Getting a handle on finances

[Fayrazzled]

I really need to get a grip on our family finances. My husband is self-employed which always makes things more difficult but it's not an excuse really. We are bumbling along- wasting money along the way- but with no big debt issues. However, everything needs looking at- we need a whole financial plan including mortgage review, pensions, savings/investing (which we do not have enough of). Can anyone recommend where to start (financial planner?) Any good books to get me started?

Should also add: need to pay for kids through uni over the next few years and I'm sure our payment protection insurance etc needs looking at too.

It does sound like you need to pay someone to take a proper look, particularly if your husband is self employed. I think books can help you with budgeting, but for the rest you need a professional.

I'd only want to pay someone if it was absolutely necessary, and I'd also want to have as good an understanding of everything as I could first.

Check out Money Saving Expert, and Meaningful Money. And have a look through threads on here too.

Don't look to pay someone at this stage. You need to be clear of your current position and what your overall financial objectives are. Only at that point can you determine whether you need someone to advise you or not.

Meaningful Money on Youtube is excellent and a great place to start.

Practical next steps

1. Track your spending over the past 3 months
2. Build a budget
3. Detail any debts to include the balance, interest rate and remaining term. If you have any expensive debt such as an overdraft or credit cards then focus on reducing those
4. Calculate what savings you have? Is it enough to cover 6 months expenses? If not you need look to build one
5. Understand your current pension provision, are you paying enough between you to cover your expenses in retirement?
6. Any other investments such as S&S ISAs / property
7. If you have a mortgage, are you going to see increased costs in the next few months due to interest rates increases?

I recommend You Need a Budget, it’s a method and you can use it on a phone app and web browser. It’s life changing. I’d recommend watching the YouTube videos to explain how the method works as it takes a bit of learning.

Alongside looking at the things @Hitchens suggests. Clicked go too soon. But for the budget you need YNAB

Im loathed to say it but in your instance MN is correct with the usual - you need 6 months expenses saved. As your dp is self employed its important.

Im not sure about payment protection, ive never heard anyone being paid to and am a bit dubious - id rather and have done, put the money aside in savings so when out of work, I could dip into that instead.

I would sit down with bank statements and make a budget, the citizen advise one is very good as it allows you to input in months, weeks or annual payments on each item - which saves you having to calculate each bill etc https://www.citizensadvice.org.uk/debt-and-money/budgeting1/work-out-your-budget/ you can save this and it is free

I take it your dp has a business account and keeps that separate for tax etc?

I would tackle things by having a separate domestic account for all utilities, mortgage so all direct debits that you simply have to pay and can't cut back on. Council tax, mortgage, water, gas, electric, contents and building insurance, car insurance etc Then each month pay the monthly figure into this account and have all direct debits come out at the same time. Also pay into this account an extra 17% of the total amount, after a year you have 2 months buffer for this account. You need to re evaluate this account each year to increase funds as bills increase. Don't have a debit card for this account or put away so it can't be used. Put the money into the account by standing order for your other account/accounts. After 3 years you should have 6 months buffer - so you may want to stop the 17% extra or continue for another 3 year to have a years buffer

What is left is to spend and save - so grocery shopping, fuel, holidays, birthday present, Christmas, days out. So also set up a standing order for savings.

Once you have this sorted, then look at pensions, firstly your work pension as it maybe the best one available with tax perks. Then seek advise from someone about pensions - but by now you know how much your life is costing and what money you have spare, as you've done all the admin stuff first.

I’m a big fan of Ramit Sethi, he has a book and a really excellent podcast where he coaches couples through talking about money together.

He encourages you to start with the big picture first: what is a “rich life” to you as a couple. Is it having lots of savings for retirement, being able to travel, good food, time with your family, affording a stay at home parent, retiring at 50, donating to charity, indulging in a hobby, paying for kids’ education (etc etc). And listing out what you’re happy to spend money on and where you’re happy to slash costs.

Once you have a detailed vision of what you want to achieve it makes it easier to say no to stuff that’s not important.

In terms of managing a budget, I used to use YNAB. It works really well when we were skint, but being so granular caused a lot of conflict with my husband. Now we are less skint I’d rather not have the conflict even if it’s less efficient.

So we do a sort of automated budget based on the 50 - 30 - 20 rule (actually it’s currently 45 - 30 - 25).

20% savings & investments goes automatically out to the right accounts. This includes pension coming from salary, we add that back into our net pay before doing the calculations. We currently have two savings accounts (a regular saver and easy access) and a help to save account each (we don’t touch these as you don’t get the bonus). If there’s an emergency, car repair etc we pull from the easy access account.

50% joint budget for bills, groceries, petrol etc. This goes in our joint account and obviously bills come off automatically. There’s a bit of extra flex in case we need to buy household items or deal with minor repairs.

30% wants budget. We both keep 20% of our (net) paycheques in our personal accounts for clothes, subscriptions, socialising, hobbies etc. The rest of the wants money goes into a joint savings account for holidays, Christmas, kids’ activities and general family fun.

I don’t track our spending but I know how much we have to spend on groceries etc by what’s in the joint account, and how much we can spend on wants by what’s in my own account and the family wants savings pot. Each payday I review and check we’re still on track with where we want to be.

So our account set up is:

A personal account each (plus I have a personal stocks & shares ISA I pay a little into each week) - for personal fun money

A joint account - for bills, groceries etc

Joint savings/investments accounts:

• ”fun and wants” easy access - for holidays, kids’ activities, gifts etc

• “emergencies & needs” easy access
• regular saver - also part of our emergency fund but it’s earning more interest
• a help to save account each - will get rolled into our emergency account when they mature

• our pensions and a Lifetime ISA for me

Thanks so much to you all for your detailed replies. I think I am going to take a whole day at the weekend just to go through it all. I need to get a grip and you are right- it starts with me.
My husband and I have tried to use YNAB in the past but because his income varies we found it too difficult. He does have a separate account and keeps his tax separate but he's not great with money either which doesn't help. I have built up a buffer now which might mean it works better. We have both adopted a head in the sand approach to our finances in the past but we need to get sorted.