Right, I've written down my outgoings and am trying to reduce them. The bit I'm getting stuck on is...

[elliott]

how do you actually implement/stick to a new budget?
What I'm after is systems for managing my money so that I can stick to my limits for certain items/categories.

I have identified various weak points - big intermittent expenses like house/car insurance, quarterly bills and car repairs often catch me on the hop and I often end up paying for them out of savings. I don't want to do monthly dd as you normally have to pay extra for this. Does anyone have a good system for putting aside enough money for all the basic expenses? We used to have two current accounts which allowed some division into basics and other expenses but now its all going into one pot.

The other weak point is shopping online using the credit card. I do this for most clothes and presents. How can I practically set a budget for this? I oftne manage to run up quite a lot of expenses on the credit card without really realising it. So, how do I set a realistic budget for e.g. kids and adults clothes, and then stick to it? Similarly for leisure spending, which I am sure is another area where money just gets frittered away.

Ok, I know the basic answer is to just stop spending, but it would be nice to be a bit more controlled about it - basically I want to feel like I have made conscious choices about my priorities, rather than just put the brakes on half way through the month!

I use internet banking so when I get paid at the beginning of the month I add up all my direct debits plus a bit extra and put it into my savings account so that when they come out at the various times in the month I tranfer it back across
I also have a weekly income so I use that for the weekly shop and other bits

We also do the weekly budget thing. Take money from cashpoint each Friday. Put cash in an envelope to be used by dp or me for food shopping and 'leisure' expenses.

What do you have on quarterly bills? IME insurance is the only thing that is more expensive to pay monthly.

Is your weekly income cash? What does it include?
Yes, I am the master of fiddling with my internet bank accounts. Still keep getting caught out though. I think I need to do what you do though - add up all the annual/quarterly expenses and transfer them into a separate account. Have started to do that, it is a bit of an eye-opener.

Quarterly bills for gas, electric and phone. Changed back from monthly dd for gas as found that the gas company was building up a nice little surplus from us. I'd rather just pay for what we use tbh.
I also have quite a lot of annual professional fees (about £1200 per year). so I need to put those aside too.

I have an 'emergencies account' which I pay into monthly for things like unexpected car bills etc. Can you look over the past year of bank statements to give you an idea of how much to set aside for those? Put in high interest account but with instant access.
Can you use a credit card that gives you cashback?
Just recommended moneysavingexpert.com on another thread. Lots of useful folks on the message boards there who may be more helpful than me!

capricasix, I just don't think I have time or inclination to do that - plus I'd have to get dh to do it too...

How do you folks budget for clothes/shoes/childrens expenses?

I use Microsoft Money. You can put in all your income/outgoings with dates and categories. So if a bill comes once a quarter, or once a year it will show on your list.

It also works out a projected cashflow over whatever period, which is great for highlighting times of potential shortfall. So eg I programme in a budget for Xmas or a holiday and when the money will be spent, and it tells me if I'll have enough cash or need to cut back/put some money aside.

You can also run custom reports to work out exactly where you spend your money. And it works with a lot of the internet banks so you can download your transactions automatically.

Have a spreadsheet where you can divide the annual amount into monthly costs. Then add up the monthly amounts for eg. car tax, parking permit, MOT, insurance, etc etc so that you know how much you have to set aside each month for those (and be rigorous, put in all of them, including children's music lessons, Cubs etc).

Then do a direct debit out of your current account every month for the total of all those amounts plus a bit extra for margin of error, and have it going into a parallel account. Nationwide online banking lets you have e-savings accounts linked to your current a/c which pay a good rate of interest -- that's how I do it. Then when the bill falls due, the appropriate amount of money will be there ready and waiting, asssuming you've done your sums properly and haven't 'borrowed' money out of your bills account.

Wrt clothes -- at the beginning of each season (August and Apri) you have a major sort out of kids clothes, see what still fits or can be passed down, and then make a complete list of what each child needs. Similar for adults. If your winter coat is still okay, you don't need a new one. Try and put outfits together to see what will go with other things. Make a list of things you actually need. Then go to a shop (or better still go to ebay) and buy it. End of.

Ditto presents. You make a spreadsheet in January with all the birthdays in, and work out what you're going to buy. In addition you buy a dozen random £5.99 presents for parties etc that your kids will be invited to, and keep them in your cupboard. Wrapping paper and cards also best bought in bulk.

I think that it takes a 6 months to 2 years to adapt to budgeting. And there is a cycle: you first plan your budget, you track and record what you spend, you review spending against your budget and then you adjust your budget if necessary.

When you draw up your budget, how are you doing it? Is it by week or by month? I usually find it best to keep to the units that I receive income in, so for me that is monthly.

I then draw up a table with months across the top and categories of expenses down the side. I personally start with the essential monthly spend categories - mortgage, council tax, utilities, food, phone, petrol. You then have bills that come up less frequently, but predictably such as MOT, car tax, house and car insurance etc. I then have categories for monthly discretional spend eg clothes, going out, gifts and finally categories for annual or irregular discretionary spends (eg holidays).

From this I can see when my heavy expenses fall and check that I balance out over the year.

In terms of credit card spending online, I assume that you are using a credit card for security and ease of payment. Again you need to track what you spend - possibly on a spreadsheet or at least from the monthly bill.

To be honest I think that the element of control is in setting the budget rather than controlling each individual payment.

Two bank accounts at the same branch, then your income goes into either account and once you have divided all your bills by 12 then the remander goes into the other account - this is what you have left to spend each month.

Make sure that the bills account you do not have a cheque book or debit card - you transphere the money to the other account to actually pay the bill.

Having the both accounts with the same bank means not waiting for the money to transphere, as the bank can't blams the other bank for the hold up in the tranphering the money

I have a simple spread sheet I did myslef with the excel program to set out all the bills and put in total income and total outoings - it changes when a bill amount alters, rather than me having to do all the addition and subtraction again.

What I have left for the month must feul the car and shop for food and a little bit of pocket money.

I use a spreadsheet. The top sheet on it shows all outgoings per month (i.e. everything we pay out once monthly).

The second sheet shows bills that aren't monthly. There's a coloumn for the date they go out and one for the amount. Then there's a column for the equivalent monthly amount. The total of the monthly outgoings is trasnferred from the joint current account to the joint savings account each month and I transfer it over to the current account just before it's due to go out.

Dh pays the total of the top sheet and the second sheet's monthly total into the joint current account each month.

We only spend current account money for the things we've budgetted...e.g. food is on there and diesel iyswim.

Other things we buy we pay for out of our personal current accounts and I often check how much is in them before buying anything. We try not to buy on a credit card, though we have bought a couple of things on it (one being some stock for my online store because the company can only take credit cards not debit cards - in the US).

If you use the martin lewis money website there is a template of bills to use to cover everything - go and input everything on that and see what you can put on your list - then try to lower your bils i.e. get cheaper car insurance, change gas and electric supply, shop around for house insurance. it can be worthwhile as you may find you can save £200 - £300 over a year on several bills.

Meant to add that there are some bills that aren't every month (e.g. water is only 10 months per year and council tax) but I budget that amount for every month regardless as it helps for the following year when a number of bills go up due to inflation and that sort of thing.

Thanks everyone.
I have made a spreadsheet similar to martin lewis's (his headings didn't really match my lifestyle ) but tbh I haven't actually managed to write down ALL the outgoings - though I have done a much more comprehensive list of 'essential' expenses and have been rather shocked at what it has revealed (i.e. we have a lot less 'surplus' than I thought)

I think I need to go back to having one account for all the predictable bills - I do have a linked savings account, but can't actually pay the bills out of it so would need to be much more proactive than I am now about transferring money across.

i do have a bit of a weakness for buying children's clothes though. I will try to do it the frogs way!!

2 accounts - household and personal.

Wages go into your personal account. You set a budget for personal spending (days out, clothes, meals out, gifts) eg £250per month. You transfer ALL other funds into household account. Only touch the household account for pre-agreed items, such as food shopping, petrol, bills. The £250 is yours to last the month.

Ideally, you will arrange the figures so that a) your personal spend lasts the month and allows for a small treat or two,
and
b) the household account runs a surplus, ultimately to pay for irregular or unforeseen bills.

The idea is that you take away most of your money as soon as it's there, so temptation is gone.

Ladymuck I think you are right - we haven't ever attempted to define how much we spend on clothes and leisure. The last time I did this properly was before we had kids, and the problem is I still have the basic figure of monthly essential spending in my head from that time - whereas I think it is actually more like double what it used to be...

perkinwarbeck - we do that already (although only have £150 per month in personal accounts). Problem is that most of our expenses are 'household' ones so I need a way of controlling them!! I only pay for clothes, contact lenses and haircuts out of my personal account.

elliot - nothing wrong with buying anything online, just that it has to come out of "my whats left account for the month". This means that food and fuel with have to be sacrificed instead - walk further and eat less which is what I have to balance when I want to buy or spend the "pocket money"

Water by the way is 8 months in some areas - so check this before making the budget.

If you can get an account with a good rate of interest not that many out there but a few left. Then as your budget money mounts up (as it will over a year)especially in february and March when no water or council tax to pay, you will make money and over a year this can add up to well over £100, if your bills are adverage.

if you shop online, could you use a debit card rather than a credit card? that way the money is gone from your account a in few days, rather than several weeks later. Whilst you are working on a new budget, get an online/telephone balance DAILY, so it's quicker to spot when you're sailing close to the wind.

we have a joint account that we both get paid into. We know exactly what comes out that account each month, and the surplus between DH's contribution / wages and my contribution / wages go to our own bank accounts on standing orders. That's our money to play with. We also have a SO to our DDs savings account and a SO to our "xmas" account to pay for the xmas shopping.
We work everything out monthly and contribute that monthly, including the council tax which you dont pay 12 mths of, just so you end up with a little buffer.
I keep track of things on a spreadsheet, makes things easier.

hmm, its keeping a handle on how much we have to spend on 'extras' that is the problem for me. I think I probably need to get disciplined about only spending it once I have finished all the essential spending for the month. And I need to earmark enough for the predictable regular expenses.
Ahh, I love hearing about everyone else's nerdy spreadsheet habits. It makes me feel less of a freak - I don't know anyone who does this in RL
But i guess that's becasuse We Don't Talk About Money with our friends

I work with 3 accounts.

1 strictly for bills, set amount for petrol and set amount for food shopping. It does have a decent overdraught so if a big bill doesn't match the incoming money it will still be paid and should even out over the year. The theory is I have enough gong in each month to cover all the direct debits and set amounts so if I don't touch it for anything else, it should just tick over.

2nd is for week to week stuff, set amount to draw each week for daily expenses like school meals and extra veg shopping or if I need a bit extra for petrol etc. Amount paid into this account varies, so weekly budget has to follow this.

3rd account is for kids actvities, child benifit gets paid in and should cover all the kids activities. It is also where I will keep any excess from teh 2 other accounts if I ever manage to build this up. Thats not really happening just now.

I have a spread sheet template set up if anyone would like one. It sets out your ingoings and out goings and gives subtotals along the way, as this helps me to see which expenses and bills I need to try to reduce.