Overhauling your finances - where to start

[Remmy123]

DH & I have x3 kids (two teens, one primary)

we have lived fairly comfortably with our salaries but lately we are getting to middle of the month and it's almost gone.

seem to spemd a fortune on food - I think around £250 a week - fussy children mean we buy quite a bit of meat - they don't eat veg so buy fruit which is expensive

I need to take control of our finances better - both salaries go into a joint pot then around 3,800 comes out to our bills account to cover our mortgage.

the rest we both just can use.

i put money into savings only to have to transfer it back j again.

my question is - have you done a overhaul of your finances and what are your tips?

Thanks

Several years ago we had a full review of our finances as we’re getting to the end of the month with nothing and had very little saved.
first you need to look at where your money is going currently. Can you cut back on anything? We renegotiated contracts, removed unnecessary expenditure and then saw what was left.
next we worked out what our longer term goals were (new car in a few years, saving for the kids future etc)
Then we made a realistic budget including all those things. We knew it would take ages to save for certain things so agreed to really rein in our spending for 6 months, which allowed us to increase our savings por to around £12k for emergencies. We could then start saving for some of the other things.
You really need to understand where your money is going first.
We have different savings pots for everything! Holidays, Christmas, Big days out, plus emergencies and other longer term goals.

I will not be the first to say this, but you need go through the last few months spending and list every single payment/outgoing. Then, only knce ypu know whar you spend, can you reduce it

Can you go through your bank statements and highlight all unnecessary spending to find out exactly what is going where? I did this after being so fed up of getting half way through the month without having much left. I didn't think I spent a ridiculous amount of money because none of my transactions ever cost a huge amount, but seeing them all written down and adding them up I was shocked. We waste so much money on stuff, but had nothing really to show for it.

After reading another budgeting thread on here, I've now assigned myself 2 days per month I can buy things if I want/need them. So instead of making an impulse purchase I know I can't buy it until X date so if I really want it I'll write it down and then by the time it comes to that date I've had time to decide if I actually need it or really want it.

We also budget our food shop costs each week and when we get paid the whole amount goes into our food shop pot, then at the start of each week we withdraw it. So even if we have overspent, we know that we still have the money for the basic necessities. I find having a separate bank account for this works best, we use Starling for all our savings pots so know money on there is only for the food shop, paying childcare, kids activities etc

I have also had to ban myself from going to the shops "for a pint of milk" because I always seemed to come out with extra things I didn't need, looking at our transactions we had so many top up shops where we went in for one or two things and came out spending £20-£30 😳 DH is in charge of the shop run if we run out of bread or milk because I can't be trusted 🤣

https://www.moneysavingexpert.com/banking/budget-planning/

Use this budget planner to work out how much you are spending. Be honest, and consider all those unexpected spendings, haircuts etc. Add up how much you spend in birthday presents, Christmas, holidays, haircuts, school uniform etc.

Then set up a second bank account. Each month, transfer money to cover the occasional expenditure.

ie. Holiday £2000
Christmas £1000
Birthday presents £750
School uniforms and shoes £500
Car mot and tax £250
Emergency household/car etc repair fund £250
Summer holiday spending fund £250
Other -£1000 (haircuts, annual football season ticket etc)

Total £5000

So put approx £400 per month into separate account to cover these costs (random figures in example)

You may feel poorer initially doing this, but richer in the long term, when you’re not scrabbling around for money to cover these costs.

Listen to the Dave Ramsey podcasts.

Head to MoneySavingExpert and suss out their advice.

I use YNAB and highly rate it. Saves me way more than it costs me.

Like a pp says, set up a spreadsheet and go back through a few months of bank statements until you know where every single penny has been going. You can’t skip this step.

A spreadsheet... With your income at the top and then list ALL your outgoings.

I believe Money Saving Expert has a good guide to use to think of everything.

Another vote for the Dave Ramsey approach. It’s worked for us.

All I can say, is look at Money Savings Expert. They make several suggestions:

1. go through your direct debits and see if you are paying subscriptions that you don’t use. I cancelled two of mine and asked DH to cancel two of his. For instance, he was paying £42 pcm gym membership and he’s been 3 times in 18 months! That saved us about £75 pcm.
2. switch utilities providers? I cancelled our BT landline and broadband recently; and switched to another much cheaper broadband provider - saving us £50 pcm. We just use our mobiles or Teams for phone calls.
3. look at your energy deal. I signed up for a fixed tariff for gas and electricity, At least we won’t have price rises for a while.
4. switch credit cards, either to a cheaper interest rate or better still 0% for the introductory offer? Ditto the mortgage and loans, not that there is a 0% mortgage!
5. look at your insurance policies like the house and car

Two things we do, are waste so much money in coffee shops and on top up shops! DH seems to buy food practically every day - especially snacks from garages!

You need to list everysingle outgoing. Everything for the entire year. Find out the costing of those outgoings and divide them by 12
you need to budget for other things like food for example. If you cannot afford 250 per week then get to a figure you can work with and stick to it. Pretend you have no choice but to!
Be sure what each category means-when I say groceries and household food that’s what I mean. I don’t include deodorant or shampoo in that. That comes out of my own spends for me and my dh pays for his, kids shampoo comes from misc expenses.
this is ours budget.

Me 3100
DP 4100
CB 280
Total 7480
Housing
Mortgage: 1900.
Insurances(life, house): 150
Property tax: 40
Total Housing: 2090
Utilities
Electricity 150
Waste collection: 30
Broadband & TV: 70
Mobile phones x3: 60
Total Utilities: 310
Food & Groceries
Groceries & household food: 500
Dining out / takeaways: 200
Total Food: 700
Transportation
Fuel: 250
Car insurance & tax: 150
Maintenance & NCT: 100
Public transport / Parking: 20
Total Transport: 520
Education & Kids
School books, uniforms, fees: 50
Activities, sports, clubs: 50
Pocket money/treats: 60
Total Kids & Education: 160
Entertainment & Lifestyle
Family outings, hobbies, gifts: 200
Subscriptions, books, etc.: 60
Miscellaneous expenses (haircuts,nails): 60
Personal spends: 200 x 2 = 400
Total Entertainment: 730
Savings & Miscellaneous
Emergency fund / Savings: 2,000
Holidays (monthly allocation): 500
Clothing: 200
Miscellaneous buffer: 260
Total Savings & Misc.: 2960
TOTAL MONTHLY SPENDING: 7,480

Go through the Martin Lewis Money Makeover thing. It's free on his website.

I use good old paper and pen!
First of all, download and print off your last 3 bank statements. Highlight all the regular payments and make a list of these in chronological order. I have 2 columns - amount of bill and account balance. So I can tell on any given day how much more money I need to have in my account to pay the rest of the month’s bills. I also use the Emma app which sends me alerts each morning so I know precisely how much money I have left.
Set yourself a food budget - for 5 people, £250 isn’t that high but it could be lower! Add things like car expenses, dinner money, kids clubs and savings. One thing we did do was to each open our own accounts and transfer a set amount of spending money each month. We only use this money for things like new clothes for ourselves, take out coffees, hobbies etc.
You need to know how much you have left over each month once all this spending has been accounted for, and then ensure you don’t go over that amount.
Alongside all this, we do a weekly meal plan and shopping list which we stick to. This is our Friday night job 😂. It’s amazing how much money we save now on food shops and how little food waste we have. I notice you said your dc are fussy eaters so you buy a lot of meat - not every meal should include meat, it’s not exactly healthy, and sometimes a simple meal such as filled jacket spuds is perfectly nutritious; we have a list of meals that we choose from when doing our weekly plan.

im currently on a very tight budget and these are a few things that help me;

• worked out all costs and set up a separate bills account for all dd and then budget for food and petrol.
• ’fun’ account so everything else comes out of this
• I keep half the spare money from both fun and for food etc in a short term saver. Transfer in half way through the month so I don’t overspend in the first two weeks. I have a right at the end expensive (energy) dd so put that in there too as that’s caught me out before!?
• on-line food shop every 5 ish days. No waste and no impulse buys. I have a delivery pass.
• i batch cook as it saves time and reduces waste. I have one kid who won’t eat carrots, tomato’s mushrooms but eats them in root veg (carrot, swede and potato) mash and home made pasta sauce. Can then put in curry, pasta sauce etc.

my next step is to look at small savings for day trips, small household expenses but Xmas is going to take all spare for the next few months.

Forget Dave Ramsey - he's pantomime.

Go on YouTube and watch Rebel Finance School course (for free). As well as helping you learn to budget, it will help you to identify gaps in your spending where you have money to save and invest.

Learn about the power of compound interest!

Once you've done the course, there's a very supportive Facebook group.

Also second the Dave Ramsey show, I've listened for a few years also go back and forth between how disciplined I am.

I also found Financial Audit on YouTube, it's an American channel where different people come on and the host breaks down their (terrible) finances. It's a bit of a car crash to be honest but good motivation when you are trying to pay off debt and/or save. I also enjoy watching Zac Rios on YouTube, he does commentary videos and is a lot more calm than the Financial Audit guy.

It sounds like your budget is very vague and you're not sticking to it in its vague form!

You need a fixed budget that you stick to like glue. It can be as detailed or not as you like. Some people budget down to the penny and the individual expense. You don't have to do that if it doesn't work for you.

So your household bills inc mortgage are £3800 pm
(does this include one off yearly expenses divided by 12 because it needs to? Eg house insurance, car insurance, car service, mot, TV licence)
Phone your providers and negotiate your bills down. Threatening to leave subscriptions often gets you a discount. Shop around for everything

Your food bill is £1000 pm
(is this all your food? Any top up shops? Takeaway? Eating out?)
This is very high. You can easily claw back hundreds a month here if you meal plan, batch cook, buy less processed food, eat leftovers etc

But at this point you need a mindset change. The rest of the money at this point is not each of yours to spend as you wish!!

Next you save something - how much per month? For what?
You need to save for short term costs like christmas, DC birthdays, Christmas, holidays
You also need to save for the long term

After that, then then you need a budget for joint costs eg DC dinner money, school uniform, school trips, DC clubs, house maintenance, family days out etc

Then whatever is left is yours and DHs to spend as you like on coffeees, lunches, haircuts, clothes etc

My main tip is to track and budget everything. So I use a Chase account and have loads of separate pots (car maintenance, holidays, Christmas, leisure- which covers everything from birthday and clothes to days out) I work out what I have left after bills, what my budget goals are for each of those pots, and disperse the rest accordingly to those pots. I think can work out what we can afford to do for holiday, school holidays etc. I track 2 years in advance…

For day to day spending I track every transaction in a spreadsheet, it sounds anal but we use credit cards for rewards so can be easy to not see what you’re doing if it isn’t tracked. I have a set budget for food each week, if we overspend on the grocery shop it has to come out of next week’s, some months we have extra that isn’t assigned to anything so can get a takeaway other months we have to stay in the lines.

I’m probably a bit OTT but I enjoy doing it and it makes our money work hard.

Just to say we are not on a tight budget by any means, we are high earners, but I think it’s very easy to squander lots of money so I am actually even stricter now than when we were much less off!

Have you costed in kids activities? Memberships and sport/music lessons? Birthday parties? Holiday clubs if you use those? I find these less regular costs seem to pop up when I’m not thinking about it and can make a big difference to monthly finances. I think the idea of costing these things out for a year and putting money aside regularly would be a good idea (I don’t currently do that)

The YNAB method is good- as money comes in you allocate it to a pot (you set these up first- eg food, electricity bill, home insurance, children’s clubs, fun, plus contributions towards longer term things like savings, Christmas etc). You then know exactly what your budget is for each item and how much you have for discretionary spending.

It does take some setting up but it works really well if that’s your sort of thing.

Have a spreadsheet that tracks all your assets and debts.

Get into the habit of using price comparisons for utilities, insurance etc- don’t set anything to auto renew. You can save thousands.

Thanks everyone - this is all great advice and many on here I am just not doing!!

need to add - although husband is not an over spender he is not a saver!

realised we dont budget for anything!!

Another Dave Ramsey plan follower here. Took us a good year using snoop app to get a hold of our budget. Realising we were spending £500 a month on eating out nothing fancy just pizza / burgers with kids 😱 was a huge moment for me. Now we plan out our spending at the beginning of each month and here’s the bit I really struggled with - we actually stick to it!! Use Monzo account with pots - it’s excellent as you can put exact amount in each pot for e.g. household billls or food and stick to it / have auto payments from that pot. It’s like a digital version of the envelope system.

good luck!! It’s not easy but sooooo worth it ❤️

Great advice above. Plus two points. Firstly - You need to pre plan spending - ie a budget. So monthly, 3 months, 6 and 12 months. So I know that I am going on a few weekend breaks and Christmas in the next 3 months plus 2 birthdays. Then I have a holiday in April and then annual cost such as car service etc.

Second point is triple bank account
1 Bills and direct debits / transfers
2 spending and saving pots for the year (clothes/ petrol/ £1000 emergency fund / gifts/xmas/holidays) I use starling
3 long term savings

On the first if the month pay the spending and saving accounts from the bills and DD account.

We actually have a 4th account just for food and household shopping.

We rarely eat out or get takeways and only food shop once a week!

I find a budget is much better than going through old statements. A plan going forward. So if you love fancy coffee can you have £50 in a space just for coffee?