First to complete our spending diary is Danielle. Could keeping a closer eye on her finances be the key to undoing years of poor financial habits…
What is your financial goal?
To become a bit more savvier with money. I’d say I’m quite good at saving month on month but, as I don’t have any concrete saving measures in place, the money often ends up being frittered away later down the line. My ultimate goal would be to be able to save for a larger house deposit and set a good example to my young niece on how women can look after both themselves and their money.
Do you feel this is currently obtainable?
Not without guidance.
What’s your biggest financial fear?
My biggest financial fear is probably not being able to support myself or my family and having to be reliant on someone else. My home life as a child was quite turbulent. My mum always pressed the message of retaining your own financial stability, even when in a relationship. Her mentality was that women needed a cash reserve to enable them to leave and start again if situation dictated. Because of this, I think my attitude is to always have cash in the bank to support myself and my family should need arise. However, I know that cash isn’t king and my money could be working harder for me rather than just being sat in the bank. As my own home life is very loving and stable, I think it’s time to break with learned habits and begin my own, more ‘positive’ approach to investments and savings.
What do you estimate your weekly ‘bits and bobs’ spend to be?
Around £20 but I’ve never counted. I can’t see it being any more. I plan all my meals and don’t buy lunch.
How did you feel completing the challenge?
I’m genuinely shocked at how much money I fritter away.
What did you learn?
That I’m not as thrifty as I thought! I think the biggest lesson is that I don’t need to constantly ‘treat’ people at the expense of saving for myself. I know that those closest to me would much rather see me find my feet on the property ladder or have a bit more financial security rather than be bought ‘gifts’. In doing the challenge I did actually have a chat with family members about these spending habits. Although they are always appreciative and can see the kindness behind it, they said they’re beginning to feel a sense of guilt in constantly being bought things- big or small. That’s certainly not the outcome I’d wanted but I can fully appreciate it and there’s almost a sense of freedom in knowing that a visit to family doesn’t need to always be accompanied by gifts!
Will there be any aspects you will be taking forward?
I will definitely be giving one of the financial diets a go. I really like the idea of the 80:20 approach and paying myself a weekly fun fund. I think that it will not only help me save money, but will also mean I’m more present with family and not whiling away the evening online shopping/ browsing. It’s about time as well as money and I think that this has taught me that my time, as well as my money, could be better spent.
Do you think you will continue to keep a spending diary?
I think it’s something I will do every 3 months or so to keep a check on things if I feel old habits slip back.
Do you feel you have a better understanding of your finances as a result of completing the challenge?
Absolutely. I never truly tracked what was going in and out because there was always more than enough left at the end of each month. But now I know that that in itself doesn’t mean I have healthy finance behaviours. I’m also annoyed at how many payments I make through contactless. I think that from now on, I’ll make sure to pay myself my weekly ‘spends’ via cash as I know the psychological effect of handing it over might make me think twice about spending £200 a year on cans of coke!!
Do you feel that, after completing the challenge, your financial goal is now achievable?
Yes. This has shown me that, although I have savings at the end of each month, I can also be making savings each month. Even if I just took those weekly wasted spending’s and put them towards investment opportunities etc, it would give me the gateway into financially securing my future.
Anything else you’d like to add?
I think keeping a spending diary is a great and unobtrusive way of gaining insight into your own money habits. It’s certainly something ill be encouraging my niece to do as she gets older and I’m looking forward to teaching her that money isn’t just a short-term safety blanket for when things go wrong, with careful planning it can be a gateway to long-term happiness, also.
Danielle is a classic example of how financial habits learnt in your youth can affect your spending and saving habits as an adult- something we’ve explored previously in our interview series.
Following this exercise, Danielle already recognises that her desire to please people through gift giving is actually having the opposite affect on both herself and the recipients. Seeing those daily dribs and drabs being spend and how they can add up shows where savings can be made.
Budgeting isn’t always about spending less — it’s about being organised and spending it on the things and experiences that are most important.
Firstly, she and her husband should keep a small cash buffer for emergencies – which can be separate or joint. We encourage women to take ownership of their finances, but this doesn’t mean that everything needs to be kept separate, just that you should remain interested on top of how things stand and review regularly.
For the medium-term goal of saving for a larger house purchase, having a separate, more inaccessible pot for these savings sometimes helps, but we find that having separate log in details and a different banking app puts people off. Instead, Danielle could consider using a system like Starling Bank’s Goals, where you can set specific targets for goals and easily manage and save in many different pots.
Finally, Danielle hasn’t mentioned any longer-term goals or concerns. Even in your 30’s it’s important to understand how the short and medium term financial decisions will impact on your future, be this how much you need to earn and for how long, or the tax savings that could be made (and equally lost out on) if you don’t understand the options surrounding pensions and investments. We’d want to understand more from Danielle about her and her husband’s aspirations for the future so that advice could be tailored to them and so that they can move forward with confidence in their money choices.