A few months ago, I decided to reassess the way I managed my finances. I was urged to take take a step back and question my spending after reading an article about prospective house buyers having their bank statements scrutinised by Mr Bank Manager before being considered for a mortgage.
The article claimed that borrowers will be asked to explain and justify their spending (even down to that £2.90 daily spend on a latte) to establish if they are credible and able to take on the MAHOOSIVE financial commitment of a mortgage. To me, this made perfect sense; I wondered why this was only just being introduced – isn’t this something that should have been done all along? I mean, how many people are out there trying to keep up payments on properties they simply can’t afford?
At some point in the future I’d like to buy a little flat in a victorian house conversion in London (I know, wishful thinking) with my girlfriend (and the cat she’s promised we can get in the next few years – yay! Meow!)
And it got me thinking….
Where does all my money go? How much of it am I wasting? Did I really need that overpriced TOPSHOP jumper that is waaaaay too delicate and keeps snagging on my jewellery and now looks shit?
What would Mr Bank Manager make of my spending? Would he hesitate to lend me some dosh to purchase a new home? How would I feel trying to justify my purchases to a complete stranger – I mean, would I even be able to justify the overuse of my plastic?…No, I don’t think I could.
So, here’s what I did…
I allowed myself one more month of spending how I had been. Whipping out the plastic for everything and anything I wanted (don’t get me wrong, I never lived outside of my means but I didn’t really watch where it was all going), the only difference this time is that I wrote down EVERYTHING that I had bought and the EXACT cost (even the 46p pack of Extra chewing gum) – I categorised my spending so that by the end of the month I could see an overview of my spending. This overview allowed me to set myself a realistic budget and the spending lockdown began!
After all my bills are paid and I have placed 10% of my wages in my savings account, I have given myself a budget of £100 to spend over a period of seven days. This amount covers my socialising, the weekly food shop, toiletries and lunch.
I have also allowed myself an extra £100 per month as a contingency fund in case I need something, for example, a haircut, new dress or to buy someone a pressie.
‘How are you managing to live in London, eat and socialise on such a small amount?’ I hear you ask…
Well, it’s not easy and has taken some work (I’ve had a couple of relapses too, t’was particularly hard to stick to when I was trying to prepare for my holiday to Turkey in August) but I am trying to stick to it as much as possible and it’s great watching my savings grow (sloooowly haha! but at least now the savings are growing as opposed to not!).
What makes it easier for me, is having the £100 in cash (I withdraw the funds from an ATM on a Sunday and it is supposed to last until 00:00 on the following Saturday), paying with the plastic makes overspending too easy and makes it extremely easy to lose track of where my money is going.
Being able to see my £100 shrink over the course of a week really makes me think about how I’m spending and reminds me to reign it in when I’m getting carried away.
Plus, when it finally comes to sitting down with Mr Bank Manager (Ooh, I say, in about 100 years time if I really have my heart set on living in London town) to explain my £100 cash withdrawal each Sunday, I simply have to say, it’s what I live on each week.
My bank statements look so much neater and portray me as a disciplined sensible savvy spender (which is exactly what I am becoming).
My budget does mean I have to wait a little longer, save a little harder and spend a little wiser for that budget-blowout meal at Gaucho or that theatre trip to the West End but I actually get a buzz out of reaching these goals through my frugal living.
Places/things that allow my £100 to stretch…
1. I plan my meals for the week and make a list before I head to the supermarket.
2. I cook extra for dinner so that I can take the leftovers to work for lunch the following day.
3. I try to attend the cinema during the day when it’s a little cheaper or use Orange Wednesdays – I NEVER buy the super duper overpriced popcorn at the cinema.
4. Eating at places that allow you to pay individually is a really good way to budget if with a group of friends, as you only pay for what YOU had. Nando’s, GBK and Vapiano are my favourite chains for this and there’s no need to book beforehand!
Living in London is super expensive but there are many ways to avoid spending too much whilst still enjoying what this great city has to offer.
So many London museums are FREE entry and often have late night openings on Thursdays and Fridays. The Natural History Museum and The National Portrait Gallery are two of my favourites. The Taylor Wessing exhibition opens in November and it’s normally only a couple of pounds to get in…just checked, it’s £3 – I’m looking forward to that!
For FREE live music I like to head to The Bedford down in Balham.
Remember, don’t deprive yourself of little treats and the odd budget-blowout moment but do spend a little wiser if, like me, one day you’d like a little home to call your own :)