April’s over, and May Day launches us into a new month!
At the start of April, I set myself the following goals:
- Work out how much I will need to live on when I retire, and how much I should be saving each month.
- Request a state pension statement after the new state pension goes live on 6 April to see how much I’m likely to get at age 67 based on the new rules.
- Invest into stocks and shares ISA – choose the best platform and funds for my situation.
- Renew my focus on everyday spending.
So how did I do?
Retirement savings: I have decided to aim for two-thirds of my current salary as my target pension income and, thanks to the Age UK and Money Advice Service pension calculators, now have an idea of how much extra I need to be saving each month. I haven’t yet started these extra savings, but I know what I need to start doing to meet my pension short-fall.
State pension statement: The new state pension went live on 6 April, but I’ve yet to call to request a statement showing what I’m likely to get at age 67. I’ll do this in May, but it’s not urgent as I’m only in my forties and I think I know what I’ll get. The work I did using the pension calculators above was more useful, as the extra saving is something I can act upon right now.
Stocks and shares ISA: I invested some money into my first ever stocks and shares ISA, getting in just before the tax-year deadline of 5 April. The rush was probably unnecessary, as the ISA allowance for the new tax year to April 2017 is £15,240. Much as I’m motivated to save, I’m unlikely to have funds to reach this maximum for 2016-2017! However, as I’m finding with writing this blog and setting myself mini-targets each month, having a deadline for action is no bad thing, and by getting my investment in before last year’s deadline, I still have the full potential to save tax-free for this coming year. I spent quite a bit of time researching which company to use – there’s a lot more to think about compared to a cash ISA – and know I’m going to invest into tracker funds. However, this is where it stopped. The money is still sat in cash, as I haven’t actually moved it into any funds yet. A mixture of indecision and fear has struck. I’m worried about falling stock markets, about losing money, and am dithering around. Something to address in May, it seems baby steps are the way forward!
Renew my focus on everyday spending: Sitting here writing this, I am excited because I have just had a light bulb moment! I have tracked my spending as usual, and April has been an expensive month, following on from an expensive March. I have overspent my monthly budget by almost half, which means I don’t feel in control of my finances and am anxious. This is not good!
However, I think the problem is not so much that I’m overspending on everyday items, more that I’m keeping track of irregular expenses that my usual budget does not take into account. When I worked out earlier this year how much I spent on irregular outgoings over the course of a year, such as gifts and hair-cuts, I didn’t want to add the monthly average of these into my usual monthly budget. I thought that I would be tempted to overspend on ordinary items, such as food and socialising, if my monthly total had been inflated to take into account infrequent expenses that didn’t occur every month. I think failing to manage my irregular expenses is at the root of my inability to budget properly, and it has taken me until about 5 minutes ago to realise that the answer might be to have 2 separate budgets, one for my ordinary monthly expenses, and another for my irregular expenses.
Playing around with my beloved Spending Tracker, I’ve just discovered that I can add another account to the app, and that I can change its settings to view the data on an annual rather than monthly basis. It means I can start tracking my irregular expenses under this separate account, and can budget for my usual monthly expenses in my original account. I’m hoping this might solve the biggest problem I have with monitoring my spending.
Looking at the above, I’m happy…and it doesn’t stop there!
Rate switch on mortgage: Well I’ve gone above and beyond for this month by switching to a better mortgage rate, and it wasn’t even one of my goals for the month! It had suddenly become something that shifted from back to front of my mind because of decreasing job security, and I learnt in the process that this is an alternative to re-mortgaging.
Cheaper energy cashback: This month I received the £30 cashback for switching energy supplier in February via moneysavingexpert’s Cheap Energy Club. This was paid despite just switching to a better tariff with the same supplier! No effort on my part this month, but a financial reward nonetheless!
Penny-day-challenge: £73.81 saved to date, though April has been a bung-the-lot-in-in-one-go-challenge! This maybe shows that the idea behind saving a small amount from loose change each day isn’t actually that practical, but the end of month rescue does still mean an extra £23.34 has been put aside rather than being spent so maybe it’s still a good idea?
I’m not sure how interesting these end-of-month summaries are to read, but I like writing them as it reminds me I’m making progress, and they give me a boost to keep going. I’d recommend to anyone who is trying to get on top of their finances to actually write out a couple of goals for the month, as it really does seem to make a difference.
So what are my May goals?
- Trial an additional account on my Spending Tracker to see if this helps me budget for irregular expenses.
- Choose which funds to use in my stocks and shares ISA.
- Request a state pension statement.
- Find a good savings account for new monthly savings.
I’ll report back in a month!
Image: Pixabay: jstarj