manage to do it
It's obviously easier to do this when your income is pretty fixed. We're both employed and just on basic so we pretty much know to the penny what's coming in every month

Also Monzo pots and some bank accounts with Santander - as soon as I get paid money goes into those pots/accounts by standing order. Holiday fund, insurance costs, Christmas, car savings etc. So that they always have what I need in them. I know it’s stating the obvious but you need to work out what you will need each year in those accounts and save accordingly each pay day.

Regular bills like council tax, water, gas all go out two days after I am paid by direct debit so it’s like the money is never there.

Works for us.

I do pots but I use YNAB to do it. It's amazing.

They encourage you to budget for "true expenses" so putting aside money for all expenses even if longer term. So I have car expenses pot, holidays etc but also a house maintenance pot, and house furnishings pot, a new car pot, a pot for saving for when my MacBook gives up the ghost.

The benefit of using YNAB over Monzo is you can then save that money wherever you want. So you can find higher interest accounts (not at the moment lol!) or, as I have done because internet rates are shit, put the moment into premium bonds.

It also helps you identify how much money you have, for what, and when you need it by.

So you could for example decide to invest some if it's not needed for 5 years plus....

@SeeminglyOblivious

One word: Monzo.

It's completely changed the way we think about, spend and save money.

We got into some financial difficulty a few years ago which was partly due to factors outside our control (redundancy) and partly due to poor management of that situation on our part- but I'm honestly convinced that if we'd had Monzo we'd have weathered the storm a lot better.

We use Monzo pots. So I have loads of individual pots set, called 'Council Tax £216', 'Gas&Elec £150' and so on, one for each individual bill.

On payday I fill all the bills pots up. Then I have 5 weekly pots called 'budget 1st Jan-7th Jan' and so on...and I put our weekly budget for food, petrol, household etc into that.

Any left gets swept into different longer term savings pots called Xmas, Birthdays, April Centre parks, Aug summer holidays etc - all our events. I put the money where most needed and monitor monthly.

As each Monday rolls round I withdraw that week's money from the relevant weekly budget pot to our account and that's it to spend. If we piss half of it up the wall by Thursday then bad luck, there's no more till Monday and we're poor for half a week. We've trained ourselves never to dip into another pot.

It works so well for us. There are never any last minute dashes for money because everything we have coming up is listed with its own pot well in advance - seeing a big £0 next to your summer holiday fund staring you in the face is plenty of motivation to start adding to it well in advance.

This is extremely helpful.

I'm going to look at tutorials on how to use this as it's a lot to get my head round but it sounds like you have the budgeting to an absolute tee by using this.

@SeeminglyOblivious

One word: Monzo.

It's completely changed the way we think about, spend and save money.

We got into some financial difficulty a few years ago which was partly due to factors outside our control (redundancy) and partly due to poor management of that situation on our part- but I'm honestly convinced that if we'd had Monzo we'd have weathered the storm a lot better.

We use Monzo pots. So I have loads of individual pots set, called 'Council Tax £216', 'Gas&Elec £150' and so on, one for each individual bill.

On payday I fill all the bills pots up. Then I have 5 weekly pots called 'budget 1st Jan-7th Jan' and so on...and I put our weekly budget for food, petrol, household etc into that.

Any left gets swept into different longer term savings pots called Xmas, Birthdays, April Centre parks, Aug summer holidays etc - all our events. I put the money where most needed and monitor monthly.

As each Monday rolls round I withdraw that week's money from the relevant weekly budget pot to our account and that's it to spend. If we piss half of it up the wall by Thursday then bad luck, there's no more till Monday and we're poor for half a week. We've trained ourselves never to dip into another pot.

It works so well for us. There are never any last minute dashes for money because everything we have coming up is listed with its own pot well in advance - seeing a big £0 next to your summer holiday fund staring you in the face is plenty of motivation to start adding to it well in advance.

How do you pay for items with the monzo money? Is it a bank account and do you have a card for this?

@itwasntaparty

Totally agree - Monzo.

I maintain my traditional bank, salary goes in there. I leave a buffer in there but on payday the majority gets transferred to Monzo and split into the pots. Eg my holiday this year is x amount, I'm not paying the balance until it's due because, Covid, but the relevant monthly amount goes into the holiday pot so when it is due it's there in full to pay.

I have Christmas, fun money, bills, clothes, pet etc and put the relevant amount in each month.

So do your bills come off the monzo account?

How do you pay for items with the monzo money? Is it a bank account and do you have a card for this?

Yes it's a normal bank account with contactless Debit Card.

You have your main current account, from where bank transfers or debit card spending come. Then the pots are like sub accounts so you can store money separately.

Direct Debits and Standing Orders can be set to debit a specific pot so once my bills money is in its relevant pot I just forget it, it's all automatic from there.

The weekly budget money I need to spend on the debit card so I manually move it back from its pot to the current account once a week.

If you spend on your card and don't have enough in your account, the transaction will decline - the money in pots is ring fenced and safe from accidental spending.

Hope that makes sense. If it sounds complex or fiddly at all, I can assure you it's not, it's just the way I've explained it!

I have a monzo account.
I don’t use it as effectively as PP bit I do like the visibility and I have moved a chunk into a separate pot.
I use it as my main account for DDs etc and I can use it abroad with no charges and withdraw cash too

I use vaults in revolut the same way. I also have a spreadsheet. So I have all incomings and all standing outgoings. Standing outgoings includes around 700 euro a month that gets transferred to revolut specifically for a set of valults with an automatic transfer into each of them, so I have one for Christmas next year, holiday, car, tax and insurance, some bigger purchases for the house, personal maintenance, birthdays, the wedding we're due to attend etc. It leverages the expenses over the year and the withdrawal is automatic (so if I'm getting my hair done, the money is in the revolut vault and I just withdraw it from the on the app pay with my card).

Then I have a balance left over in excel which is divided into the monthly remainder, weekly and then daily so I roughly know how much I can spend each day to stay within budget.

It sounds much more involved than it is!

Money goes into one account
DDs come out
Put money into savings
Some months it’s more, if any insurance is coming out (pay my house and car insurance annually) - so I do a calculation every pay day
Divide the left over amount by wks

Holidays- booked in November and paid off in may- part of the savings
All these sub pots seem pointless to me

Like @TooManyPJs I use YNAB to manage pots of money, used to use Microsoft Money back in the day!

YNAB takes a bit of cracking but is so worth it, every penny is accounted for.

Another Monzo user here. I have the main account that I use for my weekly spending. Then I have the money for the other weeks in separate pots (so currently have wks2-5). Plus pots for house, summer holiday, November holiday, dog boarding for summer holiday and emergency fund.

I want to get to the point where I have a lot for home and contents and car insurance too but I'm going to wait until I need to pay them this year then set up for next year.

What I love most is that it's immediate. You pay, and the moneys gone straight away. I also like the round up option.

@SeeminglyOblivious

One word: Monzo.

It's completely changed the way we think about, spend and save money.

We got into some financial difficulty a few years ago which was partly due to factors outside our control (redundancy) and partly due to poor management of that situation on our part- but I'm honestly convinced that if we'd had Monzo we'd have weathered the storm a lot better.

We use Monzo pots. So I have loads of individual pots set, called 'Council Tax £216', 'Gas&Elec £150' and so on, one for each individual bill.

On payday I fill all the bills pots up. Then I have 5 weekly pots called 'budget 1st Jan-7th Jan' and so on...and I put our weekly budget for food, petrol, household etc into that.

Any left gets swept into different longer term savings pots called Xmas, Birthdays, April Centre parks, Aug summer holidays etc - all our events. I put the money where most needed and monitor monthly.

As each Monday rolls round I withdraw that week's money from the relevant weekly budget pot to our account and that's it to spend. If we piss half of it up the wall by Thursday then bad luck, there's no more till Monday and we're poor for half a week. We've trained ourselves never to dip into another pot.

It works so well for us. There are never any last minute dashes for money because everything we have coming up is listed with its own pot well in advance - seeing a big £0 next to your summer holiday fund staring you in the face is plenty of motivation to start adding to it well in advance.

This is what I do it's he best

@SeeminglyOblivious

One word: Monzo.

It's completely changed the way we think about, spend and save money.

We got into some financial difficulty a few years ago which was partly due to factors outside our control (redundancy) and partly due to poor management of that situation on our part- but I'm honestly convinced that if we'd had Monzo we'd have weathered the storm a lot better.

We use Monzo pots. So I have loads of individual pots set, called 'Council Tax £216', 'Gas&Elec £150' and so on, one for each individual bill.

On payday I fill all the bills pots up. Then I have 5 weekly pots called 'budget 1st Jan-7th Jan' and so on...and I put our weekly budget for food, petrol, household etc into that.

Any left gets swept into different longer term savings pots called Xmas, Birthdays, April Centre parks, Aug summer holidays etc - all our events. I put the money where most needed and monitor monthly.

As each Monday rolls round I withdraw that week's money from the relevant weekly budget pot to our account and that's it to spend. If we piss half of it up the wall by Thursday then bad luck, there's no more till Monday and we're poor for half a week. We've trained ourselves never to dip into another pot.

It works so well for us. There are never any last minute dashes for money because everything we have coming up is listed with its own pot well in advance - seeing a big £0 next to your summer holiday fund staring you in the face is plenty of motivation to start adding to it well in advance.

I do this and it really encourages you to save. So for example today is windy and cold so I’m going through our toy cupboard getting out rarely played toys instead of going out to a cafe, pay for parking, park etc. That £20 I’ve saved today will be going towards spending money for our holiday in June. When it gets to June some of my friends will say ‘I don’t know how you can afford your holiday’ etc not realising I’ve been saving up since January. I think it just focuses your spending. I also plan ahead for the month so remember I need to put money aside for a birthday party present, a new swimming costume for one child and so on.

Another monzo user here.
We have a low income (under 25k family of 4 with pets, one car and a mortgage) but budget everything really carefully. We're very strict. Every penny is accounted for.

We have savings for Christmas, birthdays, holidays.
It can be done but you have to stick to your spending limits.
Monzo helps us to stick to budgets for each category, we can set the budgets and see what's been spent and what's left for groceries etc.

I think monzo is the tech version of the old envelopes system?
We have allocated a set amount for each area of spending and saving and I have various accounts with Nat west that savings get automatically transferred into each month.
I have a home made form that I literally record every bit of spending on in different sections (that isn't regular like after schools clubs or kids pocket money) eg groceries, eating out generally, grown up fun ( meals out just us 2, concerts etc), and do a weekly review.
I'm aware this sounds super organised and focused. In context I've spent all of my
Adult life not having a budget, being either skint or comfortably off and having no idea wtf is going on financially. It's got me in trouble and is stressful.
However I started medication for adhd and suddenly I'm able to do this stuff. It's a revelation! Husband does the spreadsheets - I'm old school 🤣

Monzo can just be an ordinary bank account too, that’s how we use it
We just like the visibility

We just use a plain, old fashioned spreadsheet. List incoming money and then all outgoings. Broadly speaking, income is £5000/month in total (two adults). Bills inc. mortgage come to £3000 (this figure also includes so much per month to go towards yearly costs, eg car insurance, TV license, car tax). £1000/month for food/activities. £500/month to save/mortgage overpayment. Remaining £500 towards holidays/birthdays/one-offs eg school trips.

I have my main bank account as my DD/bills account - my pay goes in and I take out everything but the DD total.
I have another current account which I call FFF - Food Fuel and Fun.
I have a savings account for long term saving - £150 a month in there.
The rest goes in my Monzo pots which are (in no particular order of importance):
Dentist
Hair
Presents
Holidays
Home and garden
Car service and MOT
My 50th
Clothes

I have an excel spreadsheet but it's not all that fancy, just a list of outgoings and the amount next to it. In the outgoings I try to include every possible think I can think of, including an amount for clothes, savings, birthdays, Christmas. All bills, food etc then when I get paid I move some of those amounts into other accounts.

I have done this for a long time but about a year ago I started really tracking it in fine detail, updating every couple of days to make sure I'm on track. I have a small weekly budget for miscellaneous stuff--if I didn't do that, in my head at the start of the month there's this huge pot that I can buy random things with...then by the last week I'd have overspent and there'd be days with no money till payday.

I have to do this because I'm a spender by nature, without the bank balance to match 😂
This way I cannot pretend I don't know that if I'm going over budget...there's nowhere to hide.

I keep track of what my outgoings amount to against my actual balance and I check it regularly, which helps me stay in control of it.

2 bank accounts, 1 for bills and 1 for spending which has an allowance going into it

I also like the round up option

Yes the roundup option is great.

In 2021 we had about £380 swept into savings from rounds up, money we didn't even miss.

Plus, I enjoy the neatness of looking at my spending account and seeing debits of £14, £3, £52 etc and no pence!