KATE SAYS:
‘My budgeting needs to change’
‘When my husband died nine years ago, it completely changed my attitude to money. He was the one who looked after our finances, so I suddenly had to take control. It made me much more thrifty, especially for the first couple of years when I was still finding my feet. I was very aware that when you’re on your own, it’s all on your shoulders.
For example, I’m not a frivolous spender, but I needed new glasses this month, so bought cheap ones from Boots – I’d never buy designer. However, I do spend on things I enjoy, which is food and eating out – and don’t feel guilty about it.
There were quite a few emergency purchases this month, including the glasses, a new tyre and the phone. I find it tricky to plan ahead for these, because you never know when disaster will strike. The biggest shock to me from keeping the diary was how easily little buys add up! I went shopping in week 1 and spent nearly £100 in a few hours. But on other days, I spent nothing at all.
I keep a mental tally of how much I’m spending, but I never usually write it down. I put all my Christmas spending on my John Lewis credit card and deal with it in January. I get vouchers to spend there and always pay it off in full.’ What I learnt: ‘I’ve realised that I’m actually living within my means and can afford little treats. My budgeting for big things, like Christmas or emergencies, needs to change. I need to save ahead rather than paying things off after the event. I’m going to start building up an emergency fund so I’m not hit so hard when things go wrong.’
KALPANA FITZPATRICK, GH FINANCE EDITOR, SAYS:
◆ Set up a rainy day fund Although Kate has savings, she also needs a fund for emergencies, which she’s realised. She should aim for at least three months’ income (ideally six). ◆ Save on petrol One of Kate’s biggest spends is on petrol. Petrol prices can vary massively between local stations, but she can make sure she gets the best price per gallon using petrolprices.com or its app. This could save her as much as £220 a year. ◆ Be a cashback queen A credit card that offers vouchers may seem most appealing, but a card that earns her cashback could be used to boost her savings. ◆ Prioritise pensions Kate should be putting something towards her retirement fund – paying into a personal pension means she will also benefit from tax relief. She can find a financial adviser at unbiased.co.uk or vouchedfor.com to discuss her options.