Why it’s good to write down your finance goals month-by-month
Well, half of a year has gone, which means I’m half of the way through my year of thinking about money! It seems as good a time as any to take stock of how things have been going.
My goals for June (and May if you remember, as I conveniently rolled them over into last month when I didn’t do them!) were the following:
- Trial an additional account on my Spending Tracker (a mobile app) to see if this helps me budget for irregular expenses.
- Find a good savings account for new monthly savings.
- Choose which funds to use in my stocks and shares ISA.
So how did I do?
Spending Tracker – done!
I now have a grand total of 9 separate accounts on my Spending Tracker for categories of expenses that I don’t use every month. This includes expenses that I tend to bulk-buy in one month, and spend nothing on in the following couple of months, or just irregular expenses such as gifts. To some this might sound like an overly complicated system, but I think it’s exactly what I need, and I’m really pleased with it.
Unlike my normal budget which is a fixed amount that starts afresh each month, these new accounts are set up to carry over any unused budget or overspend to the next month. It means I can see if I’m on track as I go through the year, rather than on a strict month-by-month basis.
I’m already thinking I might need to add an extra account for unexpected household repairs. I haven’t done this yet as I don’t have a set budget for this type of spending, but these keep cropping up this year. They also tend to be large so make a big dent in my usual budget when they happen.
Savings account – half done!
Savings rates are currently terrible, and are unlikely to improve any time soon seeing as there’s a good chance the Bank of England will reduce the base rate even lower than 0.5%. Even if you’re prepared to forgo access to your cash for a couple of years, you’re rewarded with no more interest than on many current accounts. So why would you tie your money up?
Sites such as www.moneysupermarket.com outline the best rates on current accounts or regular savings accounts, all of which I think are quite well known – for example, the Santander 123 account (3% on savings up to £20,000), TSB Classic Plus (5% on savings up to £2,000), or the First Direct Regular Saver (a 1-year account offering 6% on regular savings of up to £300 a month). The reason this task is half done is that I’ve been put off by the various terms and conditions they come with, such as charging a fee, paying in minimum amounts per month, having a minimum of two direct debits, or only paying a decent rate on smaller sums in the account or for limited time periods.
I’ve read complicated descriptions of opening several of these accounts, and moving money backwards and forwards between them in order to fulfil the terms of each. However, I’m not keen to set up multiple accounts in this way, it seems like a lot of hoops to jump through to get the higher interest. I’ll probably end up with one, or a mix, of these accounts, but have yet to decide which.
Stocks and shares ISA – not done (again)!
This is for the same reason as before, which is that I can’t decide how best to invest. I’ve yet to work out the bigger picture for my finances so I’m finding it hard to plan. There are still too many unanswered questions around how much I can afford to save each month, how long I’m investing for, and what my risk profile is.
Having reached a half-year milestone, I’ve been back over my activity over the past six months. In addition to the above for June, see list below from the first five months!
- Started reading finance blogs and books.
- Focused on everyday spending – cut out daily lattes, took home-made lunches to work, cut back on alcohol, no-money days.
- Switched to a better tariff with my energy supplier, saving hopefully £600 a year, and receiving £30 cashback.
- Switched to a lower rate on my mortgage.
- Obtained £700 refund from Experian for unwanted CreditExpert credit report service.
- Signed up for Barclays Rewards scheme to earn £48 over the course of the year.
- Got free Talk Talk upgrade.
- Sold £150 of items on ebay.
- Decided on 6 months of expenses as an emergency fund.
- Gathered documents from previous pension schemes.
- Requested a state pension statement.
- Set a target pension income of two-thirds of my current salary and calculated how much extra I need to be saving each month.
- Chose an investment platform and opened my first stocks and shares ISA.
- Decided to buy my car rather than re-financing.
- £166.53 saved in the penny-a-day challenge.
- Gave myself a pat on the back!
Next six months will involve bigger decisions
If you want to take control of your finances, I’d recommend you do exactly what I’ve just done – set yourself monthly targets, and note what you manage to do as you go along. Then at the point when you’ve forgotten what you’ve achieved, go back and remind yourself! When you’ve still got a lot to do, it gives you a boost, and who doesn’t need one of those from time to time? I’ve found writing these monthly summaries one of the most useful things about starting this blog!
I think in the second half of this year I’ll find I manage to do less each month, not because I’m working at it less, but because I need to start making bigger decisions about what is right long term.
Goals for July
So what am I going to focus on for the next few weeks?
- Open a new savings account – I know which are the best accounts, now I need to start using one of them!
- Move my cash ISA – I’ve been told my cash ISA will become inactive unless I do something with it, I need to choose where to put it.
I’ll report back next month!