Like all of us I’d say, we have had times over the years that we are flat broke, and times that we have a bit extra money, but no matter what we have coming in – we’ve always made it work.
The way I have always worked it is that we have a “bills account”. All the household bills (like rent, electricity, gas, phones, etc) are set up by direct debit to go out of this account, and each week we put a set amount in. I have worked out the annual cost of all our bills, and divided it by 52 weeks and each week we put that into the bills account. It means that in the summer time we have a bit of money built up in the account because the heating costs are down, but it balances out again once the winter comes in. We don’t use this account for other costs like food or other expenses.
In the past few years I met with money and budgeting advice people, and they gave me a format to look at all expenses for the year – from car taxes, back to school costs, Christmas, birthdays, health, optical and dentist, right down to hair cuts, makeup, clothes and even lotto tickets and car parking costs. No expense is too small to take note of. It is a lot of work, but it is amazing to see it adding up. These extra costs are added up, and again broken down to a weekly amount, and this amount is put into a different account – like a post office or credit union, one that cannot be accessed by card easily! When these costs come up, you can go and take out the necessary allocated money.
What is great about this system is that the money accumulates quickly in the first few weeks, so you might only be putting aside €15 per week for your car tax – but because you’re putting in a higher amount to cover all of the annual costs, after a few weeks you will have the cost of the car tax, and can tax the car, knowing that you have it balanced out over the year.
And then there is food money, a certain predetermined amount which is taken out in cash.
Now, we haven’t been in a position in recent years to have savings, but if you have excess money left over after the necessities are accounted for, then you would be able to set your savings accounts separately too.
I love our system, because it really takes away the stress of managing money. There is very rarely a shock cost that I can’t cover, although this year I didn’t have enough allocated to car repairs!! It does take a bit of time to set up and work out EVERY SINGLE annual cost, and of course you might miss a few. I’ve a folder in my notes section on my phone for expenses I missed (like a football registration cost!) so that I can update it going forward.
What do you think? Do you guys have any budgeting tips?