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Monthly Archives: April 2014

Budgeting – March


Well this post is far later than it should have been.  I’ll be blunt, the main reason for that is that March ended up being a pretty poor month as the numbers will soon show, which made me a little unwilling to write this one up.  But once you start ignoring when something becomes a problem, it’s only going to get worse, and as we’re just about to hit May I really needed to get it sorted now.

Essentials Lifestyle Savings
Target score: 50% 30% 20%
Actual score: 47.8% 45.2% 7.0%

While it looks like I’m keeping build of my Essentials it seems that my Lifestyle budget is quickly growing beyond what it should.  A portion of that is down to the usual stuff, too much spent on takeaways and nights out, but there’s also a few things where I wasn’t sure which area I should put them under, mainly travel costs.  Bus tickets to get to the cinema should go under Lifestyle (and ideally come from the Nights out budget/Piggybank), but what about when fill up with a full tank of petrol?  Should I put some of it under Essentials and the rest under Lifestyle? What about when you’re travelling for someone’s birthday, should I include a portion of that cost when I’m working out my budget for Birthdays?  The painfully accurate solution would be to calculate the distance travelled for each and every journey, work out the petrol used (which Google Maps does for you), and put that amount into the appropriate category. The problem with this is that you can spend far too long calculating where each penny should go and miss the big picture.  In my case I’ve put nearly all travel related costs into my Lifestyle section, justifying it as somewhat related.  I’m starting to feel that this is just me tweaking the figures so I can have at least one section which looks like successful. From now on I’m going to split petrol costs between Essentials and Lifestyle (about half in each) unless there’s a very good reason to do otherwise.

In other news I’ve finally got around to signing up for a company pension. I still need to learn a lot more about pension plans and how best to use them (and write up a post on the topic to collect my thoughts), but so far everything seems to say that it’s always worth paying into up to the maximum amount which your employer still contributes to.  Changes in the most recent budget have confused things a little, but that mostly seems to be when you’re ready to retire and cash out your pension so I’ve got another few years yet before I get to worry about that.

March’s final score:

3/10 – Poor Effort

Past scores:

January – 7/10

February – 5/10

 

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Posted by on April 30, 2014 in Budgeting, Self-Improvement

 

Budgeting – Piggybanking


One of the techniques I’ve read about when trying to pick up some good budgeting techniques is Piggybanking.  The concept is fairly basic, you take some money from your main account every month and put it into a piggy bank.  With the help of online banking and some helpful guides from www.MoneySavingExpert.com, this has become a lot easier to do than it once was.

Before you start on piggybanking you should really take a look at what you’re spending your money on across the entire year, not just in the past month.  Again, MoneySavingExpert has an excellent guide to help with this very thing.  Once you’ve finished this you can see the areas where you’re spending the most money and what you need to cut down on.  The problem for a lot of people are the big “one-off” spends, like Christmas, birthdays, TVs or anywhere you’re having trouble overspending.  Anything which isn’t evenly distributed across the entire year like your rent, bills and food shops are.  To help deal with this you need to look at how much you’re actually spending each year in these categories and decide on a yearly limit for them.

When you have the numbers sorted out, you’ll need to create several online “piggybanks” in whatever form your bank allows (e-savers accounts tend to work well), then at the start of each month you transfer a set amount into each of these accounts each month, which would over the course of the year match your target spending limit.  Then when you decide that you want a new, bigger TV you first look at how much money you have available and decide on what you can buy that fits within your limits, instead of how to afford to buy the largest 4K resolution TV available.  It also helps you set aside all the cash you need for birthdays, so rather than spending £10 in January, nothing in February, then £30 in March you look at how much you’ll spend across the entire year and put 1/12 of that each month.  So if you add it up and you spend £120 on presents throughout the year you know that if you put £12 aside each month you’ll have enough to cover you for the entire year without it affecting the rest of the month’s spending.  If you’re doing this through an online bank then it ends up being fairly trivial to set up a number of debits to transfer the money into each piggybank at the start of each month, leaving you with just one bank balance to keep an eye on for general day-to-day spending.

Like all methods to help you budget and cut spending, it’s not the perfect solution to all your financial woes, and it won’t help you if you don’t make the effort to keep costs down.  But combined with other techniques it certainly helps make the process a lot easier.

 
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Posted by on April 10, 2014 in Budgeting, Self-Improvement