A couple of days ago I wrote about our emergency fund (lack off) and actually put it all down on paper made me far more settled about it. It is more logical to pack all money into pension or reducing mortgage honest it is, for overall financial return. But I might just, to avoid being victemised by the black fairies, aim to get a little stash put away but on the whole I am happy with our way.
And this is our way
I get paid on the 24th of each month & Fahed gets paid on the 28th. Mine is fixed but his is very variable (I budget cautiously and update when it is good news).
I can claim my mileage and expenses fortnightly but often leave them for longer if we have a fairly padded budget because then they are used as quick savings.
I have a spreadsheet with a column for each Month (from 24th of one month to 23rd of the next) & sections for each type of payment such as household, financing, shopping, savings (yes, it is a bill).
Income goes in as well and then each section is subtotaled. At the bottom I show balance after all fixed costs and then balance after all costs. I used to carry a figure forward each month but don't do this anymore as my method is more about ensuring income exceeds expenditure than an actual cash flow model.
Really very simple and you can see problems that might be on the horizon and plan for them
When i remember what I was like pre budget (back in my twenties) and how much money I wasted in bank charges, when I could really have done with the money, it makes me want to kick myself. Now I check my online banking each morning. I actually have it as a diary item so that I cant be surprised
I am a fairly unconventional mum in some ways but I think I have taught my children well in this area.
Rules are:
No credit unless you are buying a house (or another appreciation asset).
Don't waste big money on assets which depreciate.(overpriced car on tick which takes mostly the entire wages of a twenty year old anyone?)
Have a budget set up with your outgoings/savings plans so you never get to car tax time and find its a surprise to you.
And my particular favourite - doing stuff is way more fun than owning stuff - dont buy a load of pointless junk.
The finance world according to mummy!
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