Hello all, Ell here. If this is your first time here, why not check out the About page to find out a little bit about me. In today’s post I am going to discuss a Statement of Affairs. Now that I have learnt how to complete and use a Statement of Affairs properly, it’s a great tool to help me keep track of our money and create a realistic budget. That’s the key to success, using a realistic budget. There is no point creating a budget that doesn’t include everything you spend money on throughout the year.
What is a Statement of Affairs?
What is it? Well, a Statement of Affairs (SOA) is a list of all your incoming money and your outgoings. Once you have completed the SOA, it makes it easier to identify where you can make savings.
It sounds easy doesn’t it. That’s what I thought the first time somebody suggested it to me. I used a calculator that I found on Money Saving Expert forum. If you want to use the same calculator that I used, you can find it here.
I sat down and put all my figures in. It looked great, there seemed to be plenty of money left over once everything had been accounted for. So why didn’t we have that much money left over at the end of every month? Why were we paying for things on a credit card and had very little savings?
What did I do wrong?
I started to read more on the internet so that I could get it right. I needed to get this right for the sake of my family. After reading other people’s experiences and budgets, I found out what I had done wrong. When I completed my Statement of Affairs, I was just using figures that I thought were ideal for each spend category, rather than what we actually spent.
For example, what I wrote down for our fuel spend was £120 which I thought was a reasonable amount considering the driving we did every day. However, I started to follow the advice that so many people were offering, which was to go through all my bank statements and receipts to see what we were actually spending money on. It took AGES but was well worth it. I found out that rather than spending £120 per month on fuel, I was actually spending closer to £160.
Groceries was my biggest shock. I thought £260 per month was about the right amount for a family of 4. When I started looking through bank statements and receipts, I found that we were spending on average £500 per month! It was no wonder we never had any money at the end of the month. The really terrible thing that struck me was how much food we were throwing away every week. I might as well have been throwing money away!
What to do next?
I finished checking through bank statements for 6 months. It was a really good exercise because it highlighted things that we had spent money on that I didn’t think of in my first attempt at completing the Statement of Affairs. It gave me a really good indication of how much money we spent on insurance, entertainment, birthdays and Christmas. I had all the information in front of me and found plenty of areas to improve.
With everything in front of me I decided to look at each category and figure out a way to save money on all of them. Some of the changes were small changes and didn’t save hundreds of pounds, however all of the little savings add up. Every day I try to tweak my budget to make extra savings. Sometimes the things I change work out for us and sometimes they don’t. The best thing about doing this is I know I can keep making changes but because I’ve already reduced our outgoings, I have a bit of wiggle room in our budget without our rainy day fund suffering.
I’ll go into more detail on what changes I made on our budget next time. If you would like to read about some of the changes in more detail, please subscribe so you get an email update every time a new post is published.