Bad with Money

LegacyUser

Hi All,

I hope this is an appropriate place to post.

I am terrible with money.

I am 28, have an ok job that pays alright.

Yes I find it soo difficult to save and not spend money.

This results in me literally scraping by the week or 2 leading to payday.

I have always been bad with money and I have always acknowledged this but need to stop this behavior and think ahead.

I am in a new relationship and the thoughts of always being broke (month to month) just doesnt sit right.

Furthermore I am starting to worry about the future, a rainy day or even something.

I do go out now and again once every now and again but Id rarely spend much, maybe 40-50 a night.

Can anyone help me overcome this or point me to a body that can?

I earn about 2,200 after tax.

I have a debt accrued which equates to 420 a month

Rent is 380

Other bills total up to 200 an average

Yet after this I still struggle?

I have looked over statements of september and October and its all small transactions but many of them.

Any help at all I would really appreciate it

woodchuck

sh1twithmoney wrote: »

I have looked over statements of september and October and its all small transactions but many of them.

So presumably you're using your debit/credit card for all of these small expenses? Leave the cards at home! Only bring out the amount of cash you absolutely need for any given day. You can't spend more if you don't have it on you. And some people find they spend a lot more money using cards compared to cash. To actually see the cold hard cash leave your hands may make you rethink your purchases.

Also if you're buying a lot of small things regularly, presumably you spend a lot of your spare time in shops? Are you just shopping out of boredom? Maybe it would help to get an inexpensive hobby to fill your time with instead.

Loveinapril

I agree with Woodchuck. Try to give yourself a cash allowance every week so you can see what is in your wallet dwindling towards the end of the week. Check out MABS for tips but try to limit buying lunch, coffees etc. out every day. I started a 7 day deposit savings account so a certain amount of money is taken and put into a savings account each month and I need to give 7 days notice to access it. It really helps stop impulse purchases.

wandererz

The first thing you need to do is gain visibility over where, how & when your money is spent.
Once you have visibility you can make changes.

I suggest the following :
1) Download AceMoney lite from Mechad.net - the lite version is free for 2 accounts.
2) Get yourself a Revolut card & only use this to pay for day to day stuff.

Procedure:
1) Install & setup AceMoney for your bank account & credit card and define the starting balances on each.
2) Setup every expense you can think of that comes out of your bank account every month. Setup recurring dates for these.
3) Do the same for income such as your salary.
4) Do the same for your credit card
5) Define a monthly Transfer from bank account to Credit card for monthly payments. Define another one for additional monthly payments to credit card (you won't clear it by paying minimum amounts).
6) Set the view for each account to 12months.

This gives you visibility over where you are now & where you will be in 12months.

Give yourself a monthly budget. Transfer it to Revolut.
Only use Revolut to pay for stuff outside of what's recorded in AceMoney.

Update AceMoney with every transaction including your Revolut transfers.

Right-click & mark each monthly payment as paid when it is debited.

Go back to the dashboard, you now know your net worth.
Go back to the current account & credit card account.
You will see whether each will be positive or negative and by how much - weekly, monthly, annually.

Now you have the reality rather than bluffing oneself.

SirChenjin

I used to read the askaboutmoney forum on a regular basis, OP, and one piece of advice that was always given to people who were reviewing their spending for one reason or another, was to keep a spending diary.

Can be a simple notebook, or a spreadsheet, it doesn't matter - what it forces you to do is look at where your money is going and identify where you could make changes.

There is some very good advice on askaboutmoney.com in my opinion.
I recommend having a look. (I hope it's okay to mention that forum here on boards)!

Qrt

Find out if you're the type of person that spends more with cards or cash. I feel I'm in the minority, but I feel like I spend money a lot faster when it's cash, whereas I'm a lot more careful with my card. One recommendation is: contactless – get rid of it. If the bank won't give you a card, you can get a fine drill or such a tool to deactivate the antenna. There's plenty of videos on YouTube.

wandererz

Qrt wrote: »

Find out if you're the type of person that spends more with cards or cash. I feel I'm in the minority, but I feel like I spend money a lot faster when it's cash, whereas I'm a lot more careful with my card. One recommendation is: contactless – get rid of it. If the bank won't give you a card, you can get a fine drill or such a tool to deactivate the antenna. There's plenty of videos on YouTube.

If one draws out cash, it disappears with no history of what & when.
Paying by card, even contactless creates a record.
Paying by something like Revolut sends you an instant message of every transaction. It also records transactions on the app & categorizes & shows your spending habits.

Hence greater visibility.

The contactless can also be turned off on the app without resorting to drills.

Ursus Horribilis

+1 to the spending diary. Once you start logging where your money is actually going, it should give you a better idea of where to make changes. It's surprisingly easy to fritter away your money on small things like coffees/lunches out etc. And as Woodchuck said, are you spending a lot of time in shops and buying stuff out of boredom? Perhaps you are one of those people who likes treating themselves to small things as a way to feel better.

What might also help is if you set up a 2nd bank account or an account in the credit union. Put a fixed amount of money into that every payday and try not to touch it. It doesn't have to be an enormous amount of money but try to put something in each time. That way, you'll be starting to build up some savings and you'll be making less money available for impulse buys.

Qrt

Ursus Horribilis wrote: »

+1 to the spending diary. Once you start logging where your money is actually going, it should give you a better idea of where to make changes. It's surprisingly easy to fritter away your money on small things like coffees/lunches out etc. And as Woodchuck said, are you spending a lot of time in shops and buying stuff out of boredom? Perhaps you are one of those people who likes treating themselves to small things as a way to feel better.

What might also help is if you set up a 2nd bank account or an account in the credit union. Put a fixed amount of money into that every payday and try not to touch it. It doesn't have to be an enormous amount of money but try to put something in each time. That way, you'll be starting to build up some savings and you'll be making less money available for impulse buys.

Local credit union is a good shout. I've been in one since I was born (or very very very young) and I've only started to use it recently. Fair amount saved!

Ursus Horribilis

If the local credit union isn't one of those fancy shmancy ones, you'll have to physically walk into the place to get your money out. Makes you think twice about making a withdrawal.

Turtwig

You have €2,200 after tax.

The first and most important thing to do is decide where you want every single one of these €'s to go. All of them! One mistake people make when budgeting is that they think it means sacrificing expenses. To an extent this is true but the most important bit is to learn what you WANT to spend and find out WHERE you're actually spending it. This isn't easy and requires a bit of work but it is absolutely worth doing.

So, first things first divvy up all those euros into what you what you the money spent on.
Break things down by groups:
Immediate or Day to Day Expenses.
Interim Expenses.
Long Term Expenses.
Stuff you forget to include is any of the above.

It's up to you what you put in which group. Just keep in mind that one common pitfall of budgeting is to not include 'stealth' expenses. For example, Christmas gifts, upcoming weddings, weekends away, baby showers etc. These are expenses that will frequently occur to you but they are often unplanned. You need to have a means for budgeting these. Don't worry if you estimate the amount incorrectly. In time, with refinement you'll get better at it.

This means that your monthly budget for each month should include all potential upcoming expenses that you can think of:
House maintenance.
Rental fees
Car maintenance
Car insurance
Car fuel
Motor Tax
Seasonal Holidays.
Gifts
Christmas Shopping
Groceries
Personal cosmetics and care
Childcare
Health
Commuting costs.
Entertainment
Dining
Phone
Education
etc.
The list should be personalised to your expenses. Always have one labelled "stuff I forgot". In this place make a note of what you forgot and how much it was. Then maybe next month you might need to have it as a separate item on the list.

All these expenses should be assigned an estimate monetary expense. Some like rent should be easy enough to predict but others won't. The important thing is that you assign some money to all. Then start making a note of your expenditure for all of these? Did you budget too much or too little towards them? Perhaps one month you'll have a surplus in one item and a deficit in another. Nothing to say you can't offset one against the other. For example, let's suppose I usually nominate my expenses as follows:
Cinema €25
Dining out €100
Theatre €20

Suppose one month, near Oscar season, there's a lot of movies I want to go see. So I do. I end up spending on €50 on the Cinema. I've overdrawn my budget by €25. Being aware of this is a really important step. Now I know I've overspent my funding. I need to 'offset' this deficit with estimated spending from another item in this month. Or next month I have to spend €25 less than my usual cinema budget. The former is far more preferable. So, I realise because I've gone to the cinema more nights in the month I actually dined out far less. So I have more than €25 to spare there. Here is the thing not only should I offset that €25 from dining against Cinema expenses it's clear that for this month I won't be spending a €100 on dining so I offset another €25 against my car insurance for the year.

Finally you're not going to get this right straight away. You will make mistakes, you'll also find that your spending desires will differ from others. For example, you might love getting a coffee everyday. Cutting back on this would be an easy way of saving money, but it is not the only way. Money is after all how we help enjoy our lives and if a cup a day is helping you do that then you might find it a nice treat to give yourself. Only you know what you want to spend your money on. The point that cannot be stressed enough is that you need to figure out exactly what these things will be. Then you can work to stop spending on the things you don't need to. Every single € you earn needs to be given a function, you need to know what it is and how long into the future it will be until that € is spent.

Budgeting is an active activity. Your expenses, like your life, are in constant flow. You need to keep actively managing it. You will get faster and better at it. Just give it a try, stay patient and don't give in. No matter how tempting it may be. Within a few months you'll probably notice a big difference in your control of your finances. You may not be saving much but you'll know exactly how much you can save and spend at any given time and that peace of mind is kind of priceless.

wandererz

@ OP
I used to be the same. Ended up with 60K of debt.
I used the method i mentioned above to get a better understanding of what was happening & where i could make changes. I was able to clear down about 90% of it.
Of course it helped that i got bonuses & other income.

However, if i hadn't used that method i would have been clueless & spent all of what i earned & still be in a major bind.

Turtwigs post above is really good & elaborates further on my points.

Also note that sometimes expenses such as motor tax, insurance etc are killers. So divvy it up on a monthly basis and set it aside/ spread it out.

James Bond Junior

Compartmentalise your money. I have a standing order on payday which covers the months bills and mortgage. As the bills come out I withdraw what's needed to cover them. I don't touch the money in the account only for bills. Then have your savings come out and into a CU account which is hard to withdraw from. I have another account which is used for groceries and so on. This is a joint account with my other half which we both put money into. Give yourself a set amount per week to spend on yourself guilt free and don't go over this. I use a revolut card for this as I find I spend cash quicker than the card. I get paid every second Thursday but I put money on my revolut card every Thursday giving myself a mini payday between real paydays. If I want something for myself, I either hold back cash from my guilt free account and save it up (revolut allows you to pop your money into a virtual piggybank called a vault) and then I buy it when I have the cash. It takes discipline but it works well for me, so much so that herself is now using the same system and told me she has more money left over now at the end of the fortnight than she ever did.

Good luck.