Thursday, 23 January 2020

My Budgeting & Savings Plan For 2020

So...a brand new year is upon us, and maybe I'm alone in this but I just LOVE the feeling of a fresh start that brings.

Brand new diary, brand new planner, brand new client spreadsheets for work....all empty, full of possibility and opportunity!

And along with that fresh, clean slate feeling comes a desire to try to do things a little better. To find more effective ways of living - subtle little changes to make that might improve our quality of life a little, or make things run just that little bit smoother.

There are quite a few things I've changed up a bit so far this year - our Home Ed schedule for one, my work routine, where we do our grocery shopping.

And one thing I decided was in definite need of an overhaul was our budgeting and spending/saving habits!

The thing is, managing money can be a bit tricky when you're self employed.

You never know exactly how much you'll be earning from one week to the next - it can be £4,000 one week and then nothing at all for 5.

You can also never be sure exactly when payments are going to come in - I have 30 day payment terms on my invoices as standard, but sometimes clients will pay on the day they're invoiced and sometimes they'll take 6 months of chasing before parting with the cash.

The one thing you can rely on as a self-employed person is that your income will always be unreliable!

And so, last week I decided to look at our budget with fresh eyes and see what changes I could make to help things run a little more smoothly. Our long term goal is to be able save enough to buy our own home, and along with following the advice within this helpful article - we really need to build upon our savings to be in with a chance of achieving that goal.

I was amazed to find that from just 30 minutes of checking and changing things around  I managed to save us over £50 a month.

So here's my advice for those looking to save more and spend less in 2020...advice I'm going to be following myself!

Write Your Outgoings Down

This is the most important part of the process, so if you only do one thing - make it this.

It's impossible to know how to budget your money without truly knowing what your outgoings are each month.

It can be easy to think only in terms of your rent/mortgage payments and utility bills but when you get thorough and list ALL of your monthly spends, it can be pretty surprising!

If you'd asked me to guess what our monthly outgoings were, I'd have guessed around £1500.

In actual fact, they amount to £1900 when taking in to account "little" things like our Twinkl subscription for home ed worksheet print outs, the kids extra curricular club memberships, etc.

It wasn't exactly a pleasant surprise but there's no sense in burying your head in the sand - now that I know exactly what we have to pay out each month, I have a better idea of what we can afford to spend on top of that and I can make changes to help us save money in places too.

Go Through Your Spends & See Where Changes Can Be Made

As I just said...looking through your monthly outgoings and seeing where you can make changes actually feels pretty good, particularly if your monthly spend figure surprised you! I felt empowered when looking at places I could save a few quid!

To start with, I decided I could spend less on our weekly food shop. I was spending £100 per week, whereas I have previously done it for £80 - that immediately saves us £80 per month.

I also decided to look at changing some of our service providers - I was happy with our TV price and all of our insurance providers, but I thought our mobile phone contracts were far too expensive and so we looked into them and discovered that Jon is free to leave his contract.

We've found a deal that suits his needs far better, will give him a new phone AND will save us £20 per month - ideal!

I also decided that our phone and internet package was too expensive and din't make sense for us. We were paying for a package that included phonecalls and line rental, but we don't actually use our landline at all - infact we no longer even have a telephone connected! So what was the sense in paying for an inclusive phone call package?

Through doing some research, I discovered that it's now possible to get broadband only packages. This means that you are paying only for your broadband access rather than for phone calls and extras - ideal for people like us who only want to access the internet and don't have any interest in a landline phone.

There are some fantastic broadband only deals available with benefits including fixed price contracts, and no upfront charges - it looks like we'll be able to save around £120 per year from switching!

Check Your Direct Debits & Monthly Payments On EVERYTHING! Not just your bank!

This was a BIG one - I was absolutely floored at how much unnecessary money I was spending!

To begin with, I just checked my direct debits and scheduled payments on my bank account and - as expected - found nothing that wasn't necessary.

However - I then decided to check my scheduled payments on my iPhone account.

I could not BELIEVE the amount of app memberships I'd signed up to "free" trials for and then forgotten to cancel, and the amount of app subscriptions I had that I either never used or used far too rarely to make them worthwhile.

I also checked the scheduled regular payments on my Paypal account, and once again - found quite a few monthly memberships that I was no longer using.

Through cancelling my subscriptions to these useless apps and services, I managed to save myself £52 per month!!

I DREAD to think how long I had been paying that £52 per month for apps and services I wasn't even using - so be sure to check yours!!!

Look At The Total Amount You're Spending On Services

After I had cancelled the subscriptions to services and apps I wasn't using, I noticed a regular payment I was making through my Paypal account.

I wasn't too sure what it was, so I clicked on it and saw it was for a Patreon membership for an Influencer who was offering a support group for people in return for a monthly fee. The membership fee was £6.66 per month and I very nearly kept it - I didn't want to stop supporting the influencer and I knew she had made comments before about how let down she felt when people cancelled their Patreon payments.

But then I noticed that Paypal allows you to see your total lifetime spend on a service - and when I realised I'd spent over £100 on this particular membership, I quickly became aware that the value I was getting from my access to that Facebook group was simply not worth that much money.

I then decided to take a look at the Lifetime spend for all of my subscriptions and services, just out of curiosity...

One service I was paying for was a Twitter scheduling service - it was something I felt the monthly fee wasn't too bad for, after all it was bringing traffic to my blog and saving me a few hours a week of scheduling tweets myself - but then I looked at my lifetime spend on that service.

I had spent over £1000.00 on that service in total - OH MY GOD!!! no longer seemed like such a good deal! When I think of how many FAR better ways I could have spent that £1000.00 whilst simply scheduling my OWN tweets?! I could cry!

But the fact is we never sit and do the math, working out how much we spend per year or per 5 years on these monthly subscriptions - we just focus on the small monthly amount.

I urge you to do the math! Work out how much you're spending on your subscriptions per year and see if you still feel that service is worthwhile to you!

I'm gutted to have spent so much, but I'm GRATEFUL that I realised before spending another £1000 on it!

Vow To Pay A Percentage Of Your Earnings To Your Savings Account

After I'd worked out my monthly spend and made the cuts and savings I felt comfortable with, I sat down and worked out how much I was likely to be able to save each month.

This is more tricky to do as a self employed person when you're never sure of what your monthly income will be, but I decided to pay 20% of each incoming payment in to my savings account automatically - from my calculations, this should be doable and should mean that we manage to amass some savings over the course of the year.

Do you have any tips to share on saving money or budgeting?! I'd love to hear them!

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