A colleague at work told me today that she and her husband have been saving for seven years for a house deposit. They have now saved £25,000 and are about to exchange contracts on their first house. They only got married a few months ago and had a beautiful wedding so were saving for that at the same time. I think this is a real achievement as they were also paying rent and have fairly average salaries. This is the way it is now if you want your own place – it requires discipline and determination.
In the same spirit, we are trying to save more and spend less. Now that we have a lodger giving us a bit of extra income this is suddenly so much more achievable.
First each month, we do of course pay the bills. The mortgage, council tax and utilities are all set to go out within a few days of being paid. We pay our bills monthly where we can. I know we would pay slightly less on things like insurance and road tax if we paid in one go, but we don’t want to purchase on a credit card unless essential and a monthly direct debit for these things helps us budget. I know all the bills will be paid shortly after we do and we can relax. We are working towards having the money in advance to pay for these kind of things, but we’re not there yet.
Next we put money aside for birthdays, holidays, car expenses, Christmas and a contingency fund. We are aiming to save 10% of our income. We have one account for the contingency fund and one for all the other things we are saving towards.
If we continue to live as frugally as possible and make extra money where we can, we should be able to put more away sometimes.
So that is the plan. The contingency fund got used on, well, contingencies last year. I hope this doesn’t happen again but in the end that is what it is for!
Do you have a financial plan for 2017, and have you an emergency fund set up?