Living within my means

A question about : Living within my means

Hello all,

New to this forum so apologies if this is in the wrong place. I'm 25, living in London and earning a decent enough salary...but I've been spending all of my money, and more! The time has come for me to start saving some of my salary. I've budgeted quite well over the last few months and so have managed to pull myself up from an overdraft of about Ј1000 and into the black.

I'm starting to think about buying a house, even though it'll be a good few years in the future, and that money has to come from somewhere!

Basic summary:
Income (4 weekly) - Ј1800
Rent and council tax (monthly) - Ј750
Direct Debits (monthly) - Ј200 (phone, gym, car etc)

I'm giving myself Ј100 a week to live (groceries, socialising, petrol) which leaves me with around Ј450 to save....

But I never have anywhere near that left and end up saving around Ј100. This diary is to get me to realise the money that I spend and sort that out! Any advice anyone?!

Best answers:

• Try doing it the other way around.... instead of saving what you have at the end of the month, open a new bank account for savings, and a new one for fun. Transfer your fun money for the month, and put at least half of your savings away at the beginning!
  Then, you have your fun money card to use for the month. When it's gone, you start staying home.... it worked for me.
  Good luck, London isn't the cheapest place to live. You could also look online for free gigs, galleries etc, to save money when you do go out.
• Post up a proper SOA, statement of affairs and we can help you more.
• Statement of Affairs and Personal Balance Sheet
  Household Information
  Number of adults in household........... 3
  Number of children in household.........
  Number of cars owned.................... 1
  Monthly Income Details
  Monthly income after tax................ 1800
  Partners monthly income after tax....... 0
  Benefits................................ 0
  Other income............................ 0
  Total monthly income.................... 1800
  Monthly Expense Details
  Mortgage................................ 0
  Secured/HP loan repayments.............. 140
  Rent.................................... 690
  Management charge (leasehold property).. 0
  Council tax............................. 55
  Electricity............................. 10
  Gas..................................... 10
  Oil..................................... 0
  Water rates............................. 5
  Telephone (land line)................... 0
  Mobile phone............................ 27
  TV Licence.............................. 0
  Satellite/Cable TV...................... 0
  Internet Services....................... 11
  Groceries etc. ......................... 100
  Clothing................................ 0
  Petrol/diesel........................... 100
  Road tax................................ 0
  Car Insurance........................... 0
  Car maintenance (including MOT)......... 0
  Car parking............................. 0
  Other travel............................ 40
  Childcare/nursery....................... 0
  Other child related expenses............ 0
  Medical (prescriptions, dentist etc).... 10
  Pet insurance/vet bills................. 0
  Buildings insurance..................... 0
  Contents insurance...................... 0
  Life assurance ......................... 0
  Other insurance......................... 0
  Presents (birthday, christmas etc)...... 15
  Haircuts................................ 0
  Entertainment........................... 20
  Holiday................................. 0
  Emergency fund.......................... 0
  Total monthly expenses.................. 1213
  Assets
  Cash.................................... 0
  House value (Gross)..................... 0
  Shares and bonds........................ 0
  Car(s).................................. 5000
  Other assets............................ 0
  Total Assets............................ 5000
  Secured & HP Debts
  Description....................Debt......Monthly.. .APR
  Mortgage...................... 0........(0)........0
  Hire Purchase (HP) debt ...... 5000.....(140)......0
  Total secured & HP debts...... 5000......-.........-
  Unsecured Debts
  Description....................Debt......Monthly.. .APR
  Total unsecured debts..........0.........0.........-
  Monthly Budget Summary
  Total monthly income.................... 1,800
  Expenses (including HP & secured debts). 1,233
  Available for debt repayments........... 567
  Monthly UNsecured debt repayments....... 0
  Amount left after debt repayments....... 567
  Personal Balance Sheet Summary
  Total assets (things you own)........... 5,000
  Total HP & Secured debt................. -5,000
  Total Unsecured debt.................... -0
  Net Assets.............................. 0
• Thanks both of you!
  bargainbetty - that is a good idea. Maybe it would stop the temptation, especially if there was no overdraft on it! I need to learn to say no to things...
  McKneff - See above! Haven't included things that are already paid off for the year e.g. car insurance and tv licence but I think most other things are covered... Leaves me with more money that I thought. Where is it all going??
• Like sand through your fingers ...
  Easy, it goes in dribs and drabs ... lattes, sandwiches, lunches at work, newspapers, magazines ... gym membership, annual membership to clubs and such ...
  Do a diary - any spend write it down or keep the receipts ...
  Good luck - cos it's going somewhere ...
• Im in a similar boat, will watch with interest as to how you get on!
• Start a third account, and put some money aside for things like car insurance and the TV license - stops it being such a shocker when they do roll around again. Include road tax and some maintenance into your figures too - you're leaving yourself open there!
  Are you sure about the gas and electric? They seem very low, as does the water cost.
• bargainbetty - I share with two others so the bill are split and we pay by monthly direct debit. That's definitely what comes out of my account every month...I hope I won't be hit with a massive bill for the deficit at the end??
  I don't have to pay road tax on my car - low emissions. And it's on warranty so I shouldn't have to pay maintenance. I think if anything does go wrong it will have to come out of my savings.
  I've taken your advice and opened a third account! Going to use it as a spending account in the next pay cycle and see how I get on
  Dippypud - you're right! A little chocolate brownie here, an emergency latte there... It has to stop! I really don't think I can be spending that much though...
  BaxUK - Good luck! Feel free to post progress in this thread
• I completely agree with Bargain Betty.
  You need to do it the other way round.
  Open savings account - one that is not too easily accessible, not one that is for example linked to your main account... I had one separate from my bank where transfer would take 3 days and I had different log in details.
  This way it is possible to transfer money IF you really struggle, but not too easy for you to just transfer money on a spur of the moment because you want something.
  Keep this up for few months until you get used to it, then you can start looking for better rates accounts that might need a notice for withdrawal (to get the best out of your money).
  The thing is, if the money is available we look at it occassionaly to see how low we are running. If it is not, we look every day and seeing the available balance dropping we start thinking about that latte every day - we start thinking "but if I just have a cup at work rather then Starbucks, I can go out to Pizza Express with mates on Friday night instead". If you have money readily available, you will just do both. That is why you never save much at the end of the month.
  I am now so trained that I don't miss the money going into my savings every month. I have it set up so they leave as soon as I get paid so I don't even see them on my balance (other then for few hours). If you didn't have the money, you couldn't spend them.. so I don't have the money there.
• Any - you're probably right. I've just paid for a service so I guess I've assumed I'm clear for a while. Probably not very clever. I'll add it into my budget.
  I think this third account will help me. I'll see the actual money I have left to spend dropping, rather than being buffered by 750 pounds in rent that I haven't paid yet. Then all my direct debits coming out and me suddenly being back in the red.
  Wish me luck!
• I'm sure you'll be fine - one account for operational costs, one for savings and one for fun - it makes it easier to be disciplined about keeping things straight. It worked for me when I was first setting up home!
  I'd be tempted to allow a little bit more for gas/electric - just in case. That's only Ј60 per month for three of you. My bill is Ј70 per month for a two bed flat. Just keep an eye on it.
  Best of luck
• I personally would not bother with the multiple current accounts - I have a nationwide flex direct account that pays 5% gross on balances up to Ј2500. Anything over this I put into ISA or regular saver for best rate, anything over that I put into the best instant access I can get.
  I disagree with splitting money between seperate current accounts where transfers take extra time to make you disciplined (unless you also get additional benefits or interest by having those accounts), all that does is create a faff and limit your flexibility.
  I use a Capital One Classic Extra for all shopping and fuel for the cashback. Make use of Quidco for cashback on online shopping. Then all direct debits come out of the one account.
  You can then really easily see what you've got coming in and going out and anything left over a certain amount in your current account move into savings. Simple.
  I say that though as saving money is my natural state of mind, ever since I was a child, because I had to save up to get anything I wanted. So I kept a big stockpile of pocket money and only spent it on something I really really wanted. I do the same now. Left university with more money in the bank than I started the three years with.
  Currently manage to save about the same amount as your target with very similar income and outgoings, so I am equally at a loss as to where the rest of yours is going. We mostly trip to free places at the weekend though, we're not drinkers and generally live quite frugally I suppose, but we're lucky in that we live in countryside where you can just go off and have fun outdoors without spending anything. Also we used to complain that there was most to watch on telly until we invested in a DVR, now that we can record stuff on at anytime we never run out - wouldn't bother paying for anything over freeview now, wouldn't have time to watch it!
• I have two accounts. One gets my wages, one I transfer in my spending money from the wages account. All monthly bills and direct debits go out of the main account.
  I also made two spreadsheets, one for the main account that has a running total of quarterly and yearly outgoings, the same for the cash account.
  Both have a final total of what should be left in the account at any one time.
  By doing this, I could see where I was spending most of my money [I had a percentage calculator on my spending areas] and the total cost over 3 months [it's set up on quartely sheets]
  Any yearly amounts come out of either account depending. Anything left at the end of the month either goes to buying bonds, into an ISA or into another savings account. I have a budgeted amount coming out of it for a regular savings account anyway.
• Thanks IanRi for your input but I have definitely found this additional account has helped me.
  -taff- I have pretty much done exactly as you have described and had a much better month moneywise. I transferred as much as I should spend into the extra account and a week before payday I know that I'm pretty much running out so should have a few NSDs in the coming week.
  If all goes to plan then I should be about Ј250 up on where I was last month before pay day. Heading in the right direction.
  Thanks everyone for your advice, I think I'm getting there!