Better budgeting

Woman shopper checking her list

Budgeting. How boring, right? Well if I’m totally honest, I wouldn’t have bothered making a budget if I didn’t have to. But I did have to. In fact, most of us do. So while it might not float your boat, it will help you out in the long run.

Better budgeting - articleAnd what better time to start getting on top of your finances than the start of a new year?

What got me budgeting? As I say, it was out of necessity. I was living hand to mouth as a single parent, my monthly salary going out as soon as it came in. I had no long-term plan and no savings for a rainy day.

Over the years I’ve had problems getting child maintenance from my son’s dad, and had got quite far into debt as a result. I’m glad to say I’ve never had a credit card, but I did have a fairly hefty overdraft.

Things came to a head in October 2013, when my bank told me they were going to reduce my overdraft by £1,250 within three weeks. How do you find a spare £1,250 in three weeks? On a good week I may have had a spare £1.25, but even then, most weeks I wouldn’t.

I was up the proverbial creek without a paddle and I had to learn to swim, fast.

Getting started

It sounds like a no brainer, but you really do need to start with the basics. For me, this meant working out all my income – monthly salary, child benefit, tax credits and child maintenance. I converted everything into monthly amounts so I knew exactly how much I had every month.

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Then comes the hard part. Expenditure. I started off with broad categories such as household, family, travel, entertainment, personal care, ‘big one offs’ and miscellaneous. Then I broke each of these down into narrower categories: rent, grocery, electric, oil, TV licence, telephone, broadband, home insurance… You get the picture.

Once I was sure I had everything covered, I did the maths. Given the mess I was in, it shouldn’t have come as a surprise that my expenditure was higher than my income. Hence the overdraft.

The options…

There were only two ways I could go. Reduce my spending or increase my income. I couldn’t immediately do the latter, so I had to cut back. This was tough, but I pared everything down as far as I possibly could.

Then I bit the bullet and phoned the bank.

I was terrified to make this call. Thoughts of bailiffs, bankruptcy and blacklisting had been whirling round in my head and I didn’t know what to expect. When you’re engrossed in your own despair you forget that these are real people too, who see the effects of the recession every day, and who are glad to see people facing up to their money problems.

I have to admit that the bank was far more understanding than I expected. They agreed to let me repay my overdraft at £110 per month over a year. This was still a huge commitment but I had no alternative.

Making changes

Shaving money off a monthly grocery bill which was already made up of own-brand and economy goods was almost impossible, but I was able to make some changes straight away. These included:

  • Putting some effort into planning meals in advance
  • Buying less meat
  • Bulking meals out with vegetables and pulses
  • Buying frozen veg, which last longer than fresh and have less wastage
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For me, though, the biggest change was to my mindset. While I was not – by any stretch of the imagination – living an extravagant lifestyle before, I never gave much thought to my spending.

When I would previously have answered “yes” to the question of, “can I afford this?” if I simply had enough money in the bank, this had to change. I had to start thinking, “Do I have enough money left in my grocery / entertainment / gifts budget to buy this?” If the answer was no (I kept record in a little notebook of everything I spent) then I simply couldn’t buy until the next month.

Every time I felt like giving up, I thought of my grandparents, who fed a family of six on very little money, and reassured myself that I could do it.

And I did it! I survived, and even thrived. I began to enjoy the challenge of getting more for my money. And I wanted to help others, too.

In October 2014 I entered Savoo’s Smartest Shopper contest – and won!

I wouldn’t be without my budget now – it’s been a lifesaver!

My top budgeting tips

  • Gather together absolutely everything related to your income and expenditure and work out the monthly amounts for each. If your income is less than your spending, your budget needs some work.
  • Record everything you spend. I use a small notebook with a category per page and keep all my receipts.

Tracking is one thing. Reducing is another. It may be that you have to cut back. Here’s how:

  • Never impulse buy anything (at all!). Consider for at least 24 hours whether your budget will allow for the purchase.
  • Read product reviews. Buying cheap isn’t always the best way, especially if the items are poor quality.
  • Keep smiling. It can be hard to grin and bear it through yet another mouthful of pasta, but there are ways to have fun for free. Go out for a bike ride, read a book, visit a free museum… whatever you enjoy, just keep yourself occupied.
  • Plan ahead. You can usually buy out-of-season items much cheaper, so think about summer holidays and Christmas months in advance!
  • Get online. There are lots of voucher sites and money saving tips on the internet and you can often make some great savings.
  • If you’ve reduced your spending as far as you can, look at increasing your income. Cashback sites like Quidco or Topcashback can work wonders here. You click through to your chosen retailer, and a percentage of your purchase is stored for you as cash back.
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About Jennie Hammond

I’m a welfare rights adviser, and I want to help others with problems in relation to family finances such as budgeting, benefits, tax credits and child maintenance.