Making a financial plan

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?

11 thoughts on “Making a financial plan

  1. Our contingency fund is in a bank savings account – very little interest but nothing pays very much at the moment anyway, and this way we can get immediate access if we need to. Although it’s all one account I keep a spreadsheet which I call “virtual cocoa tins”, with different amounts allocated to various headings: mini-emergency fund, car expenses, house maintenance & replacing major items, leisure travel. Seems to work for us.

  2. I use a budget plan that is free (!) on ‘The Money Advice Service’ website which allows for constant updates and covers everything including christmas, birthdays, holidays, hobbies etc. I recommend having a look. Also I have a super-large piggy bank for emptying my change into!
    I also do ‘bank account skimming’ where you regularly transfer the pence in your bank a/c balance into your savings. It doesn’t sounds like much but you do accumulate a few pounds over the weeks.

    • I use a similar tool month to month – budget brain from Really keeps me on track!

      • that model was too complicated for me!! but thanks for the encouragement that I’m not the only one needing a bit of help with my budgeting*
        ps. just got home with 4 packs of apples, each reduced to 42p (1/3 normal price) and loaf of bread reduced to 14p.. very happy!!
        * I am a qualified accountant!!

  3. Yes, I do the same as saraband, with similar categories.
    Setting it up was one of the best financial tips I ever received! 🙂

    I put 15% of our monthly budget into it but need to revise that now as I’ve noticed that some of the categories are becoming a bit over-funded! I’d say 10% is a good goal, but anything is better than nothing!

  4. Do you have a longer-term savings strategy as well? I know retirement planning is different in UK, but we find multiple long range plans are essential including cash savings, college fund, home maintenance, and a secondary after tax retirement account. Well done creating accounts that work for you and having the discipline to add to them.

    • I have a good work pension scheme luckily. The girls can get a student loan for university. In the uk they pay back a smaller or larger amount after they leave, depending on how much they earn. So long term is taken care of

    • there’s not so much choice in the UK – I think partly because we don’t save up for College-plans. Also at the moment, the interest-rates are so low here that one of our good choices is to go with straightforward immediate or short-term savings-options. But you are absolutely right that retirement planning is essential – at any age. I so wish that I had saved loads more into a pension plan when I was younger and would have been able to do so. I am still several years off retiral age but am not now in the position where it would be prudent. Ah well, we live and learn!

  5. One of my nieces will come and stay with me for free university in Edinburgh.She lives in London but born in Scotland and has a blood relative who will support her in Scotland Me. Of course her mum and dad will but I,m a sort of guarantor..Gives her free Education.

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