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Money Management and Saving Strategies

finance
#1

Hey

What’s everyone’s money saving a budgeting like?

I’m curious how people get on with it, tips they have etc.

Currently i’m attempting to save for a home and future retirement.

I have recently opened a LISA (lifetime ISA) which lets you save up to £4000 a year tax free (the ISA part), the government adds 25% to the account and it can be used to buy a first home, or used for retirement (cant be touched until 60 if not used for a home without penalty).

If your planning at all to buy a first home, this is a no brainier. There’s also a 1 year buffer period where you cant use the account for buying a house, but even opening one now and putting in £1 gets the clock ticking and you cant beat a guaranteed 25%

I’ve also got savings in a stocks and shares ISA again for the tax free benefits on any money made from the account, i’m not doing anything fancy with it though, its just in index trackers but has been doing well. My plan is to slowly build that up and leave it for 20 odd years.

5% of my money goes into my pension as well with a employer contribution of 10% for a total of 15% so this is also doing well, its not a bad pension, but not the highest around either. Unless you have large debts to pay off, putting in the maximum percentage that your employer will match is free money for retirement.

Admittedly my emergency fund is a bit low so i plan to build that up some more the next few months. I highly recommend if you do nothing else, have an emergency fund that has enough money for a few months of expenses. I generally put easy to access money in a monthly saver type account, you can usually get 3-5% interest on these accounts but you usually have to open a new one every year.

The thing that i’m still not great at is good budgeting, i’m not bad with my money but i could do a lot better in areas like food expenses for example. How do people handle this?

One thing I’ve been trying is a new bank account that has really easy automatic categorisation and targets for spending, its looser budgeting, but this seems to work quite well to give me a reasonable good idea of where my money is being spent.

I’ve also found this chat to be pretty good for how to start managing your money (from r/ukpersonalfinance)

There is a US version here (from r/personalfinance)

What does everyone else do?

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#2

That flow chart is pretty cool, it seems to overcomplicate some things, but it has a really good excruciating breakdown.

Personal preference: calculate expenses, and direct deposit that into 1 account, the remainder goes into a separate account.

The first account is where all bills get drafted from.

The second account, 20% of what gets deposited goes into a separate savings account.

Depending on your patience, do 401k or do it yourself. 401k is trusting others with your money. If you have confidence in that trust, go for it. Otherwise, there are some books like Boggleheads’ Guide to Investing or The Intelligent Investor that will teach you how to DIY regarding investments and managing money. Warren Buffet Invests Like a Girl is good too.

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#3

I have some spreadsheets that I use to budget. One I punch in my income and estimated expenses and it tallies everything together. Another I use to have weighted averages of some expenses like food, transportation, and phone bill to get a relatively accurate prediction of my future expenses based on my previous ones. With enough logging it’s possible to even see seasonality if it’s there.

And aside from that I try to maintain limits on some expenses so they don’t take more than a certain percentage of my income and whatnot. Same idea for savings, trying to keep a minimum percentage there.

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#4

I’ve moved to a different location last year, where salaries and expenses are much different than before. This is why my intuition was basically useless and I had to track my expenses. Since ~August I am using GnuCash and take the time each friday to enter everything by hand. If you do it regularly it is just 10-20m of work, so very reasonable, if you ask me.
GnuCash is possibly overkill, but I don’t mind dealing with the learning curve and learn something new along the way.

I run a spreadsheet as well to cross check, where I just update my monthly income & expenses in total and accumulate what my current buffer for longer term expenses should be (e.g. monthly fraction of a tax that is only payed once a year, etc.)
Both things help a lot and I am trying to build my emergency fund.

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#5

If one were to use the savings in a LISA for a first home, I presume this would close the account?
In which case, would you consider opening a second LISA for savings until retirement, or just use the one ISA , and separate pension/SIPP for longer term saving?
If the first case, did you consider a H2B, or did the inflexibility of it put you off?
Sorry for mass of questions, I turn 40 in a few years, but don’t have a property (or much of a deposit :frowning:) AND just missed the last tax year to start either H2B/LISA for max initial deposit before end of tax year…

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#6
live with your parents

I’ll make a more thorough post later

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#7

I’m not 100% sure if it closes the account, but I do know that you can continue to use a LISA after you use one for a house (either with the existing one, or opening a new one). There is an age limit on the LISA of 39, you have to have opened one before 40, it doesn’t have to have much money in it, and it doesn’t need to be used by then, it just needs to exist.

I don’t think I’d open a LISA for retirement after I use it for a house as my goal is to have the money available before 60, if I was going to though I’d probably open a S&S LISA as it’s long term or a SIPP. While I lose out on some extra money from the text benefit from a SIPP or the 25% from a LISA, they both have restrictions on when the money can be used and how it is taxed (SIPP may tax as income over a certain amount). So I have a standard S&S ISA for now and my company pension. I may re-evaluate in the future if I feel necessary as im not completely familiar with all the options.

As for compared to a H2B, the LISA let’s me put more money in and has a higher limit on house price (not that I’d hit 250 anyway), there’s a comparison here https://blog.moneysavingexpert.com/2016/07/24984/

fyi, I opened a cash LISA because my goal is to use the money in a few years, it’s to short for me to risk a S&S LISA.

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#8

so I have setup an automatic deduction from my bank account for my Roth IRA, and am doing a 3% direct deduction from my paycheck with employer matching in a normal IRA for retirement.

To be honest I am not worried about budgeting all that much and instead pay attention to the general question of am I spending more than my paychecks or not as you can get in a trap with budgeting of having two ridged a set of parameters for how to spend your money when you want or need to spend money in other ways.

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#9

I’ve been trying Monzo as a bank because it has built in categorisation and the ability to set things like targets in certain categories etc. It’s not as detailed budgeting like what @the193rd is using, but I think it might be enough for me to keep a general track and see where I might be spending a little to much and reduce to set targets. The goal being to up my emergency fund, then put the rest away in savings, and generally to spend a little better.

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#10

Actually, I think what I am doing is less budgeting and more bookkeeping/monitoring. I can tell you afterwards how things went and if things will workout throughout the next months, which is nice, because I also have to think about exchange rates of currencies and the like.
But I didn’t spend too much time thinking about budgets and corresponding buckets. Implicitly, yes (aka, “can I afford XYZ, while paying every month for ABC?”), but it would be nice in the future to sit down and work out some automatic transfers between different accounts that help me with saving and not spending too much on things that I don’t really need (I’m always buying those humble ebook bundles, although I never read the books, some are really crappy and I don’t really need them)

edit:
Just wanted to emphasize: I think bookkeeping and budgeting can be related, but are not exactly the same thing.

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#11

Makes a lot of sense. That would actually be really interesting over the long run to see how spending changes over the years.

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#12

As of right now, I’m not doing much. As I don’t own the business yet I am only making 1/4 of what I will be, which is enough for me to live on right now but not do much else with.

Eventually, when I get full ownership, I’ll set up a small business 401(k), a roth ira, and speak with the financial advisor about investing into the market. Also costs will be cut drastically when I take over (because printing 3 copies of every tax return and small amendment to them is asinine when we’re already paying for better ways to take care of it that we aren’t utilizing).

Currently, due to the nature of my work, I make pretty much all my money between Jan-Apr. So I budget everything out on an annual basis, then break down what’s left over after necessary expenses to see what I have per month. Once I do that I try to keep it under that monthly allowance.

I haven’t done bookkeeping as of yet… I know I’d go overboard with it. I will have to at some point though just because of the nature of my work.

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#13

I’m kind of insanely tight on budget. I have to be with my rent.
How I budget:
I know the exact amount for rent, phone bill, and cable. I account for that in a spread sheet where I keep track of income and expenses.
I do not get paid the exact same with every paycheck due in part to me working over time.
I have a amount sent to a separate account which is for saving for big items. In this case a car.
Grocery shopping, I mostly only buy items when they are on sale.
My work automatically takes out of my paycheck for insurance and my 401k. I’m planning on having a savings account to save for retirement once I take care of my old debt. That old debt taught me a harsh lesson. I do budget for paying that. I pay as much as I can each month. I’ll get it paid off.

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#14

I’ve kept this simple for now, vanguard are one of the lowest fee platforms in the UK, though they only offer vangaurd funds, i’ve got money in their lifestrategy fund. It seems to work out well until you hit a certain threshold and then your better off using a fixed fee platform rather than percentage based. My plan is to learn more about investing so i can make some more informed decisions if i want to do anything more hands on.

One thing i’ve decided to do is essentially run my car into the ground until its no longer worth keeping, since its paid off and is reliable id rather save the extra money right now than get a fancier car.

I think this is a big thing, I’ve not had huge debts but i have had smaller ones (my car initially for example), and once paid off if you don’t change your lifestyle to much that extra money can go away and work for you. I’m hoping this works out well in the long run for me :smiley:

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#15

I don’t have a family. No wife & kids, so that helps significantly.
I also don’t smoke, or drink a lot. Don’t go out to pubs and crap like that anymore.
My money pretty much goes into paying off house, saving for new car, savings. I don’t put any additional stuff into super. I’d rather pay the house off and be freehold first, since I don’t have any fall back options. I tend to have the important bills direct debit automatically after pay goes in.
I have money left over which I use to buy food, and games/tech when I get an excess. If I have too much excess, more goes into savings.
And I do, since I get paid reasonably well.

You seem to be doing the right stuff. Split things up into what you need, and what you want.
Cover all the stuff you need. See if you can get cheaper options, better deals on power, internet etc.
Cancel credit cards if you have that tendency. Board up windows, sell TVs. Do they still tax that stuff over there?
Quantify all your subscription services, knock most of the head. Tone down or cancel a few patreon, cancel netflix or reduce to a single service. The internet is rife with subscription services nowdays.
Sell all the crap you are hoarding, and haven’t looked at in 6 months. One man’s garbage is another’s treasure and all that.
See if work will give you a raise? Don’t know if you don’t ask.

You don’t need the bank to categorise transactions, as long as you can download a csv statement you can do it in libreoffice calc yourself pretty easily.

The whole investment thing… Look at it like gambling. Don’t rely on it, or spend anything you can’t afford to lose. Plenty of people try and take shortcuts to get ahead in life, and there are industries built around taking money away from those people. Some get lucky sure. But most lose out i think.
I think property is the best investment, as long as it isn’t contaminated, zoned for destruction or full of unexploded ordinance. It is a physical thing you can hold and own(debatable). However, wealth only lasts 3 or so generations.

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#16

So currently for me having any money at all is amazing. The way I set myself up, because I make 9.25 an hour with like 12 to 20 hours a week, I have strict budget setup.

Basic if then else.

If I make over 150 USD a week, that 150 is saved and the rest goes into my checking. Else, 100 goes to savings and the rest is into checking.

If I make 200 or more a week, my full allowance is filled to 50 dollars, else I allow myself 30 dollars a week of fun money.

Fun money is gas as well as whatever else I might do. Mostly gas though. If I have shit I need taken care of, recently bills and hardware overhauls for things I want to do soon, then everything is off the table. I save up, and dump on what is important.

Outside of work I have been trying to sell hardware via craigslist and here on the forum. Whatever I sell, 15% goes into checking for gas or something.

So for as limited as my shit is, I try to do everything as limited as possible. Keyboard and headset was my biggest purchase recently. 250 bucks total. But it sets me up form the podcast I want to do and for my YouTube stuff to be of better quality. Also spent 170 on a machine, which is what my last paycheck paid for. No telling what it ismyet, though :3 that’s being savedmfor an article I am working on.

IDK if I am helpful for you, but just some insight from a farm kid.

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#17

My advice is to first look at what you need during a month, then look for ways to reduce that amount.
Then look at leisure expenses(Netflix, patreon, hobbies etc) and keep those in check.

Look at impulse buys or big spends you had in the last six months and see if you did anything unreasonable. For example upgrading from a perfectly good iPhone 7 to an iphone X.

Get rid of all credit cards but one and only use it if you know you can make the down-payment in time before interest rate hits.

Once you’ve got debt that is your main expense and you should try to get rid of it asap. Come into some extra money? Put it all towards your debt.
Don’t have debt? Maximize your savings even if you haven’t planned buying a house or what you want to do with your life yet.

If you’re planning on buying a house make sure you get a good loan, shop around for offers.

These have been my basic rules since I was 16 and I was debt free by age 25.

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#18

Another option is to look at what your company offers. Many will offer sharesave schemes allowing you to buy shares at a discounted rate over a period of years with protection on your money. You can make money if shares go up or just withdraw the money you put in. This is something I’ve looked at as this year the rate at my company is quite good.

I am finding saving money is becoming addictive.

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#19

Hardest part is when your dog tired and you drive past 3 fast food joints but you go home and spend another 20 min to make a proper (and cheap) meal.
Getting gas for the car and not looking around
Taking the extra 15 min to make a lunch and coffee at home b4 work.
Avoid half the forum, that APU or FX still has another year of good gaming.
Buy a phone for making phone calls, and 3g was top shelf not to long ago.
My fav person for advice


avoid retail therapy

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#20

Something ive been trying to get into the habit of is to essentially bulk make my meals. I make dinner for 3-4 days in-advance and lunches 1-2 in advance. Large one pot meals are great because there easy to make and you can just dish them out into tubs for the week.

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