How to spend it

[Newmoney]

Tongue in cheek reference to the Financial Times magazine

I’ve changed names because someone in my personal life knows my previous username.

A couple of years ago, money felt quite tight. We had just bought a house that needed a bit of work and although the family income was healthy there was no real surplus. Fast forward a few years and both myself and DH having changed jobs with significant salary increases, our post-tax household income has doubled and our fixed costs have stayed the same. We have around £8k/month spare after all living costs and pension deductions. This is an unfathomable amount to me. We are incredibly fortunate and very aware of this.

I like my home and neither of us enjoyed the headache of buying, moving, decorating etc so I don’t feel any real urge to move into a more expensive house. Pensions are building up fine so not too keen to pay in significant amounts extra, perhaps after we’ve paid the house off we can add a bit more but I can’t imagine what we’d spend the money on if we had say a million pounds in our pension so I’m not too bothered about having a massive pension pot. Don’t need a car upgrade.

Aside from charitable donations, generous gifts to family and holidays when they’re possible again, how would you spend this sudden increase in fortunes? Or would you save it all up for the rainiest of rainy days?

Quality of life. That is it. Anything that improved my (and my families) quality of life and happiness is how is spend it.

Try loads of different hobbies, you may discover a new passion!

Travel, invest, buy so many books and build a library... My guilty pleasure

Over pay the mortgage. Invest in ISAs. Start pensions for your kids.

We will be putting the majority of our disposable income into the mortgage and it should be paid off in 2-3 years. That still allows for some indulgences in the meantime and of course after paying off the mortgage we will have a considerable amount. We intend to invest a good amount of this so we can have the option of retiring early and so on but we both enjoy working so we’re not envisaging either of us giving up our jobs any time soon.

Well, I'd probably have to leave it a year or so, but I personally would love to travel, and with that amount of money 'spare' each month, I'd be upgrading my flights.
Sooooooo many places I want to go to - the only issue would be getting enough time off work.

I definitely want to travel! I had my kids earlier than my friends and have spent years watching them go on lovely holidays to all sorts of interesting global destinations whereas we’ve had to limit ourselves to mostly trips to see family (including overseas family). Of course that’s lovely too but I’d like to see a bit of the world!

Half a million pounds in your pension only equates to £20k ish per year. You’ll probably want more than that.

£20k (which presumably would keep up with inflation over the years given the pension is invested) for me plus state pension, plus similar for DH sounds like more than enough given our biggest expenses (childcare and mortgage) would be long gone. That’s substantially more than the national median family income...

Save it for at least a year (or more) and start making a list of things you want to do.

That's what we're doing. Nothing we need, nothing extravagant that we want, similar amount to save. Kids are still young and in school so putting it all away and planning!

Private medical and dental protection if you don't already have it, get wills and funeral protection in order, get your roof checked - expect the unexpected. Then book courses for hobbies you can enjoy in retirement, travel when you can and consider supporting a favourite charity

Private health insurance? You might already get through work and I don’t have it so no idea if it’s worth it but always think I’d look into it if I had more money to spare each month.

Anything you’ve thought about doing and written off in the past for being too expensive? I liked the idea of flying lessons at one stage but never even looked into it as assume the costs would be prohibitive.

I would probably also invest in really good quality long-lasting things as and when needed - really good vintage furniture, well made shoes, coats, the best quality saucepans etc. can all take up a fair bit of your disposable income, but if you choose right will give you joy for a long time and ensure you’re not adding to the problems of fast/disposable everything.

Not possible at the moment but culture can be expensive too - I had a family member who spent hundreds on opera and ballet performances (and very little on almost everything else) because that’s what they enjoyed. There used to be a pricy annual membership to the Curzon cinemas in London that I thought looked great. There’s probably other memberships or ‘Friends’ schemes if you have a particular interest in any area.

Similarly, you could get yourself some life memberships whilst you have the cash - things like National Trust - if you would enjoy being able to visit them. Must be others, not sure what.

(I used to love HTSI magazine btw - so much weird fun to be had flipping through and going ‘how much?!?!?!?’ on every page)

Thanks for the great advice and fun suggestions!

We’ve already been saving for over a year and living life as usual other than overpaying mortgage. Not expecting any major changes for another 6 months until this covid drama is over.

I just signed up to private medical (get it through work but have to pay tax on it so haven’t done it in all the years I’ve worked and been eligible), get dental for free. Good idea about the funeral protection. We just had our roof checked and sorted this autumn! That did knock us back a few k and we were so grateful not to worry and just be able to go ahead, 2 years earlier and it would have been a major stress.

I’ve always loved horses and thought in the past that would be my one indulgence so I’m finally looking into lessons! So excited about this. Maybe that alone will be enough to rinse us

Actually I’m not sure about the funeral thing as I think we would always keep enough cash in savings to cover it