I don’t understand how SE people budget

[LostwithSE]

NC for this.

DH and are I just rubbish with money. I’ve been trying to get better all my life, he doesn’t really seem to care. I am paid a high salary: he is Self employed. This works well because it gives us flexibility with young children (previously both commuting into the city)

However, we have high outgoings and his earnings are completely unpredictable to the point I don’t know how we can rely on them. In year 1 of his business his earnings were used for holidays and home improvements and I paid for everything else which wasn’t always easy. I run out of cash almost every month.

We’re now in year 2. He underestimated his tax so all earnings for the next couple of months will go on paying that.

Added to this he’s being paid late by customers and I feel like due to the tax issue we’re just never going to be “ahead”- cash comes in, it goes straight out to cover an urgent business expense.

He hasn’t contributed anything to the “family budget” since Christmas (he paid for all the presents, food etc)

I’m now due to go on maternity leave in a couple of months, and my carefully planned budget to pay for this simply hasn’t materialised. At present isn’t the money due to come in, and though this can change it makes planning impossible.

My biggest concern is cash timing, ie he might have the money overall but is there £x mortgage payment available on X day of the month?

As well as advice to budget (are there any organisations that can help with this?) any advice on how to discuss this with DH? It’s impossible to have a rational conversation because we both get annoyed and upset and he refuses to talk about it.

To be honest, at this point I don’t even know what to talk about. The easier option seems to be wait and see what happens when my maternity pay runs out

Sympathies LostwithSE. DH is SE. Never know what’s coming when. Bills might get paid or might not. We’re looking to change his job to employed soon. SE just too stressful.

We really struggle. We dont have a high family income and DH income is hugely variable from 800- 4000 in a month.

What we have done is take everything down "as if" we dont have a lot of money and dont then spend it on months where there is a proper income. In your case a huge reduction in outgoijngs. Look at everything and pare back.

Really me having a reliable income would help but isnt currently feasable.

So cut back on holidays and home improvements and give yourself an income to work with monthly that is less than you'd earn on a bad month. Stick within that and put the extra into a separate account for lean months that come with being SE.

Yes to the tax issues and general money discussions in our house :(

There are no holidays or home improvements to cut back on this year. That’s what he paid for last year. Just to give an indication of how unreliable his set monthly income is.

In Terms of cutting back I am:

-Switching energy supplier
-Switching credit card balance to 0% card (just applied, let’s see if it’s accepted. It won’t reduce the monthly outgoing but at least it will be paid off faster)

• switching WiFi
• cancelled gym
• upon mat leave, SORN second car to save tax and insurance

Things I can’t do:

• get out of phone contracts
• get out of a personal loan (high monthly payment)
• change mortgage
• Change council tax
• change childcare (although this will go when I’m on maternity leave)
• reduce petrol expense (over £200 a month to get to work)
• reduce insurances (just checked)
• cancel tv license/ water/ car tax and insurance
• cancel daughters swimming lessons (whilst they can be afforded they’re essential- and cheap)

Plus the cost of food and consumables will go up with a newborn

Really makes me feel better to know we’re not alone though, so thanks all

“give yourself an income to work with monthly that is less than you'd earn on a bad month. Stick within that and put the extra into a separate account for lean months that come with being SE.”

Sorry kneel just re read this and understood what you’re saying. So it’s not me who is SE- I am employed but going on mat leave. My income currently pays all outgoings.

A bad month? The DH (who is self employed) went from November to February without earning anything at all 🤣 so no point estimating an amount if he’s not going to earn it (this is how I constructed my last budget, which is now redundant)

Thai is how I do it.

10% of every invoice paid in goes straight to my savings account for my tax bill. I have calxluated this is enough for me based on my personal allowance. He’ll need to work out what his % is.

Then we have a joint account where our bills come out and I transfer my half accords on the last day of each month. Whatever is left is my account is mine for the business or for me to spend but if I have a lean month coming up then I save some of it to cover my bills the following month.

Frankly if he’s not making enough to cover basic household bills then he needs a new job! Simple!

Sounds like you need to get down to actual amounts rather than general ideas.

Write it down or make a spreadsheet, monthly what is coming in and exclude your dh for now.

Your income, child benefit etc, for each month. What maternity pay will you be getting and when does it stop?

The monthly outgoings, including the months where things will change ie dorm car/reduced petrol, increase in weekly shop.

Your dh need to ensure the tax thing doesn't happen again by putting it away every month without fail. Including this year so far where he's only been putting together last years.

He needs to get a job and earn a regular income.

The longer term plan will have to be establishing holding a large enough cash float in the business to smooth out the income if such irregularity is expected to be long term.

In the shorter term I think unless you have significant savings you will probably need to plan to return to work ASAP post delivery or massively reduce outgoings.

“Your income, child benefit etc, for each month. What maternity pay will you be getting and when does it stop?”

I’ve done this- the money to cover bills and living expense runs out in October 19.

So he will obviously have earnt some money by then but how do we get head of ourselves to ensure this covers bills so I can be off a little longer rather than catch up

Can you find a financial counselor to help? If nothing else sitting down with someone objective to help you make a plan might make your OH realize that with maternity leave coming up you need to get sorted.

“In the shorter term I think unless you have significant savings you will probably need to plan to return to work ASAP post delivery or massively reduce outgoings”

This is what I’m concerned about. I’d rather not pretend I’ll be off for longer if I need to return in October. At least I’ll know. But he won’t hear of it, he insists the money will be there and I’m very tempted to give it a go so he can feel the pressure for once.

No point in him getting a Employed job- going by the last 2 years he’d earn far less. He’d be better off as a sahp as after travel and childcare costs he’ll barely be contributing anyway.

Ooo! A financial counsellor! I didn’t know such a thing existed- will google now. This is exactly the sort of thing I think we need

All I’m getting is financial advisors, which we don’t need. This is the problem it’s really hard to find professional help/ advice with this sort of thing

He needs to be realistic about his business. Is he likely to start earning money in this? If not, then he needs to find a job.

We've been there. Dh became self employed when he lost his job in 2013 and due to knowing childcare would probably cost as much as he would take home SE became a good flexible option. After four years we agreed he would find something else as the unpredictability of it, customers not paying on time, having to take every single job that came in was too much stress. He's gone back to an office job now and he can't believe how much he is loving it for the simple fact every four weeks he gets a nice big lump in his bank account without having to beg for it. Every time there are school holidays and/or something unusual I wish he still was so we wouldn't have the stress of trying to cover everything but that stress is far outweighed by being paid.

I’ve done this- the money to cover bills and living expense runs out in October 19.

So he will obviously have earnt some money by then but how do we get head of ourselves to ensure this covers bills so I can be off a little longer rather than catch up

So you carry on as you do now, his earnings go into two savings accounts, one for tax and the other for maternity cover. What did he earn between May and October last year, should he earn more this year on ave?

The fact is you can't have the certainty you want.

Go and speak to your mortgage lender. Ask for a payment break for the term of your mat leave, that will free up £x for a while to allow for you to get on top of all the other bills.

Like pps have said, write down all costs and work out what's coming in and how much is going out.

If you are unable to take a mortgage break, prioritise that bill over all others, you can live without some supplies as long as you have a roof over your head.

Try contacting Christians Against Poverty (CAP). They have advisors who can look at your budget and help you plan ahead.

I'm partially SE, and my rule of thumb is that 1/3 of all income is set aside for tax, NI etc. If it's not used, I keep it as savings for when income goes down.

Some things on your list aren't really true - there's no reason for your food bill to go up when you have a newborn, for instance. Get as much baby stuff second-hand as you can, and don't be tempted by gadgets you don't need, or big name brands.

What is his line of work?

I’ve looked at the costs already. I doubt we can take a mortgage break (didn’t think these even existed anymore) because we remortgaged in September, so very new customers.

He earns money, it’s just unpredictable. I don’t think that splitting money into tax/ savings is going to be realistic right now because the tax needs to be paid by August. I will ask him though.

This is the root of the problem I think, that I need to talk to him about it and it never goes well. We never get anywhere with it.

Well the food bill will go up eventually, because there is an extra person in the house. We also need to buy nappies, wipes, creams etc that aren’t currently purchased.

This is my second baby so I don’t need to buy anything for it. Never said I did.

So CAP help people like us? It’s a charity, we earn a lot of money and it all seems a bit cringe to take up resources like that. I’ve tried CAB in the past and they were crap. Probably good if you need help claiming benefits or negotiating with creditors but not really for situations like this

We’re taking about the tax further down the line, the next lot is due end of January, when are you planning on saving for that?

Loads of sympathy as I'm self employed too and for the first ever I've gone over my overdraft limit today by £42

I am waiting for 2400 to hit my account but with the double bank holiday that's going to happen tomorrow while of course my HMRC first tax payment for this year came out today

Are you able to actually count up what he's earned over the last year - is that an actual profit (and not just a hobby business with more going out than coming in?)

If so I would borrow £10k to be your cushion - with the date of paying it back in 6/9 months depending on income

You seem to have a tight grasp of your budget and it's a cash flow problem?

If it's not a real business that makes actual money then borrowing 10k is of course a terrible idea

Only you know which it is

Spreadsheets are your friend, budget monthly for meals with a plan (will really help with a newborn too). Prioritise that loan being paid off. He either needs to bring in work and/or get a job outside of your hours doing something (plenty of self employed people also take extra work).

I think I've just worked out what I can do for a job - financial counselling!