Do This and Save Yourself Big Bucks

Posted: November 10, 2010 in finance, lifestyle, money, personal-development, savings
Tags: , , , , , , ,

A few years back I decided to start monitoring our family budget. Previously, my wife had written down everything we spent and kept a kind of rough running total, it was messy, complicated and moreover it just did not work, it was so innacurate it was unbelievable.

We are all busy people so obviously I didn’t want to commit lots of time to this matter. As important as money is I just wanted a system that was quick, simple and effective.
 
The method I devised was just that.

So much so that in year one it saved us over £12,000 or if you look at it another way the equivelent of earning another £18,000 per annum before tax.

This is my system:

Monday to Friday I check our current account either by phone or online. I record the balance and the debit transactions in a notepad, this process takes about 2-3 minutes per day. On Friday I also record our credits, plus the ANNUAL RUNNING TOTAL, ie monies in versus monies out, I do nothing over the weekend I don’t have to.

I record the ANNUAL RUNNING TOTAL on a spreadsheet, WEEKLY. Again this takes 2-3 minutes. There’s also a MONTHLY total but this becomes obvious via the spreadsheet. (see below)

(Note on ANNUAL RUNNING TOTAL: If on week 1 total incommings are say £500 and total outgoings are £400 then The A.R.T. is +£100 if the same thing happens on week 2 then the new A.R.T. is +£200 etc)

That’s it, It’s that simple.

There is something about this simple monitoring process that really works, it does NOT make you stingey, just more AWARE, like reversing the psychology of credit cards. IE spend, forget, spend, forget, spend, forget…then big bill drops on your doormat at the end of the month…Oops!

So I reckon for an absolute maximum of 30 minutes extra work per week we ‘earn’ an additional £346.15 per week before tax or £230.76 cash.

What can you do with all this extra money?

I’ll give you some ideas.

My wife is the holiday expert in our family, she sits on the internet (sorry, I mean works dilligently at her office job) like a Preying Mantis and when a bargain comes along, she strikes.

So far this year We’ve had 7nts all inclusive at a brand new 5 star hotel in Morrocco – £720 total (NOT each) and 10nts all inclusive at a brand new 5 star hotel (Paloma Pasha, I think) in Turkey – £1110 total.

Within half an hour of her booking the Turkey holiday it had gone up to £1,850 and I think it’s still about that much for next year. But we won’t be paying that kind of money, no way, we (sorry, she!) will find yet another bargain.

We always check the holidays out thoroughly on ‘trip adviser’. To some degree you can ignore the holidaymakers comments, afterall, there’s just no pleasing some people. Instead, go off the overall rating at the top, not the star rating, the OVERALL customer rating, it’s a really good guideline.

I’ve digressed somewhat, the bottom line in saving money is this:

If you want to effect anything positively then MONITOR it, knowledge really is power. Necessity is the mother of invention but wether you need to save money or not, surely it’s better in your pocket than in someone elses.

Wether you simply read this post and walk away or wether you take some positive ACTION to impliment the system for yourselves is obviously up to you.
But those cocktails on the beach sure do taste nice.

Jotting down the daily debits is easy, the spreadsheet takes a little more effort to set up, but you only have to do that once PER YEAR, then remember to fill in the ANNUAL RUNNING TOTAL once PER WEEK and the MONTHLY TOTAL once PER MONTH.

The spreadsheet looks like this (My site blog will compresses this, so you’ll have to imagine it in columns)

January

1st  =  NIL
8th  = +£100
15th = +£200
22nd = +£300
29th = +£400

ANNUAL RUNNING TOTAL = +£400
MONTHLY TOTAL = +£400

February

5th  =
12th =
19th =
26th =
ANNUAL RUNNING TOTAL =
MONTHLY TOTAL =

Etc.

At the end of the year the sum of both totals should be identical, the reason I place more emphasis on the ANNUAL RUNNING TOTAL is that it shows you the bigger picture, if come June you are already £5,000 in the RED for the year, then it’s time to start cutting back.

I also make margin notes on any unexpected expenditure we’ve had that week. If you do start making a habit of monitoring exactly what you spend you will become really skilled at it and the previous years spreadsheet will act as an indicator for when your most expensive times of the year are.

I’ve included my notes that helped me compile this blog post for your perusal:

daily records,
previous notes,
what you can spend it on,
weekly totals,
2 minutes per day,
monitor it,
you forget you’ve spent it,
1 credit card only,
easy,
dont feel it,
rubs off on everyone else,
pleasure from bargains,
savings allow you to buy quality,
savigs are tax free,
like earning an extra 20k,
amount of waste is amazing,
teaches you organisational skills,
record keeping,
journal
good daily habits,
gets quicker with time.

Enjoy those Pinacolados!

Andy.

www.wealthnuggets4u.com

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