
Pay yourself first before paying anyone else.
I’ve heard this before. Many times. From many different people.
It is quite a difficult thing to actually do in practice…for me at least. The reason that this is so difficult, I’m guessing, is down to a one simple reason: the lack of financial discipline.
Let me work on that.
Financial discipline
I’m now at the beginning of October 2024. My budget spreadsheet is tracking every penny earned, spent and saved.
The glaring hole becomes evident — I have not paid myself since the beginning of September! Sure, I’ve spent money on things for myself but my monthly budget has not specifically allocated any money towards me. Instead, what I have been doing is leaving any excess in my current account and then dipping into it whenever I felt like.
This is impulsive. How can I therefore budget effectively if I’m merely tracking spending but not sticking to a firm allocation?
Pay yourself first
I tallied up all the additional spend, made a few adjustments and decided to settle on paying myself £330.00 per month.
£330.00 — £82.50 per week / roughly £11.00 per day.
On average, that is what I have spent day-to-day on needs and wants as I go about my business. There is the odd expensive coffee here, a takeaway lunch from there, a chocolate bar and a bag of crisps from many places and the occasional extra grocery shop.
To make things a little more interesting — and to instil 100% more financial discipline in my impulsive self — I withdrew exactly 330.00 from the nearest ATM.
Why? Card spending is too easy and too tempting. Gone are the days of entering your PIN for every transaction; it’s all touch-to-pay nowadays. And keeping track of spend this way is a bit of a nightmare. I’m just trying to reign in my impulsive spending: financial discipline.
Put another way, going to the supermarket to buy £100 worth of groceries with my card allows me to overspend beyond what is on my shopping list. Going there with £100 in cash (and leaving the card at home) will force me to stick to my budget.
How it’s going
So far, so good. With five days remaining in the month, I still have approximately 50% of the cash. There has been additional card spending to a grand total of £64.50, mainly in establishments which no longer accept cash. Not an issue as all it means is that in November, I can withdraw £265.50 in cash to rebalance. Or, better still, I can pay for something this month in cash that should be paid for by card. Fuel for my car, for example, something due in the next few days. That way, I can rebalance my books before month-end.
Where I was blindsided in my zeal to discipline myself financially was by the places no longer accepting cash payments; something I just didn’t factor in. Quite a few shops in the UK have now gone cashless. Even the self-checkouts at the big supermarkets are now mostly card-only and this is very inconvenient for cash-carrying dinosaurs.
From November onwards, I will be continuing to withdraw cash but not the full £330; instead, I will keep some aside to use for contactless payments. Besides my main current account, I also use a popular fintech app linked to my phone’s wallet app. I plan to keep it topped up (not by too much) for the times when I need it.
Either that or go stand in a queue at the bank to deposit the cash back into the account! :-)