Why You Really Need a Budget

calculator
If you want to stop being poor you really need to start budgeting

I get fed up of reading blog posts where people say they don’t budget or they don’t need a budget. It makes me mad! You may be one of those people that finds the thought of having a budget rather boring, but it’s essential. If anyone tells you that you don’t need a budget they are lying. Not having a budget means that your bills don’t get paid on time. It also means you may have to get into debt just to be able to pay for the basics in life.

In the world of Financial Independence/Retire Early there is a focus on making it sound fun and exciting. In reality, it can be hard work. Stephen Covey said that effective people are prepared to do things that other, less effective people, aren’t. Believe me, if you want to be effective in the field of early retirement and financial independence you’ve got to put in the work. This means having a budget. To some of you will seem like common sense, but I am always amazed at how many people don’t actually have a grip on their money.

So what does a budget look like?  

How to set up a basic budget

If you want to have any chance of getting control of your finances then you need to start looking at what you are spending your money on. If you don’t know how much is in your account and you are blindly handing over your credit/debit card to buy something that you don’t really need then you are in trouble.

You could start by keeping track of your expenses over the next few months, but really you need to look at a whole year. I’d recommend pulling out your old bank statements and having a look at where your money went.

Light bulb laying on grass
If you want to keep the lights on you need to start budgeting

Predictable Expenses – monthly

Let’s start with the easy part. Look at the regular bills that you are paying each month. For me these are gas, electricity, mortgage, council tax, water, phone and broadband and TV licence. I recommend setting up a separate account to pay these out of. You can automatically transfer a set amount to that account the day after payday. With that done you won’t be at risk of having the gas cut off.

Predictable Expenses – annually

Secondly, there are some bills that you only pay once a year. For me these are:

  • Car service
  • Car tax
  • MOT
  • Vehicle recovery
  • Car insurance
  • House insurance
  • Travel insurance

I also add money for medical expenses such as opticians, dentist, my physio appointments. Finally I add money towards my holiday fund. For some of the annual bills there is the option to pay them monthly by direct debit, but often this increases the annual total.

Make a list of all your one-off annual expenses, plus anything else that you want to save towards each month. Add up how much you spend on these in a year and then divide by 12. If you are going to have a second account for your monthly expenses you can then add this amount to your post-payday transfer every month. That way, when the yearly bill comes around you’ve already got the money saved. It also prevents those expensive months, as you spread the cost over the year.

Savings

If you haven’t yet got a grip on your spending, then finding some money to put away each month may not be at the top of your list. I would hope that as you’ve gone through all of your main expenses you will have discovered where you could make some savings. Hopefully you’ll have been amazed at how much you’ve wasted on things that in retrospect you could have done without. Once you’ve worked out how much you can afford to save it’s just a matter of transferring that amount to a savings account or preferably an ISA each month.

woman doing pilates
A Pilates class – one of my weekly expenses

The remainder

What you have left is yours to spend as you see fit. I have six categories for this money. They are food, petrol, toiletries, Pilates, social and miscellaneous. As I am someone who likes budgeting I allocate a certain amount to each category, but it’s entirely up to you how you spend this. As long as you don’t go overdrawn by the end of the month then you’re doing okay.

So there we are, a simple guide to start to get a grip of your expenses. It may seem like a lot of work to start with, but once it’s in place you won’t have to worry anymore when you get to the end of the month as to whether you’ve got enough money to pay the bills.

Do you have particular problems with your budget that you are trying to tackle? Let me know in the comments section or if you’d rather keep it private send me an email via the contact form and I’ll see if I can help you.

Everyday Ideas for Saving Time and Money

In this modern and hectic world everyone seems to be so busy, but there are easy ways to save time, along with making some financial savings as well. This is particularly important if like me you are interested in the financial independence/retire early movement. Making small savings every day can help you to increase your savings and having more time might just help you find a few hours each week to work on a side hustle. Therefore, here are some ideas how you can save time and money every single day.

Do less washing – you won’t be smelly – I promise!

Laundry

Wash items less

Washing clothes is time-consuming, costs money and is bad for the environment. The first way to save time and money on laundry is to hang up your clothes after wearing them once, instead of washing them. Now I don’t mean underwear, just items like trousers, skirts and jumpers. I wear those several times before washing them. I also wear blouses and t-shirts twice. In between the first and second wear I put them on a hanger on the front of the wardrobe door. This stops them from getting creased, allows them to air and reminds me that I have already worn them once.

Use an airer

If you use a tumble dryer the cost of electricity can be astronomical. To dry our clothes we have a washing line outside, which in our lovely British weather is only useful so many months of the year. When it’s too cold or wet outside, in order to save money I use airers to dry our clothes. I don’t think that hanging clothes on radiators is a good idea. For a start, I think that it restricts the heat coming into the room and I find it’s too hot for many of the clothes and they can go a little crispy. A much better idea is to just hang them on the airer and stand it next to the radiator. It may sound a bit pedantic, but made sure each item is laying flat. I used to have a flatmate that would hang her knickers on the airer whilst they were still crumpled up. This meant that they took longer to dry and again seemed to have a ‘crispy’ feel once they were dry.

Reduce the ironing pile

As well as putting clothes in the washing machine and hanging them up to dry there is also ironing. Fortunately since Mr Simple got made redundant a couple of years ago I have saved hours of my life as I no longer have to iron his work shirts very often. He spends most of his time working from home and just shoves on a t-shirt and jogging bottoms. About once a fortnight he wears a shirt and like me, he will wear it more than once, so now it’s only one shirt a month that I have to iron.

If you do a lot of ironing, in order to save money I would suggest trying to do a large pile in one go. Heating the iron up several times a week to iron a few items will cost you more money than putting it on once and keeping it at that temperature until you’ve finished the whole pile.

Colouring your hair yourself is easier than you think

Personal care

Dye your own hair

Since discovering the financial independence/retire early movement I have significantly cut the amount of services that I purchase and even before that I wasn’t a great consumer of the beauty industry. When you get to the ripe old age of 50 (and for me long before that) grey hair is a fact of life. Some people choose to embrace this and are happy to go grey, but I just think that I would look so much older, so I choose to dye my hair. This used to involve going to the hairdressers once every six weeks and paying about £60 for a colour, cut and blow dry. I’d never really considered dying it myself, but after reading about Mrs Frugalwoods cutting her own hair I thought that I would give it a go. It is a bit messy, but it saves me so much money. A pack of ‘Nice and Easy’ Dye is just £6. I then just go for a wet cut every few months, i.e. I turn up with wet hair, the hairdresser cuts it, gives it a quick blow with the hairdryer to get out the worst of the moisture and I’m off. That only costs me £20.

Make fewer trips to the salon

So how does this save me time? When I went to the salon to have my hair dyed I would be there for about two hours. By the time they had put the dye on, left it a bit, washed my hair, cut it, dried it and then straightened it, most of the morning would be gone. My hairdresser would often ask me what I was doing later, expecting me to say that I was going out somewhere nice to show off my new haircut. In fact most of the time as soon as I got home my hair went up in a clip and I got on with some household chores or gardening. All that drying and straightening, which I can do perfectly well myself, was a complete waste of time and money. On top of the time and money spent at the salon there was the travel time and if I took the car, the cost of petrol. It’s only a mile away, but it all adds up.

As well as my hair I am now plucking my own eyebrows instead of getting them waxed and using hair removal cream on my other facial hair. Each task only takes a few minutes, saving another trek into town and yet more money.

Cleaning

Be tidy

One of the best ways to save time on cleaning is not to make a mess in the first place. When you’ve finished with something, put it away. When you pick up the junk mail on the way in the door put it straight into the recycling bin rather than leaving it on the side to pile up. Eventually you’ll have to sort through it.

Ban ornaments

I’ve never been a great fan of ornaments, but I think that if you want to save time on cleaning it’s really important to keep your environment simple. I can never understand ‘collectors’ – shelves and shelves of figurines or fancy teapots. To my mind these are just dust collectors which you have to spend hours of your life keeping clean. So, save time and money – by not buying them and therefore not having to dust them. If you really must have something, keep it simple and buy just a couple of things that will be easy to move when you need to dust that shelf.

So there we are, just a few simple ways to make life easier, giving you more time and saving you a few pennies.

Simple and Healthy Meals from the Freezer

Make simple and healthy meals that you can freeze

I have mentioned several times that this month, in a bid to save money, we are eating out of the freezer. For Mr Simple and I, eating out of the freezer means eating home cooked meals that one of us made extra of last week or last month. As a rule, I tend to use these as we go along, particularly if I am going to be home late or if Mr Simple has to cook, which often happens on a Wednesday now, as I go to my Pilates class. It isn’t that he can’t cook, in fact he is a better cook than I am, but he is reluctant to spend too much time on meal preparation when he’s got a lot of DIY to do.

I find that there are many benefits to eating this way and it takes a lot of the stress out of meal planning and preparation. In particular, the benefits of eating this way are that it is:

Cheap

Many of the meals that freeze well are made with inexpensive ingredients such as vegetables and beans. We mainly used tinned beans e.g. chick peas, kidneys beans, but you can use dried as well. The dried versions are cheaper, but they take more preparation as you need to soak them overnight and boil them for over an hour. Another frugal ingredient is lentils, which sometimes need soaking, but a lot less than the dried beans. I find pouring on boiling water instead of cold water when soaking speeds up the process. Red split lentils don’t need any soaking at all and are especially good at thickening stews and curries. Particularly as we come in to autumn and winter you can use root vegetables which are very cheap, such as carrots and potatoes.

Carrots – cheap, good for you and they last in the fridge for ages

Easy to make

You don’t need to possess amazing culinary skills to make many of these meals. It just takes a bit of peeling and chopping and opening a tin or a packet. Food such as curry or vegetable stew can be made in one pot and then you do some rice on the side. You can make it even easier and have some crusty bread with it instead. Keeping it simple means that there won’t be a lot of washing up afterwards.

Healthy

As the meals are heavy on vegetables and beans it’s easy to get in your five a day and they contain high levels of protein. To make it even healthier stick to accompaniments of brown rice, quinoa or mashed sweet potato.

Time saving

Once you’ve cooked and eaten what you want the rest can go in the freezer. The next time you want to eat it you just have to remember to take your dinner out of the freezer in the morning or the night before. Then you can have your evening meal ready quickly by just heating up your defrosted food and adding a grain or other carb of your choice.

Make courgette and feta cakes – they freeze really well and are delicious

Below are some examples of what we are eating this month, along with where to go for examples of recipes, to give you some ideas if you want to save time and money on what you eat.

Veggie chilli – this is a staple in our household. Usually it is made by Mr Simple as he would say that I am too tame with the chilli and he likes it a bit hotter than I do. We have several of Hugh Fearnley-Whittingstall’s books and the recipe comes from one of those, but it is also on his website. Instead of the usual kidney beans he uses pinto beans, but I am sure you can use whatever you have in stock.

Black bean curry – I currently have the ‘Curry Guy Veg’ out of the library and he has a recipe for black-eyed bean curry. I used black beans instead. He doesn’t appear to have a website, but here is a similar recipe for you to try.

Courgette and feta cakes – these are something slightly different as they are a bit fiddly to make, but delicious and they freeze really well. It is a Delia Smith recipe and they are a good way to use up a glut of courgettes.

Veggie burgers – I find that most, if not all, vegetarian burger recipes freeze well. This month I found we had four different types in the freeze rso got them all out and Mr Simple and I had them with polenta chips and a salad.

So there we go, I hope you feel inspired to start filling your freezer with healthy and delicious meals which will save you time and money. After a long day driving to work and back, sometimes in the dark, it is good to come home to something warm and comforting which you haven’t had to spend a lot of time cooking.

Ten Habits to Make You Rich

Build habits which will give you more of this

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Over the life time of this blog I have been making my way through Tom Corley’s thirty habits in his book, Rich Habits Poor Habits. So far I have looked at ten of them, so I thought that it would be a good point to take a breath, remind myself of what they were and have a look at how I’m getting on with trying out some of his ideas. If you’ve missed any of the posts I’ll link back to each one for you below so you can check out the full details. I will also let you know other resources that I’ve come across recently which may help you if you want to work on a certain area.

So here we go…

Number One – I will adopt good daily habits and follow these good daily habits every day

I’ve been doing some reading about habits recently as I am re-reading James Clear’s book ‘Atomic Habits’ and making some notes. I was going to write a post about it, but Latestarterfire beat me to it, so I would just suggest that you read her post. You can also listen to James Clear talk about his book on the Afford Anything podcast.

During another, more recent episode of Afford Anything, Paula Pant’s interviewee, Kristen Berman, claimed that habits are overrated and you should foster one time decisions that force behaviour change e.g. if you want to save, set up a direct debit to your savings account from your current account on pay day or if you want to walk more, get a dog as it will force you to go out twice a day no matter what the weather. (By the way, if you are thinking of getting a dog, then I would strongly recommend reading Chrissy’s post on her recent decision to give a home to a four-legged friend). Although Kristen almost dismissed habits, much of her advice about cultivating behaviour change was similar to that of James Clear so it is worth a listen to both of the episodes.

Number Two – I will define my dreams and then create goals around each dream. I will focus on my dream-goals every day

This is such an important area. Many of us plan for our weekends and our holidays, but we don’t plan for our lives, we don’t think about where we want to end up. We just follow the same route as everyone else, school, maybe university, job, long term relationship, children, grandchildren, retirement, death. A lot of that may be very enjoyable (except for the death part, obviously), but there are other possibilities, other realities, you just have to be brave enough to be different. For me this is a constant work in progress as I am still working out what my dreams and goals are. How about you? Is your life going to way to you want it to? Are you just doing what is expected of you by others rather than making a conscientious choice? If you want some help setting goals then listen to this podcast by Natalie Bacon.

Number Three – I will devote at least thirty minutes each day to increasing my knowledge and improving my skills. I will invest in myself every day

I have certainly improved my knowledge over the past few months through reading and listening to podcasts, but my skills are probably much the same. In a bid to invest in myself and this blog I have recently purchased the Genius Blogger’s Toolkit, an amazing package of courses, which should help me to develop ‘A Simple Life’ over the next six months. So watch this space!

How are you increasing your knowledge and skills? There is so much free information available these days. Whether it’s online or from real books from the library don’t let yourself stagnate. Learning shouldn’t just be something that you did at school.

Eat plenty of this to keep you healthy

Number Four – I will devote thirty minutes to exercise every day. I will eat healthy food every day

I manage the healthy eating part of this most days, but it is the exercise portion which I am still struggling with. I have been doing a small amount of jogging a couple of times a week and when we had a trainee assistance dog recently I did do a lot more walking, but on many days I won’t even do 2000 steps. Basically, I could do much better and it is definitely an area I need to work on, probably like most of us.

Number Five – I will seek to build strong relationships with other success-minded people

I have been making an effort to keep some notes on other professionals who I meet through work; details they tell me about themselves so that I can refer to them if we are going to meet again and ask them questions, showing that I have remembered what they told me before. Okay, I haven’t remembered, I’ve written it down, but I’m only human and the more I chat to someone about their lives the more details that I retain. I am hoping this will help build relationships at work. One difficulty is that I don’t actually want more success in my job. I am content with my role and plan to do this until I retire.

As for in my personal life I struggle to find anyone who is interested in personal development or FI/RE in real life and just rely on my virtual ‘friends’. I am trying to make an effort to join in with local events e.g. there was a community cinema event last week and recently I went to see a play in the village hall.

How do you connect with likeminded people and where do you find them? Are your friends interested in personal development?

Number Six – I will live every day in a state of moderation

In many ways I am a moderate person. I am calm and not subject to extremes of emotion, but my savings rate is not moderate, it is extreme and so should yours be. How else can we achieve our financial goals otherwise? This month we are living out of the freezer in a bid to save money on food and so far it is going well. I’ll let you know how we get on in my usual monthly review.

Number Seven – I will take action on my goals every day

This is hard as my goals are personal rather than work ones and I don’t always seem to find the time or I am too tired to work on them. If I take the week as a whole I do feel as though I make progress, but finding the time to work on the blog is hard. I have been helping Mr Simple with some DIY for a couple of evenings this week and last week I had social engagements on several evenings. When I come home at 10pm I just want to go to bed rather than turn on my computer and write an article. Basically, this is a work in progress.

What are your goals? How do you manage to make progress on them? Have you tried writing a monthly review to reflect on your progress? I think this is such a good way of seeing how far you’ve come.

Write down every day what you are grateful for

Number Eight – I will engage in rich thinking every day

The practice of gratitude is one which I used to do, but it has fallen by the wayside. I have just started reading ‘The Miracle Morning’ by Hal Elrod and one of his six activities for the morning is ‘scribing’, which can just be writing about what you are grateful for. Whether or not I will be adopting his advice for how to structure the beginning of my day is yet to be seen, but I do feel that often we look on the bad side and are prone to moaning, so a focus on what we are grateful for can only be a good thing.

Number Nine – I will save ten per cent of my income and live off the remaining 90%

This is an area in which as you know I am ahead of Mr Corley as I save 16% as well as paying double our mortgage payment. If you don’t currently save anything though it would be a good starting point.

Number Ten – I will control my words and emotions every day

I’ve already mentioned Natalie Bacon, who is one of my favourite podcasters. She is rather an over-excited and very ‘American’ presenter (sorry to any of you from across the water who might be reading this), for whom everything is ‘awesome’, but nevertheless her advice about modifying your thought processes is amazing. I continue to meditate most days and look forward to her weekly advice which is always interesting and gives a new perspective on life. I cannot recommend her work enough as she is fascinating and her shows are usually fairly short, 20-25 minutes.

So that’s all the habits that we have looked at so far. Each one could be a book in itself. I don’t hear Rich Habits Poor Habits mentioned often, but it is such a fascinating and useful piece of work as it is not just his views on how to get rich, but written after he carried out a study of people who grew rich. If you are interested to find out more check out his book or stay tuned as I will be considering the rest of his habits over the coming months. And if you’ve made any progress in these areas or have any questions just let me know. Or, just fill in the blank: I will work on Tom Corley’s habit number ___ over the next month.

Creating Peace of Mind

Having some of this stashed away for an emergency reduces stress when you encounter a bump in the road

I haven’t had much luck with my car recently. You may recall that a few days after I returned from my holiday with my mother someone pulled out of a side road and crashed into the side of my car. Fortunately he wasn’t going very fast and swerved once he saw me coming, so the damage was limited to dented bodywork. That’s all going through the insurance at the moment and my car has been fixed and looks fine.

I was glad to get my car back after having to drive a hire car for several days, but then last week it let me down. I had travelled for about an hour from home to do a visit for work and as I turned the car on when leaving, the radio didn’t come on. I just thought, oh God, the radio has packed up now and was frustrated that I wasn’t going to be able listen to my podcast on the way home. I then started pulling off and the dashboard display went blank except for a few red lights, one of which said ‘P/S’. The steering also became difficult. I turned off the engine and got out the car user’s manual. There was no information about what the ‘P/S’ light meant, but it said that the vehicle should be taken directly to the garage.

Unexpected events can be very stressful

I sat there for a minute or so and considered calling the recovery service, but decided to turn the car on again and low and behold the radio and the dashboard display came on. I decided to drive home, avoiding the motorway in case the car failed when going 60mph. It was a very stressful journey and I was relieved to get home safely. When I did so I rang the local garage and arranged to take it in the following day. They identified a problem with the battery which has now been replaced and I am hoping this has solved the fault.

All the way home I tried to tell myself that it could be worse. The fact is that whatever was wrong with the car I have money in the bank to pay for it to be mended. In fact I have enough savings to buy a new car (well a second-hand one) with cash tomorrow. Now I don’t tell you this to brag and I don’t want to have to buy a new car, but I do have the luxury of being able to do so if I need to.

This all got me to wondering what it must be like not to be able to pay for those problems that crop up. I need a car for my job and so couldn’t go without one. I would therefore have had to get a bank loan or a car on credit. This would mean paying interest. If it was just a matter of paying for repairs that would be even more difficult if you didn’t have money in the bank. It might mean paying on a credit card if you have one or getting a pay day loan. Both of these mean that the repairs are likely to cost you more than you actually paid for them.

I felt stressed at the thought of having to get my car repaired or to have to buy a new one, but was at least able to tell myself that both of these options were open to me and within my means. I can only imagine how much more stress I would have felt if that were not the case.

Many financial bloggers recommend building up an emergency fund and the events of last week are a prime example of why this is so important. Life is a series of problems that we are given to solve and some, if not all of them, require money. Even if I could fix the car myself I would still have had to buy a new battery to install. We all like to think that things won’t happen and we’ve got much more interesting things to spend our money on than insuring against the future and events which in reality are inevitable.

So if you haven’t got an emergency fund then I would strongly encourage you to start putting away money for one. In the long run it will save you money as you will be able to avoid the interest payments associated with loans and credit card payments.