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I think for most of us budgeting comes somewhat naturally - when we get paid we put aside money for bills, for food, for emergencies, and then maybe spend the rest, if not madly, at least fairly freely. But I’m trying to help someone who finds it difficult, and for whatever reason spends money as they get it with little regard for what their obligations will be before the next paycheck comes in. I’ve helped them set up a bank account for bills, with “pots” for different things, but a few days into the month and they’re raiding the account for spending. I’d like to advise, suggest some “hacks” without being preachy or overbearing, and I’m finding it a difficult job. Any advice for me, or for this spendthrift person, would be gratefully received - ideas, books, other resources, whatever you’ve got. I’m sort of at my wits end!
Are they an adult, or a child, and why are you helping them?
Is it kwasi kwarteng?
Direct debits set up to pay bills on a certain date immediately after pay day?
I set up a simple excel budgeting tool for the apprentices we have joining us if they need some help/guidance. might be an option?
spends money as they get it with little regard for what their obligations will be before the next paycheck comes in
Forget budget sheets, spreadsheets, apps etc for now - your nowhere near that stage yet. You need to change their attitude, get them to realise the importance of it, what it affects, their future, pension, retirement plans, dependents etc.
Is it kwasi kwarteng?
not quite that level of incompetence fortunately. I’ve tried with the spreadsheets and DD. I think @snotrag has a point that some more basic steps are needed. I’ve tried motivating them by painting a picture of how nice financial independence would be but it’s tough going.
When I was living paycheck to paycheck I used the suggestion upthread. All regular bills were DDs to come off the week after I was paid.
The cash left was mine. Fairly easy at that point to see what you have and mentally divide it by 4 for a target weekly spend.
Independent of what and to what end? What does the budgeting actually look like - you can run out of money on day 25 of the month instead of day 2, you can make it to the end of the month with £6.32 to spare or you could go on holiday give times a year but not have to borrow rent every other month.
Monzo pots have made life easier for me. I've got pots for various bills and savings and allocate it all on payday. I can spend what's left. If I've car service or something coming up in a few months I start a pot for that. Previously I didn't really budget.
Is it worth trying creating a second account the other way round, i.e. after payday move a fixed amount into a 'fun' pot and that is what is available to spend. It could even be done as two direct debits during the month so it tops up after a fortnight rather than having the full amount available at the start and the spending based on that. The rest sits in the main account for bills
Im glad someone said it binners! Im exactly the same! Still battling the spending demons and im 38!!!
I used pots for absolutely everything when we were in a financial hole. I'd even save monthly for expected car tyre replacement, a monthly Sunday roast and a lot more tiny things so we wouldn't be caught out and left short. I think it's the only way so I'm with snotrag in saying that this goes beyond teaching methods and is more an overall attitude adjustment. If they're young it's obviously hard to frame and emphasise benefits that are decades away so maybe concentrate on shorter term goals like holidays etc. If you're in a position to do so, get them to ditch all credit cards as well.
OP it sounds like this may be someone that you’re bailing out?
In which case the first stage to getting someone to budget is letting them face the consequences of not budgeting.
Admit it its Birmingham city Council isnt it....
Yep, another one like binners and ravingdave. I am 'naturally' really, really crap at budgeting. Only because I have a decent wage that I would find it very difficult to blow through without the aid of C&H do I no longer find myself totally skint with a week to go before payday. I'm slightly better than I was, but none of the advice from anyone above would have helped when I was at my shittest with it, it's simply that I'm quite impulsive and don't always think purchases through - it was definitely a "Ooh look, there's a shiny thing I like the look of and I have the money to have it", regardless of what else that bumped come later in the month.
The thing that *has* helped is curbing that impulsiveness and evaluating properly whether I need that thing, whether it has to be that one, whether I can find it cheaper somewhere else, whether there's a cheaper alternative that scratches the same itch etc. Oh, and (after getting into a scrape or two with them) not using credit stuff like Paypal Credit/Pay in 3, Klarna etc, recognising that they're not solving the issue, they're just making it next-month Me's problem...
I used to work with someone who spent his entire pay cheque* down the pub the night he got paid.
He had issues, one of which was wanting to be liked, so he'd go to the pub and keep buying random people drinks till he had no money left.
Spent a lot of time sofa surfing / homeless as he couldn't pay rent...
* Back in the day when you got paid cash at the end of the week...
Glad to see ‘fun’ pot is catching on…. 😉 agree with others, spreadsheets, DD and pots etc. are just tools. What’s needed here is a mind shift. Not sure I’ve got advice for that. Chipping away can be seen as nagging. Short sharp shock usually means something has gone catastrophically wrong. Does the individual even recognise there is an issue?
none of the advice from anyone above would have helped when I was at my shittest with it,
this is what I’m afraid of !!
it’s simply that I’m quite impulsive and don’t always think purchases through – it was definitely a “Ooh look, there’s a shiny thing I like the look of and I have the money to have it”, regardless of what else that bumped come later in the month
yep, that’s exactly where we are. And since they get paid every 4 months there’s plenty of scope for impulsiveness
Does this person live with you?
Paid every 4 months would be tricky for me tbf
And since they get paid every 4 months
What?
Does this person live with you?
no so at least they can’t nick my stuff from the fridge.
im racking my brains to think of how to alter their perspective- maybe somehow cast thriftiness as a challenge so they feel good walking past the Apple Store without going in, or buying Lidl own brand beans instead of Waitrose haricots blancs.
Do they need to do any of those things? Are they in a bad state of affairs now or is it just you don't like it?
What sort of job pays every 4 months?
Im glad someone said it binners! Im exactly the same! Still battling the spending demons and im 38!!!
@ravingdave… Mate… I’m 53! It doesn’t get any better 😂
When I was living paycheck to paycheck I used the suggestion upthread. All regular bills were DDs to come off the week after I was paid.
The cash left was mine. Fairly easy at that point to see what you have and mentally divide it by 4 for a target weekly spend.
This
As for spreadsheets and all the rest of it, with the best will in the world if you started talking to me about that
What are they spending on? If it’s takeaways or ready meals, teach them to cook and shop. It’s amazing how quickly costs rack up when you buy food anywhere other than the supermarket. Helping them find cheaper ways of meeting their needs, whatever they are, might help with the overall spending.
Has this behaviour always been a problem, or just become one e.g. due to rising costs or having to take a lower paying job?
Sounds like they need a benevolent financial domme to handle their finances. Their mum, for example.