Our January 2018 Budget Report

Our January m Monthly Budget Report Bunchy the Budgeteer

It’s time again for me to share with you our monthly budget report. Can you believe it’s now February? I’m sure time moves faster as we get older! 

From a financial point of view, January can be a difficult month. Excesses in Christmas spending and a spike in credit card borrowing can leave many people feeling the pinch when January arrives. You can change this, though.
 
By designing a realistic budget focused on careful spending and saving, you’ll find that one month holds no more money stress than any other. Make sure, if you can, to make some room in your budget for some of life’s little pleasures too!
 
You can’t protect yourself from every unexpected expense (just look at our miscellaneous category!) but by making and following a budget, you can really reduce your money worries.
 

Here’s Where January’s Income Went…

For new readers: I use percentages, instead of monetary amounts. This is both to respect my husband’s wish to keep our income private and in case you want to compare how much of your income goes to your own categoriesAs your income will be different to mine, me using percentages should be more helpful to you.
 

Our January Income Had a 3.6% Boost Because We:

  • sold our old car for scrap.
  • accumulated Nectar points (which we put towards our grocery shopping, enabling us to use the cash we saved, to treat ourselves to a takeaway pizza!).
takeaway pizza image
Photo by Kristina Bratko on Unsplash

January’s Outgoings and Our Monthly Budget Categories:

 
(Shown in percentages of January’s total income, rounded up or down to keep things simple)
 

Mortgage: 25%

Council tax: 6.7%

Gas and electricity: 3.6%

Water: 2.5%

Groceries (Includes food, toiletries, and household needs): 8.7%

We have a tiny sum left in our grocery budget. As this category is tight, we’ll roll the surplus over into next month’s grocery budget.
 

Internet and landline: 1%

Life assurance: 1.4%

Mobile phone bills: 0.5%

My dental insurance: 0.6%

Mortgage overpayment: 0%

Pensions (besides to the small automatic deduction from Mr B’s wage): 0%

calculator and paper with monthly budget report

Sinking funds: 14%  

From these sinking funds, we spent 9.3% of our total January income on:

– our annual VPN subscription.

– unexpected dental treatment for Mr B.

– a new light bulb pack for our car and sealant to try to repair where water is getting in.

– birthday and late Christmas gifts (and experiences) for family members.

– a second-hand window vacuum.

Holiday savings: (‘vacation’ ) 7.2%

We’re excited because it’s the first time in a few years that we’ve been able to save towards a holiday!
couple sat on boat deck
Photo by Evren Aydin on Unsplash
 

Emergency fund savings: 18%

This month we completed our goal of having six months of expenses saved in our emergency fund! It’s been a hard slog. Yes, we’ve gone without, but the peace of mind is worth it. I’d be more secure with more put away, but if we don’t switch to investing soon, we’ll be looking at a difficult retirement.
 

Personal spending money (which has to cover clothing, haircuts, makeup, and gifts for each other on special occasions): 8.6%

I haven’t written about where our personal allowances go every month, but tell me if you want me to show you how I spend MINE.
 

Petrol: 1.4%

Miscellaneous buffer: With January’s income, our total miscellaneous spend was 3.4%. That’s  four times what we set aside for unplanned expenses! This was due to paying for:

– the final vet bill for the cat we cared for.

– taxis to work for Mr B.

Mr B cycles to work in the finer weather and I drive him during the colder and wetter months. This week, though, I’ve been ill with yet another cold and complications of Crohn’s disease.
 
bicycle propped up against settee
Photo by Yulia Chinato on Unsplash
When we ran out of money in the miscellaneous category, we covered the overspend from the grocery and household categories. Not ideal, but no debt incurred.
 
When looking at how much and where you’re spending money each month, remember that your life and requirements will be very different to ours. Sharing our budget gives you insight into how we budget and may give you ideas for your own.
 
So, how was January for you? Are you experiencing the post-Christmas pinch? My waistband is pinching! How do you divide up your money each month? Do you need to make a budget?
 
I love hearing from you and want to grow this community. Don’t be shy! Comment, contribute to the Facebook page, send me a private message or all three! I will always try to help you.
 
Lisa aka ‘Bunchy’

Our December Budget – How Did We Do? – Christmas Edition

Hands holding smartphone by laptop - Five Possible Solutions to Crippling Debt – Part Three - Individual Voluntary Agreements

Christmas is over for another year but now is actually a good time to touch on Christmas budgets.

It feels like ages since I’ve written a proper blog post. Like many people, I took advantage of the Christmas period by spending quality time with family and relaxing.

I have lots of blog posts in my head for 2018 but first wanted to share how our monthly budget went. This is for your entertainment, encouragement, (or to compare with – and be glad that you’re doing better!).

For anyone who celebrates any of the winter festivals (be it Christmas, Hanukkah, Eid, etc,) you no doubt encountered costs that fell outside your typical monthly budget. We’re no different, How we all manage those additional costs will vary, however.

For new readers, you’ll see that I use percentages, rather than monetary amounts. This is both to respect my husband’s wish to keep our income private  (it’s a low income) and to give a better comparison, per category, for whatever size budget you’re working with.

Christmas Budgets
Image by Bunchy The Budgeteer

Here’s How It Went for Us

Mr.B’s wages were on the lower than usual side, due to him having some sick days in December.

December’s Outgoings and Our Monthly Budget Categories – (shown in percentages of December’s net/after-tax income) :

  • Mortgage: 23%
  • Council tax: 6.3%
  • Gas and electricity: 3.4%
  • Water: 2.4%
  • Groceries: (Includes food, toiletries, and household needs) 8.8%
  • Internet and landline: 1%
  • Life assurance: 1.3 %
  • Mobile phone bills: 0.5 %
  • My dental insurance: 0.6%
  • Mortgage overpayment: 0%
  • Pensions: 0.3% (In November 2017 Mr.B was been enrolled in his workplace pension. The amount taken from his wages is the compulsory minimum required. The percentage we’ll be adding when actively investing in our pension funds will be higher).
  • Holiday savings: (‘vacation’) 0%
  • Emergency fund savings: 31%
  • Personal spending money (has to cover clothing, haircuts, makeup, and gifts for each other on special occasions): 8.1%.
  • Petrol: 1.3%
  • Miscellaneous/unexpected buffer: In relation to December’s income, our total miscellaneous spend was 0.8%.
  • Sinking funds: (the linked article explains these): 12.5% allocated to our short-term savings.
  • 7.5% of our total December income was then spent from the sinking funds on the following:
    1. Some Christmas and January birthday gifts.
    2. A new hot-water bottle and cover!
Our December Budget – How Did We Do? – Christmas Edition
Image by Bunchy The Budgeteer

Now, I have to say that the percentage we spend on Christmas gifts is much lower than your average family. That’s due to:

 

  1. As a couple, we don’t celebrate Xmas, yet have felt obliged by our family to get involved, even on a small scale.
  2. The gifts we buy for each other come from our individual ‘allowances’, so that doesn’t show up in the figures.
  3. My mother-in-law puts together the most amazing hamper for us each year. While it’s not food for ‘proper’ meals, it’s packed with ‘naughty’ food and plenty of booze!
  4. I’d predict that we spend less than half on gifts for people than what the average person spends. We only buy for parents/step-parents, my grandmother, and our 10 nephews and nieces.

December 2018 will be different. We’ve decided that December 2017 was the last year that we celebrate Christmas at all. We haven’t yet told all the family. My mother-in-law has insisted that she still wants to give us a hamper because it brings her joy. I’m not going to rob her of that. We aren’t doing it for monetary reasons. The money we would allocate to the people we buy gifts for will go towards their birthday instead. This means we’ll be spending the same amount on each person, but yearly rather than twice yearly.

How was December for you? How do you divide up your budget? Do you need to make a budget? Did you spend more than you’d intended? If so, why? I’d love to know how everyone else did.


You may also be interested in reading: ‘How to Save Money on Christmas 2017‘, ‘A Peek into Our Monthly Budget‘, which is the template we use each month, ‘Are You Within The Recommended Guidelines For Your Monthly Expenses?‘, and ‘Money – Where On Earth Should I Begin?


I love hearing from you and want to grow this community that is gradually getting bigger. Don’t be shy! Comment, contribute to the Facebook page, send me a private message or all three! I will always try to help you.


Lisa a.k.a ‘Bunchy’

Happy New Year! Better Money Habits for 2018

Happy New Year budgeteers! Are you ready for some better money habits for 2018?

There’s nothing like a fresh year to form new and healthy habits. That includes your financial health.

What new habits do you want to form? Are there some less-than-helpful money habits you’d like to get rid of? How about making 2018 the year you finally commit to:

  •  Getting out of debt?
  •  Saving a percentage of your income each month?
  •  Making and FOLLOWING a realistic budget?
  • Cutting back on unnecessary retail therapy?
  • Cooking at home more and ordering fewer takeaway meals?

Whatever your financial goals for 2018, I’m here to encourage you along the way and share MY wins and fails too.

I’d like to thank everyone who has supported me with the Bunchy The Budgeteer blog in 2017.  I have exciting plans for the blog in 2018 and shall strive to offer you valuable content over the next 12 months.

Normal blog posts shall resume on Thursday the 4th of January.

I love hearing from you and want to grow this community that is gradually getting bigger. Don’t be shy! Comment, contribute to the Facebook page, send me a private message or all three! I will always try to help you.

Lisa a.k.a ‘Bunchy

Our November 2017 Budget – How Did We Do?

Our November 2017 Budget - How Did We Do?

It’s a little late, but I said I’d show you how our November budget went and how we did, so here it is!

November was an unusual month. We’ve been looking after a neighbourhood cat whose owners were unable to pay his vet bills. The poor cat had been wanting to spend a lot of time at ours. With me being a qualified Veterinary Nurse, I was quick to see that something was wrong with him. Three vet visits, medications, sedation, and blood tests revealed that he was F.I.V positive. and he had to be euthanised at the beginning of December. It broke our hearts, but we don’t begrudge paying the bills.

We can’t afford to have an animal of our own full-time. Our income will reduce in April unless I can make a success of a home business I am working on. It’s important to us to have our animals insured and to have the best food and veterinary care. With this in mind, we’re not yet able to fit this into our monthly budget. Others may think we were mad to use our Emergency Fund savings on an animal that wasn’t even ours. There wasn’t a moment of hesitation for us though and we knew that it wasn’t going to be an ongoing cost. it highlights what I’ve said before, that personal finance is personal.

 3.1% of our November income was extra income from selling some stuff from around the house. One of the items sold included our secondhand PlayStation. We’d bought the PlayStation by selling our secondhand Wii. We’d bought the Wii from selling other household items. You get the picture of how we usually manage to buy ourselves ‘new’ things!

Our November income was also bumped up 9.9% above the usual amount by receiving an ‘extra’ government payment. This was because one of the two months of the year when, due to receiving my payments fortnightly, I receive three instead of the usual two payments per month.

Our November 2017 Budget - How Did We Do?
Image Photo by Volkan Olmez on Unsplash

 

November’s Outgoings and Our Monthly Budget Categories – (shown in percentages of November’s total income) :

 

  • Mortgage: 20.3%

  • Council tax: 5.5%

  • Gas and electricity: 3%

  • Water: 2.1%

  • Groceries: (Includes food, toiletries, and household needs.) 10%

This was more than we usually spend on groceries. We had some money left over from October’s grocery budget and spent that. If we’d have been frugal and used the usual amount, we could’ve put the extra amount to our Emergency Fund savings. Yet, we’re human and it was a tough month. I was ill with a cold (which I’m still fighting and now Mr.B has gone down with it). So we were lazy and treated ourselves to a couple of takeaways. We also threw some of the cat products we had to buy into our grocery bill, rather than take more from our Emergency Fund.

 

  • Internet and landline: 0.9%

  • Life assurance: 1.2%

  • Mobile phone bills: 0.5%

I went over on my mobile phone bill and so covered the overage with my personal allowance.

 

  • My dental insurance: 0.5%

  • Mortgage overpayment: 0%

  • Pensions: 0.9%

Mr.B has now been enrolled in his workplace pension. This is the compulsory amount that came out of his wages. The percentage we’ll be adding when actively invest in our pension funds will be higher.

 

  • Sinking funds (the linked article explains these): 11% allocated to our short-term savings.

5.8% of our total November income was then spent from the Sinking Funds on the following:

  • Our six-monthly dental check-up. I will get back half of what we spent, as I have dental insurance.
  • Some winter car items and we got a punctured repair on one of our car tyres.
  • A couple of Christmas and birthday gifts.
  • Some new and second-hand items for the office and kitchen.
  • Holiday savings: (‘vacation’ to U.S. readers) 0%

  • Emergency fund savings: 34%

  • Personal spending money (has to cover clothing, haircuts, and makeup): 7.1%

  • Petrol: 1.1%

  • Miscellaneous buffer: In relation to November’s income, our total miscellaneous spend was 4.5%.

4.5% is almost seven times the amount we usually allocate for unplanned expenses! This was due to caring for the cat. We added to the miscellaneous category from our Emergency Fund as the expenses arose.

 So there it is! Not a typical month by any means, but we managed. We were still able to put a decent amount towards our Emergency Fund. This was mostly due to November’s income being higher than average, thank goodness!

How was November for you? How do you allocate your budget? Do you need to make a budget? I’d love to know.

You may also be interested in reading: ‘A Peek into Our Monthly Budget, which is the template we use each month, ‘Are You Within The Recommended Guidelines For Your Monthly Expenses?,  and ‘Money – Where On Earth Should I Begin?

 

I love hearing from you and want to grow this community that is gradually getting bigger. Don’t be shy! Comment, contribute to the Facebook page, send me a private message or all three! I will always try to help you.

 Lisa a.k.a ‘Bunchy’

What Are Sinking Funds and Why Do I Need Them?

Have You Ever What Are Sinking Funds and Why Do I Need Them?

Have you ever heard of ‘Sinking Funds‘? If not, then you may be wondering what they are. Your next question may be whether you need them.

Sinking funds are savings for expenses you expect to encounter, but don’t know when. They may also cover infrequent events that don’t occur each pay period, such as Easter.

When setting up your Sinking Funds, you have various choices:

  • You may decide to use separate bank accounts for each sinking fund.
  • You may keep the money in jars at home. This isn’t the safest idea for anything other than small sums of money.
  • You may want to lump all your savings together in one place. We do this and keep track of what money belongs to what fund/purpose on a spreadsheet, but a notebook would do.

What you decide to save for will vary from what we or any other person saves for. Certain things will be the same, for example, if you also buy gifts for people at Christmas. You may have children’s costs to consider, whereas we don’t. The key is to think of all the irregular costs that catch you out and destroy your regular monthly budget. Try to include those things.

Fun Fact (from Wikipedia):

‘The sinking fund was first used in Great Britain in the 18th century to reduce national debt. While used by Robert Walpole in 1716 and effectively in the 1720s and early 1730s, it originated in the commercial tax syndicates of the Italian peninsula of the 14th century, where its function was to retire redeemable public debt of those cities.’

Our Sinking Funds have saved our skin and our budget many a time! Here’s what we put money by for each month:

  • Home insurance premium (buying it yearly works out cheaper than monthly premiums).
  • Car tax (buying it yearly works out cheaper than paying for it more frequently).
  • Car insurance premium (buying it yearly works out cheaper than monthly premiums).
  • Breakdown cover.
  • M.O.T. & servicing.
  • Sight tests every two years.
  • Boiler service.
  • Six-monthly dental checks.
  • Prescriptions.
  • Unexpected dental bills.
  • Car repairs, parts & tyres.
  • Gifts (birthdays and Christmas gifts for family. We buy for each other out of our personal allowances).
  • House renovations and items.
Do you save regular amounts of money each week or month for costs that you know will come up? What do you save for? I’d love to hear.
 

I love hearing from you and want to grow this community that is gradually getting bigger. Don’t be shy! Comment, contribute to the Facebook page, send me a private message or all three! I will always try to help you.

Lisa a.k.a ‘Bunchy’

A Peek into Our Monthly Budget

A Peek into Our Monthly Budget

Last month I wrote a post called ‘Are You Within The Recommended Guidelines For Your Monthly Expenses?‘. It covered advice on the ideal allocation of income within a budget, as percentages. E.g. How much of your income to spend on housing, etc.

I thought you guys might find it interesting to see how we divide our money month to month.

Due to having budgeted for so long, I pretty much know how much money we need to put into each category every month. Due to this, we have an ‘ideal’monthly budget template that we begin with and this is what I’m going to share further on.

This month (or even last month!) hasn’t been ideal, as we’ve had a TON of unplanned and emergency expenses. If you’re human, you’ll know what I mean. You may start with good intentions and then BAM! It all goes Pete Tong (that’s ‘wrong’ for those not familiar with Cockney rhyming slang). I’ll be sharing our expensive October and November with you at the end of the month.

Our Income

Mr.B is not on board with me sharing our exact numbers. To show you how we divide our income, I’ll have to use percentages.

There are many conflicting pieces of data about what the average income is. We’re a two-person household. Yet, our income is lower than the median average 2017 individual UK salary. I’m not basing that on the ridiculous sources where the mean average gets used. Mean averages take into account a few earners receiving huge salaries. Most people will never have those incomes.

Our income consists of Mr.B’s wage, my very small government help (due to medical conditions). We also receive a small amount of money from somebody paying us back for a loan, plus a £3 a month reward from our bank. At times we may get extra money if we sell something we no longer want, but otherwise, that’s it.

NB: Twice a year I receive three government payments instead of the usual two payments per month. This is due to receiving my government help on a fortnightly basis. If you get paid every two weeks, this will happen to you too.

Our Outgoings and Our Monthly Budget Categories – (shown in percentages of monthly income) :

  • Mortgage: 23.1% 

  • Council Tax: 6.3%

  • Gas and electricity: 3.4%

  • Water: 2.4%

  • Groceries: (Includes food, toiletries, and household needs.) 8.2%

  • Internet and landline: 0.8%

  • Life assurance: 1.3%

  • Mobile phone bills: 0.5%

  • My dental insurance: 0.6%

  • Mortgage overpayment: 0%

  • Pensions: 0%

  • Sinking funds (the linked article explains these): 12.5%

  • Holiday savings:  (‘vacation’ to U.S. readers0%

  • Emergency fund savings: 30.8%

  • Personal spending money (has to cover clothing, haircuts, and make-up): 8%

  • Petrol: 1.3%

  • Miscellaneous buffer: 0.8%

Some of the above categories need some deeper explanation, but I’ll go into that in future posts.

Your own allocations will likely be very different to ours. That’s because it’s likely that you’re in a different financial situation.

Remember that things are always changing for most of us. For example, I have plans to begin a home business providing online services. If I can manage this with my health limitations, then our income will increase. Yay!

But, next Spring, our income is going to reduce. Also, we’ll have (all being well) completed our Emergency Fund and begun investing. This is why, though a budget template is useful, all our circumstances can and will change.

Where is your money going every month? Take a moment to find out and ask yourself if you’re happy with what you discover. Are you meeting your financial goals? Do you need to set some goals?

I love hearing from you and want to grow a community. Don’t be shy! Comment, contribute to the Facebook page, send me a private message, or all three! I will always try to help you.

Lisa a.k.a ‘Bunchy’

Things You Need to Know Before Making Your First Budget

thingsyouneedtoknowbeforemakingyourfirstbudget

If you’ve identified that you need a budget, great! We all need a budget, whether we’re on low OR high incomes. To not tell our money what to do each month puts us at a financial disadvantage. Before you start, though, there are some things you need to know before making your first budget:

What Are You Currently Spending Your Money On?

You can’t set a realistic goal of spending £200 on groceries if, for the last six months, you’ve spent £400 per month.

For each of your budget categories, find out what you have been spending. If possible, look back over the past three months. Next, track your spending, for each area (groceries, eating out, clothes shopping, etc) for a month.

Write everything down as soon as possible and keep receipts.

Then, when you make your first budget, decide on a new amount for each category that is closer to what you want to spend. You can always adjust the amount for future months.

Do You Have Money Left at the End of Each Pay Period?

If you do, consider giving this surplus amount a purpose. This could be debt-repayment, savings, or whatever goal is most important to you at the moment.

You Don’t Need to Be Good at Maths to Have a Successful Working Budget

I’m not at all gifted at maths. Not even close (I even still count on my fingers!). All you need is a bit of organisation, a desire to feel better about your finances, a calculator and you’re all set.

Making a Budget Doesn’t Have to Involve Making a Fancy Spreadsheet

I do use a spreadsheet, but for ages, I used a pen and paper. I find it easier since using a spreadsheet that I designed for myself, but pen and paper budgeting is fine.

If you wanted to, you could use a money management app or software. There are loads around, but YNAB is very popular. They also have great video tutorials on YouTube. I signed up for the free trial and must admit, I found it a bit confusing, but I didn’t put enough time into it. You might be one of the many who love it.

Another great place to get started is ‘The Money Advice Service‘ Budget Planner.

Experiment with your budget and see what works best for you.

You Need a Budget If You Want to Improve Your Financial Situation

You’re reading this post because you want to improve your financial management.

If you have debts that you want to pay off, then budgeting will achieve this faster.

If you want to save optimal amounts of money each month, then you need a budget.

If you want to see how fast you can retire or pay off your mortgage, then you need a budget to help you to reach your goals.

If you want your partner to be able to stay at home with the children, then you need a budget to work out how to do this.

How Much Money Do You Owe, Who Do You Owe It to, and When Must It Be Re-Paid?

For most people with debts, especially those with a large debt-load, this can be the hardest thing of all. Everyone can understand not wanting to face up to such a stressful thing. The truth is, though, that unless you know exactly what you’re dealing with, you can’t improve things.

Get all your letters, statements and bank accounts opened up and add up what you owe and who to. Add the dates that these debts need to be repaid.

A Budget Doesn’t Mean That You Can’t Have Any More Fun

Budgets have a negative connotation of being ultra-constrictive. They can feel this way if your basic outgoings are almost as much as your income, even after making major cuts.

Can you meet your obligations and still put decent amounts to savings and/or debt? If so, then recreational spending is a good idea! It’ll stop you from feeling constricted and help you stay on track to reach the goals you’ve set yourself.

How Often Do You Get Paid or Receive Other Money?

If for example, you only receive income from one source every month then this is simple. Yet, if you receive income from more than one source, then they may come at different times.

If you receive a payment every two weeks, you’ll have months where you get three payments instead of two. Looking at exactly when you get paid is important to be able to budget well.

What Are Your Money Goals?

Knowing your ‘why‘ is crucial to sticking to your budget. It’s the difference between following your plan for a few months or staying the course.

You already know that you want to start budgeting your money, but why do you want to? If you don’t already have a strong reason, then ask yourself what will budgeting help you achieve? Return to that thought whenever you’re feeling like you don’t want to continue with your plan.

What Are You Willing to Do to Make Your Income and Outgoings Balance?

After making a budget and some time has passed you may discover:

  • That your outgoings exceed your income.
  • That there’s very little money left to enjoy each month

If this happens, then you may have to make further cuts to your spending, find ways to increase your, or both. It’s wise to bear this in mind before discovering that your budget doesn’t balance.

What Events Are Coming up That Will Cost You Money and How Will You Prepare?

As well as your monthly expenses, there will be random expenses that crop up. This could be an unexpected work trip or an M.O.T. It’ll vary each month, so think about how you’ll budget for this. Will you have a miscellaneous category in your monthly budget? What about for things like Christmas? Will you set aside a set amount each month so that by December you have enough to cover everything?

What Style of a Budget Will You Use?

Read my post: ‘Are You Within The Recommended Guidelines For Your Monthly Expenses?‘ and then decide how you’d like to design your budget.

You might want to split up your budget into ratios, such as:

A 10/20/70 budget:

  • 10% of your money to savings.
  • 20% towards extra debt-repayment (over and above what you’re obliged to pay each month).
  • 70% to cover everything else.

Or a 20/30/50 split:

  • 20% of your income goes to savings and/or debt.
  • 30% is for non-essential spending.
  • You keep your vital living expenses under 50%.

You may want to do something completely different.

Whatever you decide, be aware that as you build your budget, you may have to alter your plans. If, say, you have high outgoings compared to income, you may not be able to do what you’d first hoped to do with your money. This is ok. This discovery shows you that you need to think about how you’ll improve your situation. You can make things work.

The First Three Months Will Be a Learning Curve

I’ve heard this so often and it’s true!

An unexpected bill arrives and it’s at this point that you need to make an important decision. Many people will think ”Well, I’ve blown the budget, so I may as well start fresh next month. Now, where’s the nearest coffee shop?” Or, ”I’m terrible with money, there’s no point, and I’m giving up.”

What you could consider, instead, is that budgeting is a skill, like any other and so needs practise.

Life doesn’t care about your spreadsheet or bank account and it’s up to you to be creative. Is it possible to reduce your other spending this month, to cover the unexpected expense? Can you say no to the expense? How will you alter your budget going forward so that you’re as prepared as you can be for these such events?

Finally, return to your ‘why‘. It’s the reason that you’re doing this.

You’ll Sometimes Get Tired of Budgeting

If I, a budgeting nerd can sometimes get fed up with the budget that my husband and I made, then anyone can.

If you can add some ‘fun money‘ into your budget (even if it’s a chocolate bar each week!), then that will help.

Are you facing a long road of debt-repayment? If so, consider budgeting some ‘celebratory‘ money for when you pay off a certain amount. Then get back to it.

Again, remember your ‘why‘. It will sustain you.

If You Have a Partner, Then He or She Needs to Be on Board

This is so important.

If YOU want to live frugally and commit to paying off large amounts of debt, your partner can’t max out the credit card!

It’s fine if one of you takes charge of actually paying the bills and keeping track of paperwork. But you both need to talk about what you want for your immediate and long-term financial future. What sacrifices are you willing to make? Where do you want to spend your ‘disposable’ income each month?

I’ll let you in on how it works in our house. I update the spreadsheet, keep watch over the bank account and ensure that bills are being paid. This is because managing money has become a skill of mine and I (for the most part) enjoy it. Yet Mr.B finds all that stressful, boring and confusing. As boring and nerdy as it sounds, we have a budget meeting every month. Mr.B has an equal say in whatever financial events come up throughout the month.

What surprises us is, when we have our budget meetings, we end up talking about many other things. Money influences so many areas in life, such as where we want to go on holiday or who to buy Christmas presents for. It opens up communications about many things. In fact, I can say that it’s improved our communication in general. I’ve heard this so many times from other couples who budget together too.

If you don’t have a significant other, then you won’t have to concern yourself with the above. That said, you also don’t have somebody to keep you on track. So consider having some sort of accountability partner for support and encouragement.

It’s Worth Doing

I’ve always had a conservative attitude towards spending. I’ve always lived within my means. Yet it wasn’t until I made a budget and identified my financial goals that I saw noticeable results.

Since having a plan to follow, I’ve achieved such a lot. This is despite a low income and three years of being unemployable. I don’t say this to blow my own trumpet, but to encourage you that you can make a positive difference in your life. This comes when you tell your money what to do.

How Much Is Your Income, Actually?

You might be on a £25,000 salary, but what do you actually take home each month? After tax, National Insurance, and pension, what remains? Do you receive any government benefits? If so, how much? Add it all up to see exactly what you’re working with.

Practical Next Steps

  1. Decide if you’re going to have a weekly, fortnightly, four-weekly or calendar-monthly budget.
  2. Track your expenses for a month.
  3. Try to find out your expenses for the past three months.
  4. Work out how much money you owe, who you owe it to and when it must get paid.
  5. Write down what your weekly/monthly income is and what dates you receive it.
  6. Write down your reasons for needing a budget and what your next financial goal is (review often and when you achieve each goal).
  7. Look at your calendar and write down all the bills, (plus birthdays, etc.) that are going to occur in your budget cycle.
  8. Decide which budget style you want to try. You can always switch to a different style if the one you try isn’t a good fit for you.
  9. If you have a partner, set a time for a budget meeting to work through all the steps above. (If you’re flying solo, find an accountability partner).

All this may seem a lot to do, but if you want to succeed, then you need strong foundations. Once you’ve completed the groundwork, congratulate yourself for your effort. Now go and build your first budget!

I love hearing from you and want to grow this community that is gradually getting bigger. Don’t be shy! Comment, contribute to the Facebook page, send me a private message or all three! I will always try to help you.

Lisa a.k.a ‘Bunchy’

Why Having an Emergency Fund Will Help You to Sleep Better

Why Having an Emergency Fund Will Help You to Sleep Better

What almost all experts will tell you is that before you decide upon any other saving goals, you must first be working towards building an emergency fund (sometimes known as a ‘rainy day’ fund).

What Are Emergency Funds?

Emergency funds are predominantly a way of protecting yourself against a loss of income; which for most people will be a job loss. Of course, there may be other circumstances that will necessitate tapping into your emergency savings, such as unexpected and expensive car repairs that your usual monthly budget cannot cover.

Is an Emergency Fund worth Having?

Living ‘paycheck to paycheck‘ is a stressful existence and if using debt is your only option for dealing with a major financial incident, then anxiety levels can begin to creep up and affect your quality of life. Nobody wants to be lying awake at night worrying if a cheque is going to bounce.

Over the past two months, we’ve had to dip into our emergency savings for major and unexpected car expenses. It’s been a pretty stressful time, and although we hadn’t quite reached our goal of what we wanted to have saved in our emergency fund, the car debacle was a hell of a lot less stressful than it would’ve been had we not had some money in the bank to pay for not only the extensive gear-box work we had done but eventually a new (used) car!

What Constitutes an ‘Emergency’?

Generally, something is an emergency expense if it’s:

a) unplanned

b) necessary and

c) urgent.

So your child’s birthday wouldn’t be classed as a good reason to take from your emergency fund, as you know exactly when it’s going to occur each year!

How Much Do I Need to Have in My Emergency Fund?

Some finance specialists advise that you have an emergency fund equal to three to six months’ worth of your usual INCOME, whereas some recommend that you have three to six months’ worth of your usual monthly EXPENSES (or outgoings) saved.

If you’re going to use your expenses to calculate your emergency fund savings goal, then you may want to know that some professionals recommend that you include only vital expenses (so this wouldn’t include any of your usual recreational or discretionary spendings unless you’d end up with a penalty that would cost you more than what you’d save by cancelling it – such as a mobile phone contract).

You may also want to consider if, during whatever financial emergency you’re going through, you’ll want to temporarily pause saving, making additional debt repayments and any investing towards retirement.

Of course, you’ll be able to reach your savings goal of having a complete emergency fund much faster if you’re aiming for covering only vital expenses. However, for those on a low income who don’t have much left to spend on non-essentials each month, there may not be a lot of difference between six months of income and six months of expenses!

Consider Having an ‘Emergency Budget’

When we first decided what our absolutely vital minimal expenses were, we looked at our usual monthly budget and went through each category and expense and subtracted any budget item that we could easily cancel without penalty if Mr.B were to lose his job. By doing this, we developed our emergency budget and were quickly able to work out how much (or little) was required to hit our goal of six months of expenses in the bank.
If the proverbial hits the fan then we can follow that bare-bones budget.

If you hate the idea of tightening up on your spending habits during say, a job loss, you may prefer to have three to six months of expenses saved, but be aware that if you don’t reduce your spending during the period of unemployment (or going from two incomes down to one) and you still haven’t found another job at the end of those three or six months, you’ll face problems. By cutting right back, you’ll be able to make that emergency fund last as long as possible and furthermore, you’ll have less to put back into the emergency fund once the storm has passed.

Do you have an emergency fund? If so, how long did it take to save? How many months of income or expenses did you decide upon and why? If you don’t have an emergency fund, is it something you’d like to achieve? If not, how will you deal with large and unexpected expenses or a loss of income? I’d love to hear from you!

For more on saving, check out: Are You Within the Recommended Guidelines for Your Monthly Expenses?

I love hearing from you and want to grow this community that is gradually getting bigger. Don’t be shy! Comment, contribute to the Facebook page, send me a private message or all three! I will always try to help you.

Lisa a.k.a ‘Bunchy’

Are You Within The Recommended Guidelines For Your Monthly Expenses?

Who is Bunchy the Budgeteer? Who is 'Bunchy'?

Are you confused by all the financial advice out there, telling you how much you need to be saving each month? I know that I used to be! Would it help to know if you are within the recommended guidelines for your monthly expenses?

 
Have you got into a spin about what percentage of your income you should be investing into a pension? You know, so that you’re not eating cold baked beans in your old age (unless that’s how you roll)?
Do you ever wonder if you’re spending far too much of your income on things you enjoy? Are you worrying that those items are costing you more than the actual price tag – like your financial health?
Stressed because you can’t save what (insert financial guru) recommends you save each month due to struggling to afford the basics? (I know, I’ve been there) Well, please read on, friend…
Let me first say that there is a no ‘one size fits all’ plan to personal finance. It’s personal finance after all! I DO believe that there are good rules of thumb that we can go by. Tweak them here and there to suit your particular circumstances. That means altering things to benefit your financial situation, not to satisfy your spending desires!
 
I’ve read a lot of advice on what percentage of ones’ income should go towards various categories. Some experts vary in how they split up the categories, but for the most part, they tend to fall into these areas:
 
Saving and Investing There’s a difference. Read ‘A Beginner’s Bite-Size Guide to the Differences between Savings and Investments‘.
Debt-repayment (over and above what must get paid each month. Things such as a mortgage payment and paying the minimum balance on a credit card).
Vital household and living expenses.
Recreational/discretionary spending.
 

Let’s Start with Savings

 
General advice tells us to aim to put 10-20% of our net income towards savings &/or investments each month. Net pay is our ‘take-home’ pay, after tax and National Insurance gets deducted. What most experts will tell you is that your first goal is to have an emergency fund. Check out Why Having an Emergency Fund Will Help You to Sleep Better‘.
Once you’ve saved/are saving your emergency fund, consider other savings:
Short-Term Savings
For expenses or purchases you expect to happen in less than five years. For example, a family holiday or Christmas.
Medium-Term Savings
For expenses or purchases you expect to happen within five to 10 years, e.g. a new car.
Longer-term Savings
For expenses expected to occur in ten years or more, such as saving up for a child’s university tuition.
You may decide that you instead want to invest long-term savings, to maximise its chance of growth. Due to not needing the money for several years, it has a better chance of weathering any fluctuations. For example, if invested in the stock market. There is always a chance of losing money in investments. If you’re not willing or able to risk this, then a savings vehicle may be a better option for you.
 

Have You Ever Heard of ‘Sinking Funds’?

 
Sinking funds are savings goals for specific purposes. Read my post ‘What Are Sinking Funds and Why Do I Need Them?‘ and then come back. Our sinking funds have saved our skins and our budget many a time!
One final note before moving on to the next category. Some financial experts say that you should forget having any type of savings until you’re out of debt. This doesn’t include your mortgage. Some suggest you have a safety net of one month worth of expenses saved. Others recommend that you build your emergency fund at the same time as paying off debts.
Whatever you decide is the best option for you will depend on several things, including:
 
  • How secure you feel that your jobs are.
  • How tolerant you are to risk.
  • During a period of unemployment or illness, how your debts would affect you if you hadn’t reduced them.

Investing

For most people, this will mean the money that they save into their pension plan. It could also include other investments such as:
 
Investing in the stock market.
Buying a second property.
As mentioned before, you may also want to invest money earmarked for long-term savings. It can grow more than it could in an easily accessible savings account, but there’s more risk.
Experts recommend putting 5-20% of your take-home pay into investments/retirement savings. Other experts advise beginning at half your age as a percentage.
Example:
 
You’re 40 and have never consistently contributed to a pension or investment. Therefore, you would invest 20% (half your age) of your income until you retire.
 
The younger you begin saving for retirement, the smaller the chunk taken from your budget! Yet it all depends on how much you want to live on in retirement and what your retirement goals are.
Investing is an extensive topic and you should get professional advice about. Use a regulated independent financial advisor when making such important and long-term decisions.
Debt repayment
 
The advice seems to indicate that we should be putting 5%-20% of our take-home pay towards debt each month.
 
This percentage doesn’t include:
 
  • Your usual monthly mortgage payment (if you have one.
  • Paying any minimum credit card balance – you ‘have‘ to pay or risk additional debt.
Instead, this means, for example:
 
  • Making additional payments towards a mortgage if you want to pay it off earlier. Some financial gurus advocate this. Others feel that there are better things to be doing with your money.
  • Clearing credit card debts or paying off a car finance agreement, etc.

Vital Household and Living Expenses

We’re advised to keep this category of spending between 50-70% of our take-home pay. Though not meant to be an exhaustive list, this category will include things such as:
 
  • Food & household groceries (the basics).
  • Mortgage or rent payment.
  • Council tax.
  • Gas, electricity, and water.
  • Fuel/public transport to get to and from work.
  • Clothing basics.
  • Life assurance.
  • Home (building &/or contents) insurance.
  • Car tax, new tyres, car insurance, and M.O.T.
  • Sight tests and glasses.
  • Prescriptions.
  • Dentistry.
  • Boiler servicing.
  • Necessary hair-cuts.

Recreational/Discretionary Spending

This is where you finally get to have some fun with your money and use it for entertainment purposes!
From my research, advice indicates we try to keep these non-vital expenses between 10-30% of our net pay.
Again, the list below isn’t intended to be an exhaustive list. What you chose to spend your ‘fun money‘ on will be different to what I like to spend mine on, but it may include such things as:
 
  • TV subscription services.
  • Sports equipment, toys, and gadgets.
  • Beauty salon treatments.
  • Restaurants/eating out.
  • Alcohol
  • Smoking and vaping.
  • Days out.
  • Non-essential home improvements.
  • Make-up.
  • Junk food and takeaways.
  • Luxury grocery items.
  • Clothing (above the basics to keep from getting arrested, etc.).
  • Jewellery.
Some financial specialists list the following as non-vital budget items:
 
  • Home internet, landline telephones, mobile phones (and their tariffs). Unless it’s used for business purposes.
I hope that by reading this, you now have a clearer picture of how your spending compares.
If you’re aware of the potential impact of where you allocate your money each month, then that’s great. Whatever you decide to do is going to be very personal to you and your circumstances.
Some people don’t have the luxury of choosing where they prioritise their spending. They may have cut back everywhere possible and still don’t have enough for the basics or for saving. In these situations, it’s not a spending issue that they have, but an income issue. Until that’s improved, they shouldn’t, for example, concern themselves with investing.

Have you calculated how much of your income goes into the categories above? Are you a natural saver or spender? What are your views on prioritising debt repayment over saving or vice versa? Do you have an emergency fund?

 

I love hearing from you and want to grow this community that is gradually getting bigger. Don’t be shy! Comment, contribute to the Facebook page, send me a private message or all three! I will always try to help you.

Lisa a.k.a ‘Bunchy’

How to Save Money on Christmas

How To Save Money On Christmas 2017

Yes, I mentioned the ‘C’ word! I’m sorry, but at the time of publishing, there are only 89 days until Christmas (I found out by using this pretty cool countdown clock! With that in mind, here are some ways on how to save money on Christmas.

Make a Budget!

Really, this is THE most important thing you can do:

1) Look at what money you’re expecting to come in over the next few weeks or months (depending on how often you get paid) and what you know has to be paid out and write down what you have leftover to save each week/month.

2) Think about what you would expect to spend on Xmas this year, not forgetting:

  • all of the food
  • possible nights out for work parties, and kids’ school parties
  • entertaining at home
  • ‘Secret Santa gifts
  • wrapping paper and cards
  • alcohol

Basically, anything that you usually shell out for, (not to mention the gifts you buy) and tot it all up.

Divide the above amount by the number of pay-cheques you’re getting and you’ll see how much you’ll have to save each week/month to be able to achieve the spending you’d like to do without going (or going further) into debt. Write that number down.

3) Finally, compare the amount you came up with in step one with the amount needed to be saved in step two. Is there a discrepancy? Will you have less to spend than you’d hoped? If so, then you’ll either have to make cuts in your discretionary spending leading up to Xmas, reduce what you spend on Xmas or find a way to bring in extra money before Xmas, plus, check out the next tip:

Cut down on Who You Buy For

This isn’t easy and may require a few conversations with people, but there really is no law that says you have to buy your child’s teacher a gift each Xmas, or that you must buy that cousin you don’t really like a present, as well as all of her children, just because she buys you all something you don’t want or need each December.

If you can’t afford to, don’t want to, or it’ll push you further into debt, just decide to stop. It’s much easier than you might think. Focus on your family and your financial peace of mind. If you really can’t say no to people then consider the next tip:

Homemade Gifts

Some people groan at the thought of this, but it can be much easier than you think. Everybody has some sort of skill or service they can offer.

Are you a knitter? Then look at Pinterest for cool knitting ideas, such as a mug cosy pattern (buy a cheap mug and fill it with marshmallows) that won’t take long to create.

Don’t possess a creative bone in your body? That’s ok! Offer a new mum an afternoon where you’ll hold her baby and do some laundry while she grabs a shower or maybe takes a nap.

Wrack your brains for what you can offer and know that whilst people rarely remember what you’ve bought them, they’ll always remember the time you’ve spent with or on them. If they don’t appreciate you for it, then you might reconsider why you’d give a gift for them in the first place.

dreamstimefree_1537888
Courtesy of Dreamstime.com

Secret Santas

This is something that most office workers will be very familiar with. It usually involves receiving some useless but hilarious gift from an unknown colleague, but the idea can also be extended to family and friends.

If it’s a completely new concept to you, it basically just involves a group of people putting their names into a ‘hat’, everybody taking a name and without telling anybody else, buying that person a gift. A price is set for the gift (an amount everyone agrees on) and by Xmas, the gifts are all put together (labelled, obviously), and passed out to the correct recipient. In this way, everybody gets a gift and everybody only has one gift to buy. It can save a fortune.

Consider Second-Hand

Yes, I really said that! When you say ‘second-hand’ to some people. they envisage smelly and horrible clothes from a charity shop, but come on, don’t be a snob, there are so many beautiful, gently used items to be had both in shops and online (it’s what eBay was built on after all!). It’s a great way to give somebody something you’d never usually be able to justify buying brand new and it also keeps those things from going into landfill. A double win!

Christmas Cards

These were introduced by inventor Sir Henry Cole in 1843, who had helped to bring about the penny post three years previously (a coincidence?).

Whilst I can see the value in posting a card to somebody you’re not going to see over the Xmas period, and who you’d really like to keep being reminded of the fact you care about them by the presence of a card on their mantelpiece, I don’t see the point in writing a bajillion cards and handing them to people you are going to see right up to the big day. Neither do I see the point in posting numerous cards to people who you never have any sort of contact with from one Xmas card to the next. It’s a massive waste of money, resources and who knows if the recipients even want the hassle of finding somewhere to put the cards, let alone the mountain of recycling they have to add to in the New Year (that’s if they don’t just throw them into the normal waste – shudder!).

There are ecards, email, instant messaging, texts, a whole host of social media and even the old telephone call that can replace sending a card. All are either free or very cheap and you’ll probably say more to the person you’re contacting. ‘But I like to support my favourite charity by buying cards!’ you cry, well then you’ve got to read this 2015 article.

dreamstimefree_1483833.jpg
Image courtesy of Dreamstime.com

Meal Plan!

Whenever I’ve not made a proper plan for eating over the festive season, I’ve invariably gone overboard with how much food I’ve bought. I’m guessing I’m not alone with this.

If you’re fed up buying food that spoils, are sick of turkey and even chocolate (you’d have to be MENTAL), then before you shop, plan out how many of those days off work you’re planning on eating differently to your usual week then plan what you’d like to eat for breakfast (even if it’s a chocolate orange), lunch, dinner, snacks, and booze, and what you know your family and/or guests will likely want to eat and buy only that.

If you are having guests, it’s perfectly acceptable to ask them to bring some food or drink that will travel well and if it’s all getting too expensive, consider just one day of feasting. Not only will it help your wallet, but your waist will probably thank you for it too.

Finally, if nobody likes Xmas pudding, sprouts or turkey, etc, just don’t buy them purely in the name of tradition!

What do YOU do to save money on Christmas? What’s your biggest festive, financial regret? I’d love to hear!

I love hearing from you and want to grow this community. Don’t be shy! Comment, contribute to the Facebook page, send me a private message or all three! I will always try to help you.

Lisa aka ‘Bunchy’