What are we doing wrong?

[CindiHoZ]

Hi

Dh and I earn an ok joint income of £4500 per month take home. Despite what think are quite reasonable living costs, we are constantly running out cash before payday and I am sick of it. At the moment we pay out the following

Mortgage £574
gas and elec - £294 ( can't get this lower)
groceries - £360
C tax - £138
Internet phone and sky - £59
3 X mobile phones - £82
Water rates - £32
House insurance - £34
Car insurance X 2 - £74
Appliance insurance - £8
Car loan - £179
Buy now pay later item - £38
School money/birtthdays/days out - £150
Car repairs - £50
Emergency savings - £100

Total - £2212

This means that we should have a very healthy disposable income. But we dont. There always seems to be something that crops up. We also need to factor in costs such as holidays etc.

Does anyone else wonder where it all goes?

Do you pop to shops and get extras stuff on the way home? For example a bottle of wine there or something else? Also what about your commute to work, lunches with colleagues, drinks after work?

What @Haveallthesongsbeenwritten says. If you analyse what you actually spend, you'll probably find lots of leaks that you're not aware of.
You need a proper budget set up so that everything for the year is accounted for and split by 12 so it's ready when you need it. So Christmas, birthdays, car costs, insurances, breakdown cover etc etc. basically everything you ever need to pay. That way you'll never feel like something has cropped up because you anticipated it.

I know this gets said a lot, but this will always happen if you don't include the annual expenses (holiday's, birthday's, car tax, car MOT, Christmas etc) into your budget.

If you add up what you spend on each of these, divide by twelve, that will give a clearer reflection of what it's costing you month-by-month. I was pretty surprised by how much this took off of my "disposable" income.

If you're a fritterer then imo you need a minimum of three months where you write down every single tiny thing you spend so you can try to spot patterns.

You have to track absolutely everything for at least three months so you can find where money is going. You both have to keep track and agree on a spending plan.
Your list is looking ok, but it's missing Fuel, car breakdown cover (though may be in with car insurance), but that does not account for £2000+ of missing money.

Download your bank statements for the past 3 months and analyse it on excel.
You can filter it and group by where you spend it. You'll be able to see exactly where all your money is going.

Very true!

Are you definitely only spending £360 per month on groceries, you never pop to the local shop and spend £20 here and there?
How much is you annual holiday, how much do you spend on clothes, what do you allow for personal spends?

Looking at your list, what I didn't see mentioned was:
Events (e.g. tickets to go to xx, nights out, pub lunch, anything you are going out to which is separate from the school days out you mentioned)
Transport - any trains, buses, flights ? how about car MOT and car tax ? what about petrol ?
Xmas or any other special events ?
Presents for relatives / friends / anyone ?
Are there any gym memberships / other memberships / other subscriptions you have ?
Health items - dentist, optician, prescriptions, any other health related stuff ?
Clothes / Shoes ?
Haircuts ?
TV licence - any other bills whether monthly or annual ?
Household maintenance budget ?

Maybe not all of these are relevant to your household but surely some of them are ?

You need to record every single thing that you spend for three months. Then you'll know why

Are you still paying off your phone handsets?

Go through your bank statements.

You must have some idea where it is going

Mine is all going on paint and other DIY stuff at present!

Money goes so easily. I agree with other posters that you need to track your spending for awhile. Just write down every little purchase and you'll see how little things are adding up.

Your grocery bill looks light.
No work lunches or takeaways?
No clothes and shoes budget?
No hobby/club/interest related purchase?
No fuel costs? - I think you're underestimating all the vehicle running costs.
Have a look at your last three months of Amazon purchases for clues.

I never wonder where it all goes, because I know. No-one spends it for you. There’s no magic to it! A budget is not writing down the obvious things and forgetting the rest. You can’t begin to work out what genuine cost you haven’t accounted for and what is frittered away until you look at your spending properly.

You've just guessed a lot of those amounts, they are too rounded to be pulled exactly from your statement.

So that's where you need to look, and your statements will tell you where it's all going.

I know exactly where my money goes every month. I track my spending in a spreadsheet and have done for years. I allocate from my "disposable" income set amounts for my hobby, hair cut/colour, face/aesthetics, car repairs etc. My disposable income, which sounds like a healthy amount, doesn't go far and I have to keep it in check and really watch it. It's all about knowing you have X amount to spend only, and channelling it towards the things that important to you, and you can only do that by identifying where you're wasting money.

We have similar income and outgoings and spending is something I have really been getting to grips with this year.

I find it very difficult as there's a mindset that you should be able be able to buy xyz but with inflation your purchasing power is much less than you think. That's my experience anyway.

Annual expenses: Make sure you understand what those are. We have to save £500p/m to cover them all across the year.

Food: I'd be very surprised if you are only spending £83 a week on food considering how much prices have increased.

James Shack on YouTube has a good spreadsheet for budget tracking. I'm not recommending his investment advice though.

Also recommend analysing 3 months bank statements and prepare for some shocks. One month last year we spend £600 on eating out.

Our money is divided up each month into various pots. I have about 20 for me.

I pay for instance 150 in our holiday/ Xmas fund.
Then 50 pm into bday fund. 50 into car repairs.
Etc.

190 per month into children activity.
Petrol and food is all pinned down.
What's we spend on a weekend.

There is nothing left over

Do you have teenagers? They eek momey and can eat loads with their locust friends.

I spent £110 in Aldi on Friday for a weekly shop with not many cleaning products. £360 is very economical on your income.

Do you have any credit cards? Gym?

You can blow £50 on a takeaway or £100 on a night out.

Add in a few thousand pound holidays and its gone.

Agree with pp sit down and go through your last few months bank statements.

I did this just in one month I noticed spending such as
Buying a diet coke in my lunch break nearly £2 in co op.
Cakes from a craft stall I walked by in town
Breakfast out with friends
Bought cushions for the house
New pillow cases
Teen always wanting money
A new lamp
A few new tops
Wine
Beer
Teen wanting a mcdonalds
Cat toys
Extra presents for work
Sponsoring people
New socks
New bag I didn't need
An escape room in the holidays
Day out in hols and just blowing money on train food.
A mop
Compeed plasters £7

And many more thats where my money went. You maybe similar.

Transfer a savigg bc a amount as soon as you're paid and then don't touch it.

You're probably spending a lot more on food and drink than you've said, especially if you buy coffee, lunches, takeaways etc.

Plus all other groceries and sundries like batteries, medicines etc.

You could probably get your house insurance for less if you live in a normal house with normal possessions.

Unless you're in a contract you could cut your mobile costs by about two thirds.

You need to work out exactly where your money is going. If you pay for most things by card, you have the information available right now so use it to work this out.

Moneysavingexpert.com gives good advice on this:

www.moneysavingexpert.com/family/money-help/

I moved to Starling Bank and it categorises your spending (you need to correct the odd one like if you've bought something from Amazon). It's been eye opening! I didn't realise how much we spend on the kids, holidays and eating out.
We can afford it and this is after saving, investing and overpaying the mortgage but it's still quite shocking.

I recommend You Need a Budget, it’s a great app and has really made me account for every penny we spend.

We have a similar income and save £1000 a month. Before I got YNAB we were spending more than our income!

You definitely do need to track every penny, it’s a real eye opener.

You need to allocate the £2k-odd you have left over after bills. For example £1000 into a holiday account and then you and DH each get £500 into your own account. Although I would allocate a 'food account' too as that's not a regular bill and your food spend seems quite low. We have all house bills (direct debits) coming off one joint account, and then remaining funds allocated into holiday, food, spend etc. You need a spreadsheet.