As a child, my parents actively encouraged me to save. Whilst I like to spend money, I’ve always been careful with my money and never got into debt.
When saving up for my first property, I was pretty good with my finances – not great, but I always knew roughly where I was and what I had in each account, plus I was saving well.
Then, after buying my first property, a two bed flat (it was perfect!) I began to slack. Still no debt, but I no longer saved as I needed every penny for bills.
I have been like this ever since, even though I’ve had promotions and pay rises! So, back to tackling my finances…
Before starting, I had two current accounts (one where all my money goes in and out, the second for all car-related bills – petrol, tax, insurance etc). I also had an personal savings ISA.
I know for some, just being on top of the in/outgoings of their main current account is enough and if that works for you then great stuff, but for me, only keeping an eye on half my spending is the start of a slippery slope to make excuses and lose track – I’ve realised I need to keep on top of the what I spend my cash on too.
Step 1: I decided to go ‘old school’ and set up a spreadsheet system. I started by using the first tab to work out and show all my regular outgoings which I would have over the year, broken down by the amount I would need to keep aside each month. By doing this, I could work out how much money I had left each month to decide on a realistic amount to save, with the remainder becoming my monthly personal spend budget.
I labelled the second tab May, and used this to show the current month. On this tab I decided to have four tables;
1) to track the in/out goings of my main current account. 2) to track my cash spending. 3) to monitor my personal spend budget. 4) to show my spend by category e.g. Clothes, work, supermarket etc
I then set up a third tab to show my spend by month for 2017, for each of the categories.
Once all the templates were finished and I had worked out all my expected bills, I started populating May’s spend. I’ve quickly realised my personal spend budget is tight, but having my goals remind me why I’m saving so much and this has helped me to stop buying uneccessary things so far.
Step 2: knowing what I had budgeted to save, the first thing I did was increase my ISA by £10. Initially I was going to increase this considerably more, however, I quickly realised interest rates are so low right now it wasn’t the best way to get my savings working for me, so increasing just a little made me feel better!
Step 3: after researching online for various saving accounts with a half decent interest rate, I found a NatWest Builder Savings account which is free to open and has a two tier interest rate system. If I could save £100 or more in a month, I would be on the higher tier with an interest rate of 1.5% (as of May 02 2017). Whilst I agree this isn’t particularly high, it is currently one of the best offers around, unless I wished to pay for the privilege of having an account (which wasn’t the appropriate way for me).
I was able to apply online and within a week it was up and running!
Step 4: with interest rates as low as they are, I decided it was the perfect time to capitalise on increasing my premium bond portfolio. After a frantic phone call to NS&I to find out why I couldn’t set up my online account (I was using the wrong number!) I set up a standing order of £50 a month (minimum amount). I will need to have had these new bonds for one full calendar month before they are eligible to be entered into the monthly draw (which means it’ll be July before I’ll have increased my chances of winning a prize) but that’s okay, because one £25 win will likely be more than any interest I can get!
The feelings I had when I finished setting up my new finance plan surprised me. I felt considerably lighter and I suppose I hadn’t realised just how much my lack of saving and general lack of knowing the state of my finances had contributed to the stress I’ve been feeling.
Another thing which took me by surprise was a memory these feelings triggered. When I was about five or six years old, I had a savings account with the Halifax building society. As a ‘thank-you’ for joining, I was given a little money box in the shape of a house – it was yellow with a red roof! I can remember spending HOURS pouring out the contents (usually coppers and some 10 pence’s) and counting it up – oh, the BUZZ I got when I had enough to bag up and take to the bank and ask the lady to add it to my account…I had that exact same feeling seeing my new saving account total!
Now, I plan on updating my spreadsheet daily so I will always know exactly where I am financially.
How do you keep on top of your finances? I would love to hear your tips and tricks so please leave them in the comments below!