Recently, my paid maternity leave came to an end and I have started my unpaid leave from work meaning that we are now working from one salary. As such myself and himself had a look at our finances to see where we are. With the realisation that even when I go back to work we will still pretty much be on one salary as childcare takes the majority of one salary, it turns out that where we were was in a worse place than we thought. So out came my accountant hat (a very fetching fedora if you must know!) and after numerous cups of tea, and a very colourful spreadsheet later, I had set out some saving plans. Here are my tips and tricks.
The first thing I have done is look at the structure of our bank account and our payment methods. After looking at this, I have made the following observations and adjustments.
1. Set up regular payments.
Where we could, we have changed the payment date for bills and other regular expenses (rent/mortgage, savings etc) to be paid out of our bank account a couple of days after our salary gets lodged. Not only is there often a cost saving for paying bills by direct debit but this also eliminates the need to hold money in our account for a bill that would be paid at a later stage. Doing this avoids stressful situations where we have very little money left after paying the bill or avoids necessary overdraft fees if we had used this facility to make the payment. Getting all the bills paid at the beginning means we know exactly how much money we have for the month for all our other personal expenses.
2. Planning for set expenses.
There’s nothing worse than receiving a letter in the post for a big expense with only a month notice to pay, or less. This will put anyone on the back foot because there is no other option but to pay it and make sacrifices elsewhere. To avoid this strain, as best as is possible, we have counted up all our set expenses for the year. I’m not talking about rent/mortgage, electricity or gas expenses but instead I’m referring to those expenses that are often only paid once in a year. These are usually easily forgotten….. car insurance, health insurance, car tax, tv licence fee and even christmas gifts and holidays. We counted up the cost of all these and set up a monthly payment from our main account to another secondary account to cover these. We will then use this second account for a source of funds for these expenses. Yes we may have fees to pay on the second account but these will be much less than any overdraft fees or loan interest.
Ok so now that I have structured our regular bills as best I could, the next step was to look at our monthly expenses. So I took the following steps…
- Use debit card for 1 month.
Often we take out €50 from an ATM but can you say for sure exactly what that was spent on? It’s very difficult to do for most of us, so by by using our debit card for a specified period we got an accurate record of our expenses. At the end of the period, we got our bank statement and categorised all items into expense types. Once we did we were easily able to see our spending trends and surprised ourselves on a couple of these. I would never have thought I spent much more than €15 a week on coffee but when we looked back at statements it was much more than this. We went through the expenses and decided which ones we could live with cutting down on, or even better cutting out completely. For example I now make my own coffee and treat myself to a cup from my favourite barista twice a week.
2. Get organised.
We also have started to plan meals better during the week and at weekends to avoid the go to take away when we haven’t anything in the house to cook. This is surprisingly easy to do once we found some dinners that we liked to cook and are really tasty rather than the old bland meals we used to cook. This bit will take a bit of trial and error to get these recipes but once you do you’ll love your home-cooking. Also, bringing lunch with us is another great saver and frankly is much better value against the sandwiches we used to pay for, and again much tastier.
3. Avoid wastage
Groceries make up a significant amount of our monthly household expenses. As a result we have switched to a low cost supermarket for as much of our grocery shop as we can. I honestly can’t fault these retailers for the majority of items and have significantly cut down on our spend in the last few months. However, I would advise everyone to be aware of the products you are purchasing at these retailers. In the first few weeks we noticed that a large amount of the fruit, vegetable and milk products had a much, much lower spoilage time than other mainstream products. As a result we were throwing out a lot of products before we even had a chance to use them. This was such a waste of food, and of money, so we changed back to mainstream products for a few things and for others we only buy what we need in the next one to two days. I know this is annoying as we now need to do a top up shop mid week for fruit and vegetables but when it saves money and reduces food wastage I think you’ll see its worth it.