How are you managing your money?
It’s pretty likely you fall into one of two camps: The brilliant organised one with a budget and a savings plan or the person who means to save but keeps finding they have too much month at the end of the money.
What these two camps have in common is a worry that they’re doing everything wrong.
How I Save sets out to soothe money worries and open up the conversation around personal finance. Each week we track someone’s spending and saving, then get them some expert advice on how they can save better. The idea is that we can all learn from their bank balance and personal saving techniques, while also seeing that we’re not alone in our saving struggles.
This week we’re following Charli (not her real name), a 24-year-old communications executive living in Birmingham.
How Charli saves:
I earn £21,000 a year. In my savings account right now I have £9,450.
I’ve saved this much money by making sure the first thing I do when I get paid is put between £450 to £600 in my savings account, depending on how expensive I predict the month being.
I’m saving for a house deposit. I’m one year into a five-year plan culminating, hopefully, in purchasing a two-bedroom house with a garden somewhere in a picturesque part of the West Midlands with my boyfriend. We spend a lot of time browsing Zoopla and it definitely helps motivate our saving! Once I hit the £10,000 savings mark (a completely arbitrary personal goal I’ve always wanted to say I’ve achieved) I’m going to open a LISA (Lifestyle Instant Saver Account) and try to max out those savings and government bonuses. Not all my savings will go on the house, though; I’m also saving for general life emergencies.
The main way I save is by having a frugal outlook! I grew up poor, and my natural instinct is to squirrel away as much excess as possible because you never know when you suddenly won’t have that regular income.
I was made redundant last year and although I found a new job relatively fast, my savings buffer did my mental and financial health a world of good in a hugely stressful time. My boyfriend is equally careful with money, and saving is ingrained in all our decisions. When we moved in together, we chose the cheapest flat possible, and made it cosy with furniture and furnishings found mostly for free, and we do regular big online food shops based around weekly meal planning.
I also love vouchers and cashback offers, do my Christmas and birthday gift shopping throughout the year to spead the cost, and get most of my clothes from charity shops and eBay – I get a genuine thrill from bargain hunting and upcycling, plus I offset new purchases by selling clothes I no longer wear back onto eBay and keeping my ‘clothing fund’ separate in PayPal, away from my main bank account.
I do still sometimes struggle with saving though, because I don’t always keep track of the little purchases – coffee and pastries being the prime, if clichéd, example! Coffee shops were the one financial frivolity my parents had when I was growing up – we’d spend hours people-watching over a hot beverage – and now I have a regular income I find myself on the go, getting coffees, pastries and general snacky bits without really noticing how quickly those little things add up.
I also get frustrated by just not having a higher salary but frankly, who doesn’t?
How Charli spends:
Monthly expenses:
- £232.50 on my half of the rent
- My share of the bills, usually around £80
- £102 on a monthly travel pass
- £10 on phone
A week of spending:
Monday: It’s a rare day out of the office on a client visit today. I spend £4.45 on a pain au chocolat, Weetabix drink, fruit bar and spare pack of pens. The meeting is long and awkwardly timed, and I have no choice but to get a late lunch at Pret on my way back – a dissatisfying £3.98.
In the evening I swing by the big Primark for underwear – mainly winter tights – which comes to £9.50, then some bits for dinner from Sainsbury’s, costing £3.70.
Total spent on Monday: £21.63
Tuesday: I get a pain au chocolat and fruit bar en route to work, costing £1.45. I made a packed lunch, which makes me feel slightly better after yesterday.
The weather is awful, so I Amazon Prime one of those sturdy umbrellas that supposedly can’t be blown inside out, which sets me back £14.70 but has excellent reviews and was on a limited time offer.
Total spent on Tuesday: £16.15
Wednesday: I start the day with a hearty bowl of porridge at home – if I eat too many more pain au chocolats this week I’ll start to look like one. I go out for lunch with my colleagues, which comes to £7.75, and win a skirt on eBay costing £4 including postage, although this comes out of my PayPal account so doesn’t affect my actual bank account.
Total spent on Wednesday: £11.75
Thursday: Breakfast at home and a packed lunch today. No money spent, and a refund for a faulty jacket comes through from eBay in the evening, meaning my PayPal account ends the day £7.90 better off. Result!
Total spent on Thursday: £0
Friday: Feeling queasy and running late this morning, I skip breakfast and don’t have time to make a packed lunch. There’s a pop-up street food market near my office today, so I head over there for lunch instead. It costs me £4.50 and the nice lady on the stall throws in a couple of free vegetable spring rolls as well.
On the way home I impulsively spend £2 on chocolate because it’s That Time Of The Month and the bars are on offer.
Total spent on Friday: £6.50
Saturday: I’m heading up North to visit a friend this weekend. My return train ticket costs £43.85, then a bus ticket from the city centre to her house is a further £2.50.
We debate going out out but the weather is grim (that umbrella I got on Tuesday serves me well) and freshers’ flu has landed among her housemates so we decide to stay in, watch Netflix, and make pizzas instead. She pays for all the ingredients which is very kind and makes for a wonderfully cheap Saturday night!
Total spent on Saturday: £46.35
Sunday: My friend and I venture out a little further today, visiting a mini zoo that costs £7 to enter. We spend a happy few hours wandering around looking at meerkats and crocodiles, among other things, and have lunch out too, which costs me a further £7.30.
We have to take several buses over the course of the day, so I buy a £4.50 day rider ticket. I also spend £5 on some Quorn bits for dinner that evening as I’ll be the only vegetarian in the house.
Total spent on Sunday: £23.80
Total spent this week: £126.18
How Charli could save:
We spoke to the experts over at money tracking app Cleo to find out how Charli can save better (and what we can learn from her spending).
Note: the advice featured is specific to one individual and doesn’t constitute financial advice, especially for a London budget.
Here’s what Cleo said:
The perfect blend of frugal and frivolous. You set a fine example for us all. Applause.
Main vice:
If we’re being picky, we’d like to know a bit more about those breakfast buys. Are they making your mornings feel glamorous, or would you actually (secretly) rather have porridge at home?
Also, maybe double-check that your “clothes fund” is definitely there to help you control your spending, and not to help you convince yourself it doesn’t count.
By no means a vice, but if you’re after a higher salary, are there any training courses or skills you’d love to learn that would help you justify a pay rise?
Where you’re going right:
Pretty much everywhere.
Whacking over 30% of your pay into savings each month is truly stunning work.
We’re not fans of the ‘dissatisfying’ £3.98 you spent at Pret, but we love how emotionally in touch you are with your spending. Being quick to match a post-spend mood to a purchase helps you understand what’s actually adding value to your life. Financial frivolities can be great value for money, as your coffee shop memories prove.
For anyone reading: Ever tried looking back over your week’s transactions and sorting your purchases into ‘happy’ and ‘unhappy’ spends? It’s handy for working out the real suspects behind all your money regret.
Spending plan:
We don’t think you really need help here, but your excellent saving habits made the maths really easy.
Safe to spend: £460 a month. This includes your monthly expenses, a breakfast fund and any lunches you have out.
Safe to save: Let’s go for your upper saving limit of £600 a month. This means you’ll exceed your £10k savings goal next payday!
Safe to burn: £425 is safe to burn each month. Use this for your clothes fund, umbrellas, and financial frivolities.
Bottom line:
You’re doing a brilliant job. We’re so excited for you to kit out your new place in that picturesque part of the West Midlands.
How I Save is a weekly series about how people spend and save, out every Thursday. If you’d like to anonymously share how you spend and save – and get some expert advice on how to sort out your finances – get in touch by emailing ellen.scott@metro.co.uk.
MORE: How I Save: The disabled marketing assistant earning £18,500 a year and living in London
MORE: How I Save: The 24-year-old blogger and consultant with £75,000 saved
source https://metro.co.uk/2019/10/31/save-24-year-old-birmingham-earning-21000-year-9450-saved-11016047/
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