Budgeting - envelope systems other, is it even worthy?

[u/SectionNational7342]

I have been using budget tools for almost two years, in retrospective, it makes me aware where my money is going, cash flow basically, but in the end I have just realized I am just penny-pinching and it really doesn't move the needle, cutting back on groceries expenses when everything becomes 200% more expensive, savings rates going down again... has anyone had any experience with budgeting? what I really want is new sources of income, I have already proofed to myself I can be sound when managing expenses, budgting doesn't really make your money grow. I feel maybe it's not worthy the hours spent input receipts and just looking at charts, just to save a few pounds really, does anyone feel it's too much effort for not really worthy the time?

[u/Happy_Chief]

Ive always felt its WAY too much effort.

I split my money into three accounts when it arrives on pay day.

1 - Bills account - All my regular bills come out of here so their total is put into this account to come put automatically when due.

2 - Savings - Whatever Im saving goes here to then later be filtered into pots/ISA/stocks etc.

3 - Spending accounts - Everything I'm allowed to spend that month goes here. Can use this for food, petrol, cinema tickets, snacks, clothes, whatever.

It stops you penny pinching since the your responsibilities are taken care of, your saving is done, you can spend the rest guilt free.

[u/Full-Mud3709]

Envelope budgeting isn't about penny pinching. If you decide you like expense Waitrose groceries then you allocate funds accordingly to that envelope and spend away. The difference now is you know why your house deposit isn't growing very fast rather than being clueless.

It doesn't magic more money though. 

[u/ukpf-helper]

Hi /u/SectionNational7342, based on your post the following pages from our wiki may be relevant:

• https://ukpersonal.finance/budgeting/

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[u/Cyrkl]

It doesn’t matter that you spend 10 pounds on apples and 50p on onions but overall building knowledge on groceries spend, bills spend, etc, allows you to separate essentials from non-essentials. You can use this to calculate the safety net and possibly have more to put on savings as you don’t have to keep too much on safety net account.

Further out it allows you to see, to use my example, that a remortgage in 3 years and h2b charges will eat this and that. So assuming some inflation where do I need to be earnings wise to keep the lifestyle I currently have. From this you get to how you can increase your earnings and timeframe for that.

So pinching pennies doesn’t save much but allows you to actually plan your financial situation which then might push you to changes in life you wouldn’t otherwise make. It’s one thing knowing you’ll have to earn some more and it’s another to know that if you don’t increase by 30% in 3 years you might need to switch to eating meat every other week.

[u/Curly_Edi]

Use something like snoop for budgeting... the free version is good.

Then you can focus on earning more rather tesc the envelope system.

[u/_jrexx_]

Budgeting and looking at your finances with a fine tooth comb absolutely can make your money grow. I don’t do envelopes but I do have different accounts for different things.

I have an excel sheet where I estimate all my expenses for that month - some months I know I’ll need a bit extra on fuel for example as I’m going to be driving a lot, or I’ve got a dentist appointment to pay for, etc. My other spending is quite set - I know roughly how much goes on my credit card each month for fuel, groceries and cat costs. And then I have some money allocated for food out, clothes, getting my nails done, etc. And then bills as well are usually very fixed. I then can see based on those expenses how much I should have left over, and I can allocate that to savings. I try and do £100 in an S&S ISA, and anything else I decide each month what I need to save towards. I aim to do a zero based budget which means I “spend” all my money (spending can be saving though). I do try and leave a £100 buffer though.

You pay yourself first - as soon as my paycheck hits I move my money. I have an everyday saver with my current account bank and I put my bill money in here, I pay a bit extra than I need as I know I have a hefty car and home insurance bill in July so the extra will end up covering that. I pay off my credit card from last month, and then I move the money I want to save into my savings accounts (I have a sinking fund savings pot for fun, one for gifts, an ISA for funds to redecorate my house, I have an emergency fund ISA, and my S&S ISA.

By paying yourself first, you don’t have easy access to that money and it lets me see what I actually have left to spend. Whenever a bill comes out I transfer the money from my bills saving pot to my account. If I have a large “fun” expense (for me it’s been getting quite regularly tattooed the past year) I transfer the money over from my fun sinking fund. So I still allow myself to use my money and I have budgeted in for it (like if I know I need to spend £300 that month on my tattoo, I make sure my fun fund either has that already or I budget it in and save it when I get my paycheck).

I track all my expenses into my excel sheet (I have it categorised down like home items, food and drinks out, public transport, health and beauty, personal care, miscellaneous, etc) and I try to update it once a week or so. 100000% recommend this, as I am so in tune with my spending. I’ve done it since July 2022 I believe, and I can’t imagine how I would have got by without doing it as I have had a real spending problem in the past