Help with savings.

[billandtedsexcellentadventure]

When my husband and I opened our joint account (many years ago) we could afford to save £200. We have since upped that by another £100. Several years ago. We would like to start having a weeks holiday abroad. I’ve priced one up and we’d need about £4000. After paying bills and putting money into savings we are left with £2400 for the month. Thats food clothes, petrol etc. which seems a lot but we never seem to have anything left either. Is there an app I can use to see how I could make general savings? Not really sure what I’m asking. But I basically want a pot of money for a holiday but a separate savings pot for other things.

Would a regular saver do the trick? First Direct has a very good one, £300/month, if you dip into it it closes, interest is 7%. After 12 months you’d have £3600, plus interest.

The trick is to pay yourself first. Not wait till the end of the month, the day after you get paid, the standing order takes the £300. If you haven’t got it, you cannot spend it.

Would it be worth working out how and where the 2400 go? Im not great with money but tallied up how much i was spending on top up shops, uber etc and was way more than I realised.

Then seeing what extra you can put away? Not sure if you have children etc

You have to organise everything on pay day, have a spreadsheet that lists incomings and all fixed outgoings then set a budget for groceries/household items, long term savings, holiday fund and personal spending for each of you. If you don't already Move at many bills onto direct debit as possible so your monthly outgoings are relatively stable. If there are bills such as insurance where you incur interest to pay monthly, pay yourself monthly into an account and then at the end of the year user that money to pay next year's insurance. Move it all into different accounts for those specific purposes on payday and leave it there, if you run out of personal spends before the month is over you don't dip into savings.

I have two children. So have to factor in clubs into the £2400. It seems so much money left over. We stopped doing top up shops yet seem to have gone back to doing them again. I’m sure a lot is going there. I almost need account for different things? So one for food. Then one for clothes, one for holiday etc.

£4,000 in a year is £335 a month, and you're already saving £300. So you can nearly afford this holiday right now — the money's just going into one anonymous pot where nothing is ever "for" anything.

Give the money names. Most banking apps do named pots these days (Monzo and Starling are best at it, the big banks have mostly caught up). One pot called Holiday, one for everything else, and the standing order split between them on payday — before you can spend it, not after. Once money has a name, you stop quietly nicking it from yourself.

As for the £2,400 that vanishes: skip the budgeting apps and read one month of bank statements with a cup of tea and a highlighter. The leak takes about ten minutes to find. It's nearly always food shops and forgotten subscriptions, and fixing it rarely means giving up anything you'd actually miss.

Book the holiday 13 months out and it's paid for before you pack.

@TimsWealthLetterthank you. I will definitely go through the bank statements and see what’s going on and where it’s going. I think I need to just be a bit more mindful with money really. I’m going to set up the accounts for different things and hope that helps.

Go through 9 months of bank statements and see what you are actually spending your money on. Then agree your categories and set a budget for them based on the average spend per month. Eg £150 per month for petrol. I use an account with pots and a salary sorter so it moves the money. When I go to the petrol station then I move say £40 in and put in £40 petrol. This really works for me and I can see what I am spending on.

Childrens clubs and subs come to a fair bit. I reckon my two were clocking up £300pcm 15/20 years ago. Swimming, tennis, brownies, flute, piano, drama, etc.

So reasonably you might be spending £400. School lunches? Also reasonably be spending £650/700 on food, so that's down to £1300.

Haircuts, dentist, odd prescription, coffee, ice-cream, glass of wine or three with the girls, school uniform, petrol, parking, books/crayons, occasional book/magazine, day out, MaccyD treat, take away.

I had a look last night and food/take aways were less than ideal thought really. I need to break it down even more.

The key is definitely to get a good understanding of where your money is going.

I'd separate out regular expenses (whether they are weekly, monthly, or less regularly) as these are repeatable and predictable, first. Then look at what is left. You can start with broad categories such as food shopping and break it down as you need. Assign "pots" for discretionary spending if it helps you. I personally find you get used to spending at a certain level so it becomes second nature and you can then stop watching your spending so carefully.

make a list of your essentials - if kids clubs etc come out of the £2400 then you don't really have £2400 left at the end of each month. food, transport costs, hobbies / clubs, subscriptions etc.
then go through your bank statements and work out exactly where your money is going each month.
I agree about paying yourself first - my savings pots all come out a couple of days after payday so they're accounted for. I put money into my ISA, money into a regular saver that's for overpaying the mortgage, a small amount into the rainy day pot, and this year I put £50 a month into my premium bonds towards paying off my holiday balance which yielded over £200 in winnings :)

Like others here, I keep a spreadsheet with my monthly outgoings so I tick things off as they go out and I set a spending budget for food, clothes, fuel and fun as well as how much I plan to save. I log all expenditure so I know where it is going. I have a few easy access savings account so I can put money places (with Nationwide you can name the account so I have an account for holiday!). I've progressed to having long term "locked away ready for my retirement" savings accounts now too so I don't even think about that money other than to check my interest rate.

I also like the pots method. I have one for kids clubs and about £500 a month goes into that. One thing I wanted to mention about the kids clubs pot is I put all the expenses in so for example: beavers - fees, uniform, trips, dance - each class that has an exam I put down two exam fees per year, one leotard / uniform per year, show fees, basically anything to do with a club is saved for monthly so when DD grows out of her leotard the money is there in the kids clubs pot, or when an exam comes up the money is there.

I definitely need to do pots for different money. One club is dd every month. But I’ve got other clubs where it’s every term we have to pay. But actually it would be better to put the same amount in a pot every month rather than a large chunk coming out.

The main trick with saving is to “pay yourself first” - so money goes into a savings pot along with other regular household bills just after you recover your pay, before you buy anything that’s a flexible cost eg food shops, socialising etc. Some months I might have to dip back into savings if we have unexpected costs. I’ve saved £10k in the last 2 years this way. I need to save far more tbh, but money is tight at the end of the month.

You need to stop thinking of the £2400 as what is left and start assigning that £2400 to regular monthly commitments and annual commitments prorata. Then work out what you can afford to save and what would you need to be able to save to afford the holiday. Having done that you can look at what minor adjustments you can make to make the goal more achievable.

Second thing to do would be to look at making your money go further. Go through all of your contracts and check whether they are good deal. It is very easy to miss that your bills - energy, mobile phones, internet etc have gone on to variable and are no longer competitive. On the flip side make sure you are optimising your savings with high interest accounts. There are quite a few banks at the moment offering a switching bonus of £150-250 and having done so you would qualify for their regular savers like the First Direct account mentioned by another poster

Moneysaving Expert will walk you through reviewing your budget:

Do a money makeover and potentially save £1,000s - Money Saving Expert

Assuming you do most of your spending by card, you already have the answer as to where the £2400 goes as most/all banks will have this information in their online banking. The categorisation isn't 100% reliable, eg last time I looked it had McDonalds as 'entertainment' but the most comprehensive way to go would be to download a year's worth of transactions into a spreadsheet and play with the categories to work out where all your money goes and where to target changes in behaviour to free up money for a holiday, also savings etc - £2400 each month is a huge amount spare so you could build up some real savings by being more mindful about your spending.

Look at why you're overspending on takeaways. If it's 'no time or CBA to cook' look at getting similar food in with the supermarket shop which is much cheaper or batch cooking for the freezer. Obvious one if it's lunches is take a packed lunch so work out how that would be possible. If it's coffee, it might be worth the investment to buy a nice coffee machine and flask for home.

I was exactly the same with never really knowing where the money had gone each month! The best thing I ever did was get Monzo. I have about 6 different pots and when I get paid my salary automatically gets split between them – mortgage, bills, credit card, holidays, birthday/Christmas presents, savings etc.

My mortgage and bills then come directly out of their pots, so I know the money left over is actually available to spend rather than mentally having to remember what’s still due that month.

The spending tracker is really good too because it makes it painfully obvious when you’ve somehow spent £££ on eating out or random shopping 😂 Honestly recommend it to everyone and have set my auntie up on it who is now a pot convert.

Snoop is also really useful if you don’t want to change banks. You connect your accounts through Open Banking and it pulls everything together so you can see where your money is actually going. I’d probably do that for a month first because with £2,400 left after bills/savings there might be some really easy wins once you can actually see it all.

Then for little savings on things I’m buying anyway, I’ve started using Sprive. You buy gift cards and the cashback goes towards overpaying your mortgage. I’ve used it for Airbnb is currently 5.8%, but I’ve spotted Jet2holidays at 9%, Lastminute.com holidays/hotels at about 7% and some of the spa/theatre ones are over 10%. Definitely worth checking before booking a holiday or anything expensive.
My Sprive referral is below if useful
https://linkprod.sprive.com/refer?code=JM06ZHFZ

But I’d definitely start with Monzo/Snoop and work out where that £2,400 is currently going. You might find you can build the holiday pot without feeling like you’re massively cutting back.

good luck! ☀️

Are your savings getting the best possible rate(s)? Offers and rates change regularly. There are accounts with limited access - eg allowing 3/4 withdrawals within a year.

I’m not sure about rates. I don’t think it’s a good rate. We are sitting down tonight to go through finances and see where we can save.

If you post your income and outgoings on here, posters are really helpful in showing you where savings can be made.

Of course you need to know where the money is really going first and I appreciate that takes time and effort!

At the moment I only have basic figures. Such as total income is £5323 and bills DD are £2800. That’s excluding breakfast club and food and petrol. It includes savings.

As well as the good adice here, go to Moneysavingexpert and once you have looked at monthly expenditure, try and look at ALL annual costs and you'll get a better idea of your position.
Build in NSD - no spending days - for me it's the volume of transactions, just say no!

@AmicaNemicai think I need lots of no spend days!

Breakfast club, food and petrol will take a big chunk of what you think is left over. But if you're already saving £300 for a holiday account then it looks like you could increase by about another £50 and that would get you over the £4000 level. I've just hot into pots at the ripe old age of 63. I have them for bills that get paid annually but save monthly like car and house insurance and service/MOT and my most hated tax bill. Fortunately it fell this year as my income fell so I've already saved my January and July bill so at least I'll get interest on the money.