Money management
Jul. 22nd, 2019 11:15 am![[personal profile]](https://www.dreamwidth.org/img/silk/identity/user.png){kind=small}
annwfynSo, I made an offer on someone’s facebook to share some of my experiences of trying to manage money while being, frankly, appalling with the stuff. I have shit impulse control, I can’t count properly due to dyscalculia, I have hypomanic spending sprees and I also get easily distracted and forget about stuff I’m meant to do.
I’m a total financial disaster area.
I have, however, spent a fair bit of time trying to get myself down to ‘financially incompetent’ as opposed ‘horror show’. I’ll never be up there on moneysavingexpert.com, but I have gone from ‘my bank account has its own scorched earth policy’ to ‘I have savings sometimes, for short periods of time’. I’ve not bounced a direct debit in over five years, or gone into unauthorized overdraft and I finished last month with £50 spare in my account until payday.
Yes, I was still in my overdraft at that point. Shush.
So what I’m saying is that I’m not offering expert advice on how to be really good at this stuff. I’m offering a crazy person’s guide to being functional. Basically, How To Fake It Until You Make It (the money edition)
This process, by the way, is based on three principles which I use relentlessly.
1) If it’s automated, you can’t screw up by forgetting about it.
2) Big things are hard to focus on. Small things can be devoured.
3) Use your powers of distraction for good.
So, let’s start.
Step one
First of all, before you do anything else, you’re gonna need to figure out how much money you’re actually working with. This is purely so you can set the automation in place, and is not something that needs done too regularly (although I probably do revisit this bit of the process every 3-6 months as bills and stuff change). It’s also the suckiest part of the process as it means staring the horror that is THE MONEY flat in the face. But sadly there is no way at all of managing your finances without looking at them, so…brace yourself!
I normally do this kind of thing first thing in the morning before anyone else is up, so I can do it, then put it down and distract myself from the awfulness for the rest of the day. I get up, sit down in front of my laptop and log in to online banking. Then I download three months of bank statements into excel.
This is going to be turned into an excel spreadsheet which tells me how much comes in every month, how much goes out in bills, debts, regular expenses etc, and how much is left over. Three months lets you spot any big variations as well. Hopefully there won’t be many, however, and you’ll have similar outgoings all the time.
Then put them into columns – one for totally unavoidable costs like bills, credit card repayments – stuff that comes out of your bank account no matter what.
One for necessary living costs like petrol, food, bus fares etc. Stuff you in theory could not spend money on, but would starve. This is likely to vary more.
Then one for living costs which you could cut back on but don’t want to – like WoW subscriptions, or buying stickers and stationary, or LRP costs. Basically, don’t pretend it ain’t an expense. It is.
Oh, and if you LARP, be goddamn honest about how much an event costs. No, it doesn’t cost £80. That’s the ticket, and nothing more. Stop being dumb. You know you’ll buy extra kit and snacks and travel and…just make sure the actual price is down on your spreadsheet. OK?
Step two
Make sure any credit card debts you have are on 0% interest. I have three credit cards for this purpose – two are always empty, waiting for the 0% variable offers to come round again. The other has money sitting on it with 0% interest. I mean, yeah, pay off your credit cards as well and don’t get into debt. That’s good. But being realistic, odds are you’ve got some unsecured debt and it might as well be on a 0% credit card as anything.
You should probably check this out every 3-6 months again, but even if you forget, at least doing this once gives you a break on interest.
If you don’t have any credit card offers at the moment, try moneysupermarket.com and see what they have. Again, might not help, but it is helpful if they do.
Step three
Breathe. By this point I always feel like I have done absolutely all of the things and my brain is bleeding. So I write down ‘do more stuff tomorrow’ or something and bugger off for a bit. Let us be realistic here – I just went through a shed load of numbers.
Step four
Right. Now I’ve got my hopefully accurate and up to date figures on how much money I am going to spend every month whether I like it or not. Now is the time to make those numbers hopefully make sense. Do your overall incoming funds cover your overall outgoing funds?
If no, then you need to start doing extra shitty maths about how to manage debt, or cut costs or whatever.
Often I’ve found that on paper, however, they do. I’m often not skint because I have no income, but because I spend money on stuff I like, and also waste money on total shit like takeout, or random impulse DVDs that I don’t even watch, or some random bit of kit for a character that doesn’t even exist yet.
And mad impulse spending isn’t a bad thing. You just need to make sure you’re not spending bill money on it.
Step five
So, one of the things I’ve learned is that if I look at my bank account and see £100 there, even if I know that I have an £80 bill going out next week, a bit of my brain says “yay! You have money to spend”. And that is bad. I am pathologically incapable of juggling mental maths with hypotheticals or remembering what is going out when.
Literally the only thing that has ever worked for me is, therefore, making sure I never the see the damn money. It needs to be invisible so I forget it is out there and can be spent. This is using my powers of distraction for good.
For me, the best way of hiding money is to move it out of my main bank account ASAP and make sure it’s all put in separate pots before I even see it. I have four accounts for this purpose.
1) There is the joint bank account that I share with my husband. This is where all household bills money goes and comes out of. I have a standing order set up on my main bank account which takes the bills money out on the day that I get paid so I never see it.
2) There is a savings account attached to my main account with a standing order for £100 to go into. Often that turns into a ‘fuck! It’s the end of the month. Move money back’ account, but it’s got as high as £800 before by virtue of me forgetting I’d set up the savings standing order for ages.
3) There is my main account that my salary goes into that I want to not look at if possible post payday. Some personal direct debits stay attached to that, such as my credit card minimum payment, and my mobile. I try and set them for the first of the month too, but either way, I assume that money in there could go at any minute and can’t be trusted.
4) There is a Monzo account which is where my spending money goes. There are absolutely no standing orders or direct debits set up on this account. That would lead to madness. I want to know that any money in that account is mine to spend. Monzo also has an excellent little app which lets you set budgets for different things, like groceries, and then allocates your card spending to said budgets depending on where you shop, so Tesco is always groceries.
Actually, do take the time to set up those cool budgets on Monzo. It’s weirdly hypnotic and super helpful. Loads easier to grasp ‘I have £40 per week for groceries’ as well instead of ‘I have £1,500 a month and some is for food but I need to assess how much every time’. That way leads to madness.
I do my best to only really look at my Monzo account day to day, unless one of the other accounts sends one of those threatening text messages saying ‘you might be about to drop below X amount’. Monzo is real. The rest are a lie. The only money that exists is the money I can spend. Forget about the rest.
It’s worked surprisingly well.
Step six
While you’re doing this, make sure absolutely all your bills are set up via direct debit. Automate everything. Never ever be in the position of needing to remember to pay a bill. It will only lead to sadness!
If something can be set up to be paid automatically, do it. Add the money to the relevant bank account. Move on.
Step Seven
While you’re at it, take a block of cash out of your account. I take all my lunch money for work out of my account and it sits in my desk drawer at work. It’s like magic. I can never be so skint I starve!
Step Eight
Start your Christmas shopping in May or June and fuck any bitch that says it’s ‘too soon’. Ain’t no one got the cash to do it all in December. They just can’t. This is the rule.
There’s other stuff I find handy too – like I’ve got one of those little apps on my phone which rounds up my spends to the nearest £1 and puts the spare change in savings which is cute. But those are kind of hit and miss for me and I mostly just play with them as extras. And loads of people have loads of better advice. This is just a method that lets me ignore my money most of the time and somehow not end up as skint as I used to be.
Anyway, hope some of this helps. I know there are a lot of steps and many seem obvious but I wanted to break it down into very small specific steps as my particular brain isn’t good with much more. And if you’ve got a better way, I like to be told how to be better with money! We should share.
I’m a total financial disaster area.
I have, however, spent a fair bit of time trying to get myself down to ‘financially incompetent’ as opposed ‘horror show’. I’ll never be up there on moneysavingexpert.com, but I have gone from ‘my bank account has its own scorched earth policy’ to ‘I have savings sometimes, for short periods of time’. I’ve not bounced a direct debit in over five years, or gone into unauthorized overdraft and I finished last month with £50 spare in my account until payday.
Yes, I was still in my overdraft at that point. Shush.
So what I’m saying is that I’m not offering expert advice on how to be really good at this stuff. I’m offering a crazy person’s guide to being functional. Basically, How To Fake It Until You Make It (the money edition)
This process, by the way, is based on three principles which I use relentlessly.
1) If it’s automated, you can’t screw up by forgetting about it.
2) Big things are hard to focus on. Small things can be devoured.
3) Use your powers of distraction for good.
So, let’s start.
Step one
First of all, before you do anything else, you’re gonna need to figure out how much money you’re actually working with. This is purely so you can set the automation in place, and is not something that needs done too regularly (although I probably do revisit this bit of the process every 3-6 months as bills and stuff change). It’s also the suckiest part of the process as it means staring the horror that is THE MONEY flat in the face. But sadly there is no way at all of managing your finances without looking at them, so…brace yourself!
I normally do this kind of thing first thing in the morning before anyone else is up, so I can do it, then put it down and distract myself from the awfulness for the rest of the day. I get up, sit down in front of my laptop and log in to online banking. Then I download three months of bank statements into excel.
This is going to be turned into an excel spreadsheet which tells me how much comes in every month, how much goes out in bills, debts, regular expenses etc, and how much is left over. Three months lets you spot any big variations as well. Hopefully there won’t be many, however, and you’ll have similar outgoings all the time.
Then put them into columns – one for totally unavoidable costs like bills, credit card repayments – stuff that comes out of your bank account no matter what.
One for necessary living costs like petrol, food, bus fares etc. Stuff you in theory could not spend money on, but would starve. This is likely to vary more.
Then one for living costs which you could cut back on but don’t want to – like WoW subscriptions, or buying stickers and stationary, or LRP costs. Basically, don’t pretend it ain’t an expense. It is.
Oh, and if you LARP, be goddamn honest about how much an event costs. No, it doesn’t cost £80. That’s the ticket, and nothing more. Stop being dumb. You know you’ll buy extra kit and snacks and travel and…just make sure the actual price is down on your spreadsheet. OK?
Step two
Make sure any credit card debts you have are on 0% interest. I have three credit cards for this purpose – two are always empty, waiting for the 0% variable offers to come round again. The other has money sitting on it with 0% interest. I mean, yeah, pay off your credit cards as well and don’t get into debt. That’s good. But being realistic, odds are you’ve got some unsecured debt and it might as well be on a 0% credit card as anything.
You should probably check this out every 3-6 months again, but even if you forget, at least doing this once gives you a break on interest.
If you don’t have any credit card offers at the moment, try moneysupermarket.com and see what they have. Again, might not help, but it is helpful if they do.
Step three
Breathe. By this point I always feel like I have done absolutely all of the things and my brain is bleeding. So I write down ‘do more stuff tomorrow’ or something and bugger off for a bit. Let us be realistic here – I just went through a shed load of numbers.
Step four
Right. Now I’ve got my hopefully accurate and up to date figures on how much money I am going to spend every month whether I like it or not. Now is the time to make those numbers hopefully make sense. Do your overall incoming funds cover your overall outgoing funds?
If no, then you need to start doing extra shitty maths about how to manage debt, or cut costs or whatever.
Often I’ve found that on paper, however, they do. I’m often not skint because I have no income, but because I spend money on stuff I like, and also waste money on total shit like takeout, or random impulse DVDs that I don’t even watch, or some random bit of kit for a character that doesn’t even exist yet.
And mad impulse spending isn’t a bad thing. You just need to make sure you’re not spending bill money on it.
Step five
So, one of the things I’ve learned is that if I look at my bank account and see £100 there, even if I know that I have an £80 bill going out next week, a bit of my brain says “yay! You have money to spend”. And that is bad. I am pathologically incapable of juggling mental maths with hypotheticals or remembering what is going out when.
Literally the only thing that has ever worked for me is, therefore, making sure I never the see the damn money. It needs to be invisible so I forget it is out there and can be spent. This is using my powers of distraction for good.
For me, the best way of hiding money is to move it out of my main bank account ASAP and make sure it’s all put in separate pots before I even see it. I have four accounts for this purpose.
1) There is the joint bank account that I share with my husband. This is where all household bills money goes and comes out of. I have a standing order set up on my main bank account which takes the bills money out on the day that I get paid so I never see it.
2) There is a savings account attached to my main account with a standing order for £100 to go into. Often that turns into a ‘fuck! It’s the end of the month. Move money back’ account, but it’s got as high as £800 before by virtue of me forgetting I’d set up the savings standing order for ages.
3) There is my main account that my salary goes into that I want to not look at if possible post payday. Some personal direct debits stay attached to that, such as my credit card minimum payment, and my mobile. I try and set them for the first of the month too, but either way, I assume that money in there could go at any minute and can’t be trusted.
4) There is a Monzo account which is where my spending money goes. There are absolutely no standing orders or direct debits set up on this account. That would lead to madness. I want to know that any money in that account is mine to spend. Monzo also has an excellent little app which lets you set budgets for different things, like groceries, and then allocates your card spending to said budgets depending on where you shop, so Tesco is always groceries.
Actually, do take the time to set up those cool budgets on Monzo. It’s weirdly hypnotic and super helpful. Loads easier to grasp ‘I have £40 per week for groceries’ as well instead of ‘I have £1,500 a month and some is for food but I need to assess how much every time’. That way leads to madness.
I do my best to only really look at my Monzo account day to day, unless one of the other accounts sends one of those threatening text messages saying ‘you might be about to drop below X amount’. Monzo is real. The rest are a lie. The only money that exists is the money I can spend. Forget about the rest.
It’s worked surprisingly well.
Step six
While you’re doing this, make sure absolutely all your bills are set up via direct debit. Automate everything. Never ever be in the position of needing to remember to pay a bill. It will only lead to sadness!
If something can be set up to be paid automatically, do it. Add the money to the relevant bank account. Move on.
Step Seven
While you’re at it, take a block of cash out of your account. I take all my lunch money for work out of my account and it sits in my desk drawer at work. It’s like magic. I can never be so skint I starve!
Step Eight
Start your Christmas shopping in May or June and fuck any bitch that says it’s ‘too soon’. Ain’t no one got the cash to do it all in December. They just can’t. This is the rule.
There’s other stuff I find handy too – like I’ve got one of those little apps on my phone which rounds up my spends to the nearest £1 and puts the spare change in savings which is cute. But those are kind of hit and miss for me and I mostly just play with them as extras. And loads of people have loads of better advice. This is just a method that lets me ignore my money most of the time and somehow not end up as skint as I used to be.
Anyway, hope some of this helps. I know there are a lot of steps and many seem obvious but I wanted to break it down into very small specific steps as my particular brain isn’t good with much more. And if you’ve got a better way, I like to be told how to be better with money! We should share.
