For those of you looking for the weekly update, it’s coming. Last week was a big week and so I need the right headspace to tell you about it.
In Australia I was mostly on top of my finances. Bills got paid (mostly) on time, I had a regular savings plan, my credit balance was steadily declining after rising during the very lean university years. I had good systems set up to ensure that I didn’t overspend.
I’m quickly realising how much the Australian banking system actually helped with this. Here, in the UK, I’m increasingly frustrated that these systems are not normal, and hence what I am presented with is, to me, weird; part 3 in the ongoing “Things that are weird” series.First disclaimer: in Australia my primary account was with a tiny credit union that I’d had an account with since I was 12. My account number was 4 digits long. I knew the tellers by name, and they once phoned my mother when my account was likely to get overdrawn as they thought I was out of the country. I know this is not normal. Most of what I am going to talk about, however, is.
My system went like this: On the day that I was paid, regularly every second Thursday (this is important), my rent and savings (including an account which was for large annual payments I knew were coming up, like insurance so I didn’t get stung) would be immediately taken from my account so I didn’t notice.
On the following day I would gather all my outstanding bills and pay them . I’d take out $100 and put it in a tin behind my desk for lunch and coffeee at work. I’d buy my fortnightly train ticket. If I was good I’d then do a quick paper tally of my known expenses for the fortnight, deduct that from the remainder, divide by 14 and get a rough idea of my maximum daily expense limit.
Throughout the period, whenever I withdrew cash from an ATM I got a paper slip telling me my up-to-date balance. This is important. It allows you to keep a decent idea of your ongoing balance so you know when to slow down expenditure if necessary. I also had a small sum in a side account attached to my main one, which I could transfer over by phone at any time of day or night in an emergency.
I made sure that I had purchased food to cover the remaining period, particularly if it was getting low.
Over time I watched my finances really stablise. I was able to afford lots of domestic travel and 1.5 overseas trips in a 12 month period, along with updating my very tired wardrobe, because I dealt with the big things upfront and was able to keep a finger on the pulse. I had no chance of my bank allowing my account to be overdrawn so I had minimal money stress. This was good.
Now the weird. In the UK:
- Monthly pay and monthly bills are the standard. This makes automation more onerous, a bit more manual.
- When taking money out of an ATM that is not your bank’s ATM you do not get a balance update. This makes keeping tabs on balances REALLY tricky. If money can be transferred, why can’t information on balances? Seems obvious.
- Any transactions made outside of business hours do not get immediately debited from your account, even if you use a bank’s EFTPOS machine. It can take up to 2 business days for it to clear. This means that your actual balance left to spend is not necessarily a reflection of the number showing on your account. Especially over a weekend.
- Internal transfers between your own accounts does not occur immediately. Again, especially on a weekend. It can take up to a day for this to happen. (I got badly stung on this the first time I tried it. Cost me an uneccessary £16.50 train fare to London which should have been covered by my travel pass that wanted to renew)
- An overdraft facility on your account is more standard than not. You pay interest on the overdraft, and get hit with fees if you go over the agreed amount (which you may have agreed in the fine print when you opened the account). To me this is worse than a credit card. If you decide that clearing your credit card debt is a primary goal then you can cut up your credit card, you can decide on a regular amount to pay on the balance and refuse to put more on it depending on your circumstances and timeline to pay it off. An overdraft is a big money hole that you pour your salary into and with a reduced ability to know how you’re tracking against your debt until the next pay period. Psychologically much, much more difficult. It can easily become all or nothing in terms of restriction of spending, leading to a cycle of “I mustn’t spend anything, it’ll affect my overdraft balance” “oh, I’m still behind, screw it I might as well buy that thing I’ve been denying myself”. Too easy to spend, not enough control, utter madness!
Nothwithstanding the fact that the first 6 months in a new country are likely to be a bit of a financial drain, this set-up has made saving that extra bit more difficult. Especially the part where expenses are not cleared from my account the minute they are incurred. Last I checked computers didn’t need to sleep, so what’s the problem?
In all, I get the distinct impression that the Banks don’t seem to respect that IT’S MY MONEY! and I’d like to have better control over it, thank you very much.
 I once cancelled an account with Optus as they had a standard 7 day billing period, and as I was on a fortnightly pay period, the standard in Australia, I was constantly receiving warning letters. When asked why I was cancelling I told them. The only response was “oh, yes, that’s fair enough, as we can’t change that”. Win!