Help! What can we do with our extra money? Can we have another child?

[HalloweeenQueeen]

My husband and I have two children and are currently living overseas. An opportunity has presented itself to us which means we are able to save around £2k a month for the next 2-3 years.

We are in our early 30’s and don’t own a property yet so saving for that is our first goal. I just don’t know if there’s some other way we could invest this money to give us a better return? Like buying a flat and renting it out.

This extra money we are earning will definitely only be for this 2-3 year period and then we will go back to DH earning around £40k and me earning a very low part time wage of £10k. I am a student at the moment so I’m hopeful this will grow in the coming years.

The other point worth mentioning is that we both would desperately like to have a 3rd child. Obviously we could make this work in the short term but I want to know I can secure a good future for all of my children. I just want to make sure we capitalise on our current financial situation and make this extra money work as well for us as it can.

I’d be very grateful for any advice. Thanks :)

I would buy a house. Far better to provide a secure future for your existing children. That is the best return. You don't want to be renting when you retire if you have the opportunity to change that.

Yes, we will definitely be buying a house but that won’t be until around 2025, when we will be living in one fixed location.

If we have a 3rd child now, my maternity pay would be similar to my current earnings and we would continue to be able to save around £2k per month.

I just want to make sure we are putting this extra money to the best use possible, if that makes sense.

The only thing holding me back on having another is that this increase in earnings is only for a relatively short period of time. If I can find a way to really capitalise on it, then maybe a 3rd child would be an option. I know the expense that comes with children as they get older though and that’s what has been holding us back from trying for another.

And can you afford childcare for three children when you are no longer a student? Or will you be giving up what you have studied towards and rely solely on your husband's wage? Even combined, your current salaries are not that great.

My career would be term time. Also, my other children are school age so childcare isn’t quite so much of an issue as it can be for others.

We can save at least £50,000 over the next 2-3 years. I just really want to know if there’s a way to make the money grow more…

Well there are higher interest accounts or premium bonds

But it's enough to use SS a house deposit

Only you know if you want another child right now

There are ways to grow the money but you also have to take on the risk that it could end up less than if you just saved cash.

Wouldn't recommend property as you will have selling fees on the other end to get your equity back out. Plus it sounds like you don't have the money available to buy now, so you would potentially be buying and then looking to sell in a year or two to get the money back out. You would probably lose any capital growth to various selling fees.

Other option is investing, so you could opt for a global equity tracker fund (I.e. Vanguard Global All Cap) or something riskier.

In your shoes, I wouldn't do anything to potentially affect the capital at all as you only have around 3 years before you need access. The minimum rule for investing is generally 5 years, as you need time to weather the ups and the downs.

Agree with @Alarae. The time frame isn’t long enough to invest in high growth riskier investments.

I’d focus on seeing what else you could do to boost your long term income.

Whether you can afford another child will depend more on your long term income not this 2-3 year bonus (although it will give you a great base and using it as a house deposit is exactly the right idea).

Maybe also start looking at where you plan to live and how expensive that place will be.

To be honest, an extra £2k a month for 2-3 years probably isn't going to be able to be as life changing as you think.

It brings your joint income up to £74k a year for a few years, then you go back down to £50k.

I know everyone's different and many people do it, but I wouldn't feel comfortable to provide for 3 children on a joint income of £74k, even if that was guaranteed long term. I don't think that would be enough to as you say secure a good future for 3 people.

I would just put the money in savings to use towards a house in future.

We can save at least £50,000 over the next 2-3 years. I just really want to know if there’s a way to make the money grow more…

Not if you want access to it in the short term, as a previous poster said.

You could wait til you have the £50,000 in three years' time, then in vest it, but you would have to invest it for a good few years and not touch it. You'd be looking at 8-10 years to see a return.

In your situation, as you have two kids and want to buy a house, I would not do that.

@onelittlefrog out of interest, what do you think a sensible joint income would be to think about having 3?

Teenagers are expensive, so need to think ahead.

Thanks so much for all the helpful advice. It sounds as though just popping the extra in savings accounts is the best bet.

There are a few other factors I haven’t mentioned. Our accommodation is currently heavily subsidised. My husband wage is likely to continue to increase as progression is almost a certainty in his career. (I know I posted upthread saying his salary would go back to around £40k, that would be the case if he isn’t promoted). The other thing is that £2k is a conservative estimate. I think some months well have almost £2,500 saved.

It’s such a huge decision to have another baby. I just don’t want to leave any stone unturned when deciding if we should or shouldn’t.

Having more children is irresponsible. No one needs more than two kids.

Spend the money on the children you have or save it for the future for you kids as life is going to be a lot tougher for them in the future.

How old are you OP? If you have time to wait I’d not be going for a third now. Save and buy a house first.

And what are property prices like where you’d realistically buy? Are we talking central London or the hebrides?

@TheWayTheLightFalls I’m 33 so could possibly wait but now is probably the time when a maternity leave would affect us the least.

Also, we have no idea where we will end up buying. It is very up in the air because of my husbands job. We are aiming to settle somewhere from 2025 onwards to give my eldest continuity in her secondary education but this will likely mean DH living apart from us depending on where his job sends him. I know that’s really unhelpful but there’s loads of uncertainty over location.

I feel like it’s now or never for a 3rd. My two children are desperate for another brother or sister but I know that’s not a reason to be swayed on it.

I should add, it definitely won’t be central London.

If I was in your position I would absolutely focus on buying a property. Unless you already have a deposit saved you can't use the £2k a month to buy and rent out somewhere so I'd simply set up up a savings account and in 3 years you'll be in a good position to buy.

I'm not sure this extra money has any relevance to a 3rd child. Kids cost so much for such a long time it won't make a long term difference.

On your long term salaries you can’t afford a 3rd child comfortably!

@OnlyFoolsnMothers - that’s the tricky part, not knowing how that will change in the next few years. Once I’ve completed my degree etc.

You’ll struggle for a BTL mortgage without owning another property. I’d also second what everyone has said about it not being the best investment for 2-3 years… you’ll likely come out worse off at the moment, a lot of the old tax & financial benefits have been removed.

The third child is something only you can really decide. If it’s now or never, do you want it? There’s never a way of knowing how life will look in 3 years, so you have to make realistic plans and worst case plans and see if it works, and if it’s something you want, and how much it impacts on the rest of the family.

Is your degree in something that will make it easier to earn more than £10k, or is the fact that it’s term time only limiting that? Are there similar careers that your degree will be relevant for, that pay more? What about DH, does he have potential to earn more than £40k? In some places/industries that’d be close to the ceiling, in others it’s really not.

I’m training to become a teacher. I know salaries aren’t so high but obviously substantially higher than my current earnings. My husband has scope to earn up to £55k in his current job. He will retire from that role in about 9 years though and will then need to find another career, so there is definite uncertainty in the future but not necessarily anything to worry about. DH could go on to earn more than his ceiling in his current job. It’s hard to predict.

There is no way you can invest that money short term without taking a huge risk. We used to dabble in a risky way in investments, that was over a decade ago. We paid our mortgage off when we were mid thirties but one day DH lost 25k.

Buy a house.

Bigger car, bigger house, more expensive holidays, more childcare- honestly enjoy the family you have.