Tuesday, 26 March 2013

Living elegantly and well within your means

The concept of living within your means somehow sounds terribly old-fashioned.  To me it conjures up images of a 50’s housewife trying to stretch the housekeeping money.  But its a concept that seems have even more meaning in current times, where just about everyone is feeling the pinch.
Pre-Biscuit, Mr Biscuit and I were in the very lucky situation of having 2 substantial full time salaries coming in every month.  Things were good enough that the cost of holidays didn’t really need to be considered too much, and my clothing ‘budget’ was more or less whatever I fancied spending.
Following the birth of the Biscuit, I was lucky enough to have 6 months maternity leave with full pay, so even then things didn’t really change (in fact as I was spending less, they were even easier financially).  But then I went back to work part time – 4 days a week.  And we hired a nanny for the Biscuit – even more expensive than nursery.  And then 4 months later Mr Biscuit was made redundant.
So our disposable income went down overnight by about 70%.   Although Mr Biscuit is now nicely self-employed and loving what he is doing, he is evidently at the moment not earning what he used to.
Slowly the penny dropped that we probably needed to start budgeting and that the ‘thoughtless’ spending that we’d been used to couldn’t carry on.  We were actually very lucky that we had never gone overboard on the mortgage, and had only borrowed an amount that one of us could easily pay on our salary.  We had no other debts, and also a reasonable level of savings to keep the wolf from the door in the worst case scenario.  Our car isn’t fancy either, and was paid for in cash a couple of years ago.
I’ve been hearing the phrase ‘elegant frugality’ bandied around the blogosphere.  No idea where it started, but it felt like something I could embrace.  I couldn’t truly comprehend a self-denying, bad-food eating kind of frugality, but I was feeling excited about a change in lifestyle which focussed on simple but enjoyable home cooking, making the most out of basic and affordable ingredients, a wardrobe where each piece was considered and appropriate and within budget, and pleasant and fun holidays and outings. 
My ideas and actions aren’t necessarily focussed on those people who might be in a worse situation financially; those who may need to consider the repayment of significant debts or who doesn’t have the necessary cushion of savings.  They may need to be more robust in their approach – there is plenty of help out there – one of the best known in the UK is Martin Lewis on MoneySavingExpert.com. but there also seems to be a huge community of bloggers who espouse true frugality and economy.  Try searching for the words ‘frugal blog’ and see what you find.  I’d be interested to hear about any real gems.
I’m planning a series of posts, with some of the tips that I’ve found helpful in balancing the budget. 
The first step is evidently to know what you have coming in, and going out.  There are various tools out there to help (including one on MoneySavingExpert), but depending on your abilities with excel and other software, you could easily create your own.  The main thing is to include all outgoings – including the intermittent ones such as Christmas, car repairs/servicing etc, and not just those regular monthly bills.   And don’t kid yourself.  Look at your bank statements and credit card and be honest about how much you spend on clothes, or beauty treatments, or hair, or dining out.  The exercise can only work if you have the full picture upfront.

Having done this myself, I was showing initially about a £1000 per month shortfall.  The next step was to find ways of cutting this down – ideally without too much suffering!
Any good ideas are more than welcome here.

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