Please help me stop being sh*t at money

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This year I will earn 130k or more, but I don’t have a grip on my finances.I often run out and dip into my savings (60kish but going down)

Is there anyone out there that’s good at managing day to day money who will advise and cheer me on?

First up, please go east with me. I am aware that I am very fortunate, and I know listening to fortunate people say they can’t manage their affairs can be really enraging. Sorry in advance. I think I am that person, but I am trying to learn.

Background. I am high functioning but I have dyslexia and dyscalculia (numbers don’t stick in my head, I make errors, and I don’t know my times tables, struggle with percentages, to read a clock face etc) BUT I am very good at some other things, and as such, have had some professional success.

I’m Self employed so I can avoid the things I’m bad at and just do the things I’m strong at.

When I was married (to a much older man) he managed our mortgage, bills etc, and I paid for all discretionary spend, but divorced a few years ago. And I have been trying to step up.

I live in the south.

I’m too impulsive and tend to throw money at things to solve problems or make social situations go well.

I lost all my work during covid, it was a very frightening couple of years and I have only just got my earning back to a good level. I get scared of losing work again.

I am single mum, but my children go to their dad nearly half time. He’s a good dad.

I have an 150k mortgage in a small flat worth about 580k

I own a rental property worth 260k. It has a 140k interest only mortgage. I rent to cover the mortgage payments. I would like to move it to a repayment mortgage in a couple of years.

My parents have passed, I don't have a backstop, I have earned all My own money since I was 17 - though have been very lucky with property.

I have never had a bad debt, and I currently have no debt but the mortgages.

I don’t have much spare time because of kids and work.

Where would you start?

Oh gosh ummm ... My husband manages all my finances. I've learnt a lot from him.

Put your money in a saving account that you can't withdraw money from for a few months. Put a chunk of your monthly income into that so you cannot access it.

You don’t mention your age, long term goals, or pension situation. Can you say more?

It’s never too late and it sounds like you’re in a fab position to start from

Train yourself to stop spending money willy-nilly. Question every purchase and take time out before you spend.

Think about what you want your future to look like, and how you need to manage your money and plan how much you will need to live in your future.

Remember that we often have a sweet-spot period of earning more, and that it may not last as long as you think.

Have a read of this and start learning about money, financial products, how money works, and how to get to grips with it all.

https://www.hl.co.uk/financially-fearless

You Need A Budget

For £11 per month it has completely revolutionised our finances. We have gone from being proper broke each payday to adding about 1300 per month to the balance.

Game changer. Takes a little while to set up but has been amazing for us.

Firstly, tackle your income / outgoings as it's INSANE to be self employed, brining that amount in, and yet be dipping into savings.

You need a budget - and there's an amazing app called YNAB that does it for you!!

It takes a while to set up but be thorough and regular with it and it will set you up to see what you've actually got. After a few months you can then review the longer term plans.

You put in what you earn every month (salary, rent) and then create a list of EVERYTHING you spend money on. Create different groups to keep it organised

I use:
Savings (emergency pot, long term savings)
Monthly bills (everything that leaves via DD that's completely non negotiable - mortgage, council tax, allowance for tax if self employed, insurance, energy, water, TV licence etc)
Quality of life (direct debits that could be cancelled if I absolutely needed to but I'd really rather not)
Annual bills (set aside correct amount for car tax / MOT / repairs / house insurance / annual subscriptions etc)
Food - menu boxes, weekly shops, top up shops, eating out, takeaways
House - homewares, maintenance, home improvements, garden
Christmas
General spends (disposable income stuff) eg Birthday gifts, days out, entertainment,
Charity
Holidays (split into actual trips we're saving for)

There's loads of videos and you can change it until you're happy.

It links to your bank then you go through every single transaction and assign it to the correct pot and it reduces accordingly so you can see exactly what you're spending on what and how much is left.

@ChocAuVin
Thank you! That's heartening.

I'm 48.

Pension, I'm not paying into one, but the rental house, if I pay it off, will bring some. At the moment it rents at 800 a month.

I have a 340k pension from the divorce. We split everything 50/50 and that was my half of his pension.

Long term goals. I don't know. I'd like to live in a house by the sea with a lovely man and go on lots of holidays... but wouldn't we all

@AmandaHoldensLips

What you said about a financial sweet spot- that's my fear. I have no idea how long this will last and I am terrified of being lonely and poor when I am older

@MyBedIsMySpiritualHome - I don't understand, you pay 11 a month for a budget? How/ where?

@AmandaHoldensLips - I'll
Look at that site. Thank you

First step is to write down all of your monthly expenditures. Absolutely everything. For non-essentials like coffees, takeaways, clothing, etc, be as accurate as possible. Go over your bank statements from the past few months to see what you spend aside from bills. You need to actually see, in black and white, where your money is going.

Next, put away your credit cards and debit card. Obviously, don't destroy them, but do not carry them with you. Give yourself a set amount of cash per week. It should be an amount for necessities like petrol, train fares, etc, and then maybe £100 additional for unnecessary extras like coffees, lunch, whatever. Learn to live on a set budget. It's the only way to really develop an appreciation for money and how frivolous your spending habits are.

It's a website and app called You Need A Budget. Have a google, I'm another advocate for it.

@FusionChefGeoff ohhh now I get it. It's an app. Thank you.

That sounds like a huge task. I am going to take a look but I am quite intimidated.

And yes, it's insane. And it has to stop.

@Meta123 - would you recommend a savings account you can't access?

Though I have a bad habit, that if I don't have cash flow, I just 'borrow' it from my tax savings, or my rental property account or whatever. So I lose track of what I'm getting through.

Also, every month feels like a special situation- the summer holidays, getting some DIY done, whatever. It's a bit like a dieter that eats loads because they'll start being healthy on Monday if you know what I mean.

Just writing this down is helpful. Thank you

@Aquamarine1029 - the writing it down and adding it up is a good way to get yes on it. Okay, I will think when I could do that. It sounds like a big job.

Cash! I haven't used cash in such a long time. I will have a think about that, but then what about everything you buy on Amazon and online food shop etc. don't you end up with lots of spending outside the cash that 'doesn't count'?

A good budget will help with all of that. It will give you an 'allowance' you can confidently spend on these extras while knowing you've enough left in the cash account to cover all of your regular monthly bills and a secure stash of savings.

I use You Need A Budget (YNAB) too. It's a monthly cost. But I see it as investment to good money management and peace of mind. Just like I spend on gym membership even though I hate exercise but because it's good for my health.

An unpopular opinion nowadays, but I use cash as much as I can for discretionary spending. I take out what I can afford to spend each week and when it's gone, it's gone.

Okay thank you. I'll look at the app, and work out when I could write down everything I spend.

I'll come back and report.

Thank you for all the encouragement

Why not make your 150k mortgage interest only and start paying your 240k mortgage off?

so you’ll be taking in around 6k a month?

it goes quickly doesn’t it! No advice I’m afraid

your savings are decent though maybe stop fretting so much it’s not like you’re in debt

Another vote for YNAB.
I'm in my second month and it has removed a lot of stress to get a view of what my actual financial picture is.
We are making savings as a result.
It has taken me A LOT of time to set up - I've had to watch a couple of hours of videos, and email them.
I did the 34 day free trial, then decided to pay for the year.

@NightNightJohnBoy is it the sort of thing you'd need a whole day to sort out and set up?

I am fine on my own, but this is the stuff that makes me envious of married people but it would be so much nicer to do these things with someone as a team!

Not a whole day in one go, I had to set up (took a couple of hours as I had already created spreadsheet of all my costs and expenses) but then there's been some trouble shooting as I've used it, and watching more videos has helped.
Worth it though when you see £ earmarked for savings. And now is the time to do it as there are plenty of good savings account rates out there.

I also use YNAB. We have a support thread if you want to join us :)

I don't think it's worth it if you're just using the app - the website version is the easiest and clearest to use. The app is fine for quickly checking/adding things on the go.

It is worth reading their guides, watching some of the videos (Nick True on Youtube is very good) before you take the plunge with the free trial - you do have to understand some of the American terms e.g. Checking Account = current account, but it becomes clear after not very long.

I like it because you don't have to do any complicated calculations, it does all that part for you. You do have to be actively engaged with it, that's sort of the point.

I don't think it takes very long to set up, but you do need to get your head around the method first. It's basically a digital version of envelope method, if you imagine getting paid in cash and then sitting and dividing your money up into different envelopes - one for the gas bill, one for food shopping, one for Christmas etc. It just sort of makes an intangible thing tangible.

Op if you really struggle with numbers and find all this overwhelming it might be worth paying someone to 'manage' your finances. There are accountants /money managers that will do it for you, obviously you pay for it but they can be very good at maximising your income and investments. Even if you only did it to get you started and on the right path it might be worth the investment.

I agree, I think you need someone professional to help you get everything set up.

I think a banking system with something like Monzo would really help you because there are lots of little folders where you can keep money separately, so that, for instance, you could put some money aside each month for holidays, for Christmas, for school uniform etc. I think my son has about 11 folders and finds it so easy to save up for things and monitor how much money they have.

I don't think cash would be suitable for your situation at all.

Who manages your self-employment money? Can you ask them to spend a couple of hours working out a good system for you?

Sometimes having more income makes you feel more relaxed even though you shouldn't been.
My tips are...
Ring your service providers annually to negotiate your rates. You will always get a lower rate when you tell then you're looking to leave for a better price.
Get rid of amazon prime if you have it. It makes spending on something in the moment you'd like but you wouldn't get off your bum to go to shop and buy.
Use cash. Put a float in your purse each week for coffee, cakes, little treats. If money is gone treats are gone. £5 on a coffee becomes more of a thought when it's visible. Far too easy when your tapping your card.
Dont keep up with anyone and don't be afraid to tell people it's not in. My budget for this month, I'm prioritising saving.