I really need some help with budgeting & managing my money as everything right now is all over the place!
A little background:
I’ve recently started full-time work, um in May… where I was getting peanuts. But I’ve just moved to a better paying job so that’s why I’ve finally decided to properly save.
Monzo is now my main account. My salary will be getting paid in as of this month, and all my spending will be done through it once that happens.
I have a Nationwide 5% account which currently holds around £200… that’s my savings so far.
I don’t really know how to go about setting a budget as each month is different and I find budgets really restricting, but I do want to save as much as I can - just not sure how to go about that.
I’ve just started the 1p challenge, £1 a week challenge & £5 moved every time I buy takeaway/lunch at work etc - to stop me from buying food. (That’s my main issue!)
I’m currently able to save around £300-500 a month without really thinking about it. I have very few bills & live at home.
Here’s a breakdown:
£150-300 a month on rent
£10 student loan repayment
£7 pet insurance
Credit card: usually £120 a month (but will be using this just for petrol now, as I don’t have to pay for the tube anymore, so probably a little less - like £50 a month?)
Netflix: £5.99
Spotify: £4.99
Amazon Prime: £3.99
That all equals roughly: £400 - rounded up, give or take!
Anyway, if you can save £300-£500/month without thinking about it, I suggest you aim to put aside £600/month as soon as you get paid. If that proves easy increase to £700 next month until you find the balance. In my opinion, if you want to save aggressively its important to put the money aside as soon as you get paid rather than wait and see what’s left over at the end of the month.
Put the money in the Nationwide account initially until you get to the £2500 limit for earning interest, then open the regular saver.
I don’t think you need to worry too much about a budget… Others may disagree, but why not just put away as much as you want for savings on payday (I used to do £500 for house deposit and then £100 holiday fund) and then do whatever you want with the rest. As time goes on you can try and save more if it’s feasible up to a point where you’re comfortable with the amount you’re saving and the amount you have left to spend elsewhere.
The difficulty lies in if you try and save too much. It starts to feel like you’re living payday to payday and it can get a bit miserable.
I had £400 left over from last month but kept it in my main account - I guess I just forgot to transfer it out and then ended up spending it. This month I’m aiming to have about £700 left over (because of the extra from last month) and I’ve already limited myself to £200 until payday so that’s why my actual savings is so low.
Before this I didn’t really save. I come from a poor background so when I started earning real money, I got a bit excited.
I think the key is to put money aside for savings as soon as you get paid rather than waiting to see how much is left at the end of the month. It will just take a few months for you to decide on the right balance of how much to put aside and how much to keep for spending to enable you to enjoy yourself without going overboard.
It sounds like you will quickly saturate the interest bearing portion of your Nationwide account so will soon need to think about where else to put your savings to maximize returns.
Do you want to be working when you’re 70? The chances are much better than 50/50 that you’ll reach that age and if you do having always spent every penny you’ve ever owned, never bought a house etc and only the state pension (as if that will still exist!) to live on you’re going to have a pretty miserable existence.
My approach is pay yourself first - decide how much you should save and put it away before you spend anything.
The rule of thumb for retirement is save half your age in percentage as a minimum - so if you are 25, save 12.5% of your gross income, preferably in a tax advantaged account like a pension.This amount will then stay constant, so the earlier you start, the lower the percentage you will need to save over your lifetime, as it compounds up over a longer period.
In addition, decide what you might want in the future - a car, a house etc and save for them. Remember, borrowing is stealing from your future self - when you get to be that person, you may deeply regret wasting money on interest.
I’m not in debt; I paid it all off with the first few months pay checks when I started working in May (another reason my savings are low!) but I do want to save for a house & an emergency fund, just in case. Those are my two big goals. I have a car that’ll last me at least another couple of years I’d say & holidays aren’t something I do a lot bc you know depression & a shitty life.
So I do need to save & I want to save as much as possible. I’m just starting out so I don’t see many big payrises in my near future just yet so cutting down spending and saving as much as possible is priority right now.
Not really sure why you’re saying this? I’m literally here trying to save more & budget better for this very reason…
I don’t have much savings because I paid off my debts.
I had £1500 in my overdraft, now that account is at £0.
I had £650 on my credit card, that’s also back up at £0 now.
I paid that off with the first 3 months pay that I received. I was previously at uni and working part-time and spent my savings from that on my car so I’m starting at scratch now and I want to get into good habits and do everything properly & save so I can buy a flat & finally move out!
You’ve a sensible outlook, and with no huge short-term big-ticket purchases looming, I’d offer only one word of caution “save as much as possible” might better be seen “save as much as is practicable”. Over-saving will be ok as long as you can get at it when needed.
Are you asking for recommendations on how much to budget for living costs rather than how to save, or both?
If it’s just monthly budget suggestions you want, if it were me doing the spending I’d say:
Entertainment, drinks out etc £100
Clothes, personal care and other stuff £100
Food (incl. cooking own meals and making packed lunches for work) £100
Credit card containing misc expenses and guilty pleasures £100.
Might seem a bit tight on £1400 but £100 is still a lot of money to spend on each thing over a few weeks (well, 4.something weeks). If I were spending a lot more than that on any one thing I’d really need to question myself.
Your “pre-moving out” cash flow is so good with a £1000 surplus and it’s great that you’re thinking about how to save it.
When I was your age (guessing 18-21?) and I had that sort of cash flow (after I’d just learned the ropes of shelf stacking), I’d buy random crap like “oh I want the latest £500 CD player that can play mp3s, and I have £1000 so what the hell”, which I really regret now.
15 years later the CD player is in a landfill somewhere and that £500 could have been £1000+ in my bank with the right investments.
If only there had been an online community back then who could tell me that the pre-moving out cash flow wouldn’t last forever and I should budget much more aggressively, I think I’d be much much better off today. (Maybe I’d own instead of renting, who knows?)
I firstly opened a saving account that doesn’t allow me to take money out, only put in - I’m really bad if I have “access” to it. Virgin Money do one and you can set how long you want it to last so I’m doing it year by year.
I also tried a few money saving apps or helpers … tried Emma wasn’t too keen on it - I have re-signed up to moneydashboard.com - I love the prediction feature - you can add it your predicted transactions, then any predicted spends (like your food shopping for the month), add in a predicted salary (if your crazy like me and work it out a month in advance).
So I use this - salary minus everything (bills, household, joint and personal) then minus savings and the leftover is for “fun” - however it it gets to next payday and I have some left that goes straight to savings and I start again from fresh.
I try not to categorize my budgets to crazily as I’d be too worried more about if I’ve spent too much on takeaways or drinks than enjoying life haha!
Get paid on the 28th. All bills and standing orders come out on the 1st along with transfer to savings. The rest is what I have to spend for the month.
Adjust the amounts appropriately for your situation.
I have to admit, budgeting is not my forte and I’m in a lot of debt so I have very little money to save but one thing I’ve been doing the last year or so which has helped save money on my food shop is to make a weekly meal plan. Then buy the ingredients you need for just those meals every week (plus other bits and bobs you may need obviously ie toilet roll). If you live by yourself something like a cottage pie could be made and then frozen to eat another day or eat for lunch. For myself, my wife and our 2 children (4 and 15) we generally spend about £80 a week on food shops, down by about £30 a week. Go to Aldi to get what we need and anything I can’t get I go to a non budget Supermarket.
I do this for dinner/tea predominately. Have a few options for breakfast and generally for lunch I make enough dinner to be able to eat it again for lunch. Or I’ll have a backup lunch like beans or mugshots in my draw if I don’t have anything left over.
I tend to have a monthly budget of £500 (using the pots function and transferring out as and when) and any money that’s left over is rolled over into next month meaning that I have spare to go towards something else.
Dave, would you include employer contributions to that 12.5%? For example (correct me at any point) I’m 28, been paying 9.3% into my nhs pension since I was 23 and my employer contributes 14.3%. This equates to 23.6%!
Am I right in thinking this is plenty? Only just getting into this whole pension malarky after spending time on the forum here, so forgive my naivety
