How to control personal spending: month 2 – mid-month update

If you’ve read the last post, you’ll know that my aim for the month of June is to stick to my personal-spending budget of £120 by dividing it into 24 x £5 a day, which means six days not taking the £5 daily allowance. Furthermore, because cash tends to come out of the ATM £10 at a time, I have been withdrawing it roughly three times a week. So how’s it going?

Not very well. Actually, I should qualify that by saying that I am still within budget albeit with less money that I would like to last until the end of the month – £20 to last ten days, which would have been £40 using May’s method. In other words, I have overspent.

So what went wrong? Well, the new method does not regulate (control) spending as effectively as the £4-a-day method, but I think this is largely because I am withdrawing larger sums (£10 a time) which then have to last two to three days. It feels like the bad old days of withdrawing cash as and when I “need” it, without any thought for what I’ve spent so far, or how much I need to last the rest of the month. Hopeless.

What I need is a very clear way to visualise the money available to me today, tomorrow and every day. What I need is this…


…but with an extra row of pockets for days 25 to 30. I could then put £4 in each pocket, or £5 in 24 of the pockets. OK, this may be taking things too far, but this kind of visualisation would make the situation as clear as it could possibly be. So for next month, I think I’ll try something like this and it turns out there are products out there that would be perfect:

pocket calendar

This one even has see-through pockets and spare pockets at the end for any carry-forward amounts. Obviously, spending money on this would be wasteful and so I’ll have to come up with my own version.

I’ll be back in a couple of weeks with a two-month update and hopefully a new plan for July’s spending. In the meantime, feel free to add comments and suggestions.




How to control personal spending: after one month

Quick recap: I want to see if I can better manage my everyday spending by giving myself a small daily allowance of £4 (£120 a month) rather than drawing out money as and when I feel like it and hoping I last the month without overspending – which never happens. I hope to prove, one way or other, if there is any truth to the old adage “Look after the pennies and the pounds will look after themselves”. In other words, I want to know whether learning to control small amounts of money can help me to manage larger amounts of money. I started at the beginning of May 2018 and have now completed the first month. Here are my thoughts so far…

There is no doubt that managing on small daily amounts of spending money has kept me on budget. Well, more or less… It was all going so well before getting a little ragged in the last few days of the month. I had been merrily using up my £4 a day and then had a very unexpected yet very necessary expense of around £10. The only option was to withdraw £10 from an ATM, which meant that I ended the month £10 over budget. I’ll admit that a little bit of complacency crept in at the end (on the home stretch and all that) and I didn’t see the expense coming, nor was I prepared for it. On the one hand, I’m beating myself up because I didn’t even make it one month without messing up; on the other hand I think lesson learnt. It’s also worth debating whether this trivial-spending budget should be able to cope with the unexpected – it is a spending budget and not a saving budget, after all.

As an aside, it’s interesting to note how the problems I’m facing on this very small scale reflect those that I face with my much larger monthly budget covering all household expenditure. And that’s good because the whole point of this exercise is to see what I can learn from successfully managing small amounts of money.

Perhaps the tweaks discussed below will address these points.


Two ways to tweak the method

As discussed previously in the two-week update, my personal spending can vary significantly from day to day – I can go for several days and not spend a single penny, and then suddenly need to spend several times my self-imposed daily allowance of £4. Dealing with these larger expenses takes some forethought and planning, and I’m trying to make this easy so that it works. This led me to consider splitting my total monthly spending budget of £120 in half and allowing myself £2 a day while keeping £60 aside as a ‘slush fund’. The idea is that I can focus on controlling an even smaller amount of money on a day-to-day basis while still being able to cope with slightly larger expenses of, say, £10 by dipping into the slush fund. Importantly, the total monthly budget of £120 stays the same. The only problem I can see here is that this method is actually more complicated, requiring me to control not only a daily budget, albeit an extremely trivial £2, but also the slush fund. Also, even when I’m just thinking about it I start to feel the ‘burden’ of managing that slush fund.

I have since thought of another method, which involves a daily amount of £5 but only for six days of the week. Hence, £5 x 6 days x 4 weeks = £120. The ‘day off’, so to speak, could be easily accommodated on one of my ‘non-spending days’ while £5 notes are much easier to deal with compared with £1 and £2 coins. This simplifies things significantly although it doesn’t address the issue of unexpectedly needing slightly larger amounts, which is where the slush fund would come in. However, to what extent should trivial daily spending be able to cope with the unexpected? Larger unexpected expenses ought to be covered by some other contingency, right? This needs further thought as it would be helpful to define what can be reasonably demanded of the trivial-spending budget. This is also good because it means I’m starting to really think about what expenses might occur and how to deal with them.


The next month

After giving it some more thought, I’ve decided to adopt the second tweaked method for the month of June. I will alow myself £5 a day (actually £10 every two days because that’s how it comes out of the ATM) and then skip a day each week where I know I won’t spend anything nor have anything that I’m ‘saving’ for. So the monthly budget is still £120, but I hope these changes will make it simpler to manage. Simplicity is the key!

I’ll do a two-week update on the new method around the middle of June. As always, feel free to comment with any thoughts or suggestions.




How to control personal spending: two-week update


The regulated spending is going well. I have not crashed my budget nor ‘borrowed from tomorrow’, and there is always money in my pocket for trivial everyday purchases. The £4 daily limit makes it easy to say ‘no’ to even the smallest purchases because I know that if I don’t spend it then it will be still in my pocket tomorrow – a very important point!

However, I am becoming mindful of the need to plan ahead, even when dealing with these small amounts of money and trying to think just a few days ahead. If I know I am going to need, say, £20 to help someone celebrate their birthday with a few drinks then I need to make sure I save £4 a day for five days, which means no trivial purchases for five days. This is perfectly doable with a little effort but what happens when such things happen on impulse: birthday drinks are tomorrow, or the family decides they want fish and chips tonight? These unplanned-for expenses are impossible to fund on £4 a day without a few days’ warning. However, I am beginning to understand where the peaks are and wonder if a weekly budget might work better because it would allow for slightly larger spends but at the risk of blowing the budget – a double-edged sword perhaps.

I am determined to stick to with the current method for the rest of the month before deciding if any tweaks are needed. It doesn’t stop me thinking about possible changes, though. For example, instead of dividing my £120 into 30 x £4, I could put £60 aside for larger impulse spending (a slush fund), such as going to the pub or having fish and chips, and then divide the remaining £60 into 30 x £2. So that would be £2 in my pocket every day, but there would be this other amount of money for larger expenses. This slush fund would still be intended for monthly personal spending and so could be used for anything, or if unused then the remainder could be rolled over to the following month or used for something else, e.g. debt reduction. Hmmm, good idea.

Main points so far:

  • Spending is being regulated, i.e. no overspending so far
    (this is the most important thing)
  • Most days, £4 is more than enough
  • Some days, £4 is nowhere near enough and so planning is required, but this is not always possible so…
  • Consider putting half of monthly budget into a slush fund for larger spends and reduce daily amount to £2.


  • Obtaining change in £1 or £2 coins is not always easy unless spending.
  • After a few days of not spending, pocket can get quite full of change. Need a system for changing coins into notes, but wary of adding complexity.

I will post a full report at the end of the month together with any changes I want to make for next month. Feel free to add your ideas and comments below. It would be good to hear from anyone who has successfully (or unsuccessfully!) tried something like this to limit their personal spending.

How to control personal spending: an experiment

calculate-calculating-calculation-3305You may have heard the expression ‘Look after the pennies and the pounds will look after themselves’, but it often comes as part of some trite advice on household budgeting from a (usually older) relative. However, many people struggle to manage a monthly budget, possibly overspending by many hundreds of pounds every month, and I freely admit to being one of those people. I find personal finance complicated, too complicated, and so I wanted to find a way to manage my money better. Specifically, could I achieve this by concentrating on the small, trivial, everyday spending, or in other words, by looking after the pennies?

The hypothesis

Take the household income and deduct the essentials such as mortgage/rent, debt repayments, utility bills, insurance, food and transport. And while we’re here, let’s assume that all these outgoings have been reduced as far as possible by paring down and shopping around for the best deals. If they haven’t then do this now.

Whatever money is left over can then be used for some combination of the following:

  • paying off debt
  • savings
  • personal spending

The rate at which debts should be reduced and/or savings increased is a very individual matter, but at the end of the day there needs to be something left for personal spending on those trivial, everyday things: a drink with a friend, a cinema ticket, a birthday card, grabbing some milk on the way home and so on – you know the sort of thing. It is these trivial spends that I want to focus on, the hypothesis being that by regulating these small amounts day in day out – by ‘looking after the pennies’ – I can make my overall budget work month in month out.

What this it not

This is not an exercise in household monthly budgeting. It is assumed that household income has been allocated so that all the important stuff is taken care of.

This is not the ‘envelope system’, which allocates cash into separate envelopes (literally) so that, for example, the money in the ‘groceries’ envelope is used for groceries, and only for groceries, and once it’s gone, it’s gone. For a more detailed explanation of this system, see here.

This is not prescriptive. I’ve read far too many articles and blogs by people who like to give advice but often without ever testing that advice first. I just have this idea. I don’t know whether it’s going to work for me, let alone whether it will work for you. I’m writing this at the very beginning, so let’s see what happens.

About me

I like my privacy, but I want to assure you that I am a normal person: a husband and father of school-age children with a lower-middle income and a mortgage, bills and debts to pay. I think that qualifies me as an average Joe.

The idea

I was thinking about weight-loss diets and specifically those that use a calorie-counting, or points, system. The basic idea is that you have a number of calories that can be consumed (‘spent’) each day, and if you stay within this limit then you will lose weight. It’s quite obvious when you think about it: stick within your calorie ‘budget’ and everything will be fine. More interestingly, however, is that diets like this hopefully educate you about what you should be eating on a day-to-day basis. Once you get the hang of it, you can stop calling it a diet and get on with living your life, just being mindful of what you eat for most of the time and indulging yourself now and again.

It’s significant that these diets work using a daily calorie count. Can you imagine trying to manage a weekly or monthly calorie budget? So rather than having 2,000 calories a day, you have 14,000 for the week. Off you go! I know I would find that very difficult. Which is why it occurred to me that a daily cash budget might be a whole lot easier to manage than a weekly or monthly cash budget. I thought about it on and off for a few days and then decided that the only way to see if it would work would be to try it.

Set a trivial spending budget

How much you allow yourself for personal spending each month will depend on your income and financial commitments, as well as what you intend to use that money for. For example, it may or may not include petrol or bus fares.

I set my monthly personal spends at £120. This figure divides into 30 – the average number of days in a month – but also into 4 and 5, which may be useful later if and when we want to try a weekly cash budget. But let’s not run before we can walk!

So that’s £4 a day.

It doesn’t look like much, or does it? That’s the trouble: I really don’t know yet.

Until now I have been drawing cash from an ATM, usually £20 at a time, and when I’ve spent it I’ll draw some more as I need it. For the record, I’ve also tried drawing £30 and trying to make it last a week before I can have any more. It doesn’t work because I find it too hard to predict what I will need money for later in the week. So instead, starting at the beginning of the month (May 2018), I set aside the full £120 from which I took £20 and changed it into £2 coins (or £1 coins, it doesn’t matter). I keep that bag of £2 coins in a drawer and each morning I take £4 and put it in my pocket, along with whatever money is left over from the day before.

The next bit is pretty obvious, but since it’s the whole crux of the experiment, I feel I should spell it out anyway:

On day 1, I have £4.

On day 2, I have £4 plus what I didn’t spend on day 1.

On day 3, I have £4 plus what I didn’t spend on days 1 and 2.

On day 4, I have £4 plus what I didn’t spend on days 1, 2 and 3.

And so on.

On day 1, if I want to buy something for £5 then I can’t. This is really important. No ‘borrowing’ from future days, no ATM withdrawals and definitely no card payments. If it costs more than the money in my pocket, then I can’t have it. If I still want it tomorrow then I might be able to have it because I’ll have an extra £4 in my pocket, but not today.

I’ve been doing this for a week and so far so good. I’ve taken my children to the cinema, bought popcorn and lunch. I’ve not overspent and I have money in my pocket. It’s early days, but if I can carry on like this for the rest of the month then I will not spend any more than my £120 allocation, and that I will declare a success. Who knows, there may even be some left over…


Join me next time to see how this goes. If you have any comments on my method, including simplifications or embellishments, then add a reply below.