Our weekly series How I Save challenges people to get honest about their money situation. Really honest.
We want to take a realistic look at how we’re spending and saving our money, to get a better sense of what our budgets should actually look like.
So each week we ask someone to track their spending for a week and recap their saving habits, then we give them some expertise they (and we) can learn from.
Last week we followed Joel, from Romford, who managed to save up £11,016… mostly because he doesn’t have to pay rent.
This time we’re chatting to Lily*, a 30-year-old charity fundraiser living in London.
How Lily saves:
I earn £29,000 a year and in my savings account right now I have £13,200 – £11,400 of which is in a two-year fixed ISA.
The ISA is a mixture of money that was put aside by my mum when I was a kid (when you could get actual interest) and money I saved through working full time while at university – I worked evenings and weekends so I had quite a boring life which kept my outgoings really low. In hindsight I wish I’d worked less and had more fun.
I currently save about £1,500 a year.
I’m saving for a house deposit (eventually) and holidays (I have family abroad and a long list of places I’d like to travel to.
Most of my savings are in an ISA I can’t withdraw from which keeps it safe from the ‘borrowing’ habit I had when I was a bit younger.
I put £100 a month into a savings account I can only withdraw from in person in the bank and £50 into one I can access at any time, which I treat a bit more like a piggy bank.
These come out along with my rent when I get paid so I never really see the money, which helps me budget. When I first started working full time on a living wage I saved £50 a month. I’ve gradually increased this as I earned more.
I also use the Chip app on my phone to save small amounts at a time as an extra contingency fund.
I worry too much about money, given that I am in a pretty stable situation. I think it’s because I’ve lost jobs suddenly before and been unemployed for many months and I want to make the most of being in a good position.
I check my bank account most days and work out how much I have left to spend per day until I get paid and that helps me mentally plan spending.
I put expensive items on an interest-free credit card and am sensible about paying it off in installments – I never buy anything if I haven’t worked out I can afford it and how much I’ll pay off each month.
I don’t really leave myself enough wiggle room for emergencies and sometimes I need to pause my standing orders, like with Christmas coming up. Sometimes I get fed up with being sensible and buy something expensive I don’t need.
How Lily spends:
Monthly expenses:
- Rent & bills – £640
- Therapy – £140
- Savings – £150
A week of spending:
Monday: I make a charity donation of £10, buy a bag of oranges for £1.95, and spend £3 on bus fares.
Tuesday: My bus and Tube journey come to £6.30, but I’ll get £4.80 of this back in expenses.
A drink after work comes to £5.65.
Wednesday: My contactless is blocked so I have to buy something before I can use the Tube – I buy a croissant for £1.40.
£12 goes towards a staff social activity, then £7 goes on Tube and bus travel.
Thursday: £3 on bus fares. I buy lunch at a food market for £4.50, then pick up some eggs and veg on the way home for £3.30.
Friday: £12 goes on a bus and Tube journey, but £10.80 of this counts as expenses.
A train to visit a friend costs £20. I send £5 to a crowdfunder while I’m on the journey.
Saturday: I stay in with my friend so I don’t spend anything!
Sunday: £2.40 on a Tube journey, £8.24 on groceries.
Total spent this week: £97.94
How Lily could save:
We spoke to the experts over at money tracking app Cleo to find out how Joel can save better (and what we can learn from his spending).
Note: the advice featured is specific to one individual and doesn’t constitute financial advice, especially for a London budget.
Here’s what Cleo said:
There are people who start thinking they’re rich on a night out and wake up with money ‘missing’. There are also people who don’t seem to go out at all but have a ‘mysterious’ hole in their budget at the end of the month (this is you).
Main vice:
You said you sometimes get fed up with being sensible and buy expensive things you don’t need. Unless you’re talking about the eggs and veg on the way home, we’re struggling to see where you’re spending anything on yourself at all.
We think your monthly income is about £1,900. We deducted your monthly expenses (£930) and weekly outgoings (around £350 a month). This left us with £620… Where’s it all going?!
You’re either not spending enough on yourself for fun things or you are, and you’re just not telling us about it. Either way, something needs to change.
For anyone reading: Cleo has a dedicated Roast Mode that helps you confront all the spending you wish you never committed. Just say ‘roast me’ and she’ll do the rest.
Where you’re going right:
We really can’t fault any of your weekly spending (that you’ve told us about). Your most expensive purchase was the £20 train ticket to see your friend, and we think stuff like this is super important.
Checking your bank balance most days and mentally planning your spending is very admirable, but we also suspect this takes a lot of time and effort. There are heaps of budgeting apps out there that can help you with this kind of stuff.
Spending plan:
We’ve bumped up the amount you’re moving to savings each month (so you have a bit more wiggle room for emergencies) and given you a dedicated budget category to record any spending on yourself.
Monthly expenses: £1,030. This includes £250 towards your savings.
Weekly spending: £400 for your groceries, transport and ad hoc croissants.
Fun(d): We’re giving you £400 this month. Once Christmas is up, we think you should start moving some of this into a dedicated holiday fund, given there are so many places you want to go!
Bottom line:
Be the fun you want to see in the world. Don’t be afraid to spend a bit more on yourself (or to own up to it afterwards).
How I Save is a weekly series about how people spend and save, out every Thursday. If you’d like to anonymously share how you spend and save – and get some expert advice on how to sort out your finances – get in touch by emailing ellen.scott@metro.co.uk.
*Name has been changed.
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