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

budget planner

If you haven’t already done so, use this budget planner to work out your expenses. It’s amazing how many one-offs you need to consider - car tax, school uniform, and I didn’t realise how much I spent on haircuts. Think how much you spent on Christmas recently - food and presents and divide by twelve. Save this much each month. Similarly, work out your annual birthday present spend, holiday spend, etc, and work out how much this is per month. Put this money aside in a different bank account.

It can all be a bit frightening when you jot it all down, and you may feel a little broke at first when you start putting the money aside, but at Christmas time, it’s lovely having that money saved, waiting to be spent.

I use YNAB too, it's fantastic

@SeeminglyOblivious

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!

But if you didn't 'round up' the money would just stay in your current account .

But if you didn't 'round up' the money would just stay in your current account

It wouldn't in reality though. It would just be extra money swirling around in our usual weekly budget which would get frittered on rubbish 🤷🏻‍♀️

@SeeminglyOblivious I’ve decided to set up a Monzo account following your excellent explanation.

Another YNAB fan here. I had seen it mentioned on mn so many times. I found myself slightly over spending every month and with a bit of a credit card balance and I started using YNAB. It's really revolutionised everything for me. And now I'm a year and a half in and I'm really reaping the benefits. I have things funded across the whole year so every time a bill is payable like insurance, car tax etcetera it's already covered before it's due. I have loads saved for holidays too. it's amazing. You can do a free trial.

@JackieWeaversZoomAc is there a U.K. version now? I looked before but it wouldn’t connect to U.K. bank accounts.

Starling also works for this.

I used the money savings expert budget planner to work out what we spent on the major headings each year, divided by 12 and set it up so that automatically goes across the the savings space for that heading a couple of days after pay day. They also let you set up direct debits from there. I then have a cashback credit card for the things that I can get cashback on and auto-pay the amount I spend on it on average monthly, plus check it every so often to see if it needs topping up.

I think it works well for me as I never feel like the money is mine to spend because it goes the moment it comes in.

One massive excel sheet that tracks bills and savings over months, quarters and years then takes my expected income and charts the cashflow through the period and highlights where I might have excess or not enough.

So, I don't think of my finances in monthly segments but more as a long contiuum. If a bill goes up one month, I change it and it auto changes all the future payments of that bill and I can see the long term impact on chasflow. Ditto if my salary changes etc. I don't spend down to zero each month, I spend a specific spending allowance that forms part of that.

If I know there are one-off big costs, such as wanting to change the car I can add that in and then tweak spending so that the money is there when I need it.

In all honesty, I've never seen anyone else do it this way (not that I often see other people's financial workings) but it works for me to be able to see how the next 5+ years looks based on what I know now.

[quote TabithaTittlemouse]@JackieWeaversZoomAc is there a U.K. version now? I looked before but it wouldn’t connect to U.K. bank accounts.[/quote]
Yes it connects to uk bank accounts now. It's a fairly new development

I have 5 bank accounts.

Income goes into one and I all my direct debits come out that account.

I then transfer money to another for food for the month. Another is used for savings. Another for saving up for larger items for the house or holidays. And the last is for things I pay yearly like insurance.

It works for me and the food budget really does help to not over spend on the supermarket.

Another vote for Monzo. I didn’t think it would help me much as I already held separate pots for savings/holidays etc. but it has been an absolute game changer for me with my personal bank account. For the first time ever I am not routinely going into my credit card as I know up front at the start of each month exactly how much money I have to budget for necessities, like travel to work (surprisingly more than I thought!). I am going to set up an account for our joint finances next. Highly recommend.