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 :)

Yes, it's not just about affording a child in the short term, but the longer-term costs

Will you be moving yourselves in readiness for secondary? That will take a chunk of your cash. As will DH living separately to the rest of your family.

If I read it correctly, you are living in heavily subsidised accomadation, and spending through most of your current income. Given the cost of living differences, how much of a lifestyle change will you get if you move and the salaries stay static?
It cost us a fortune to move internationally, and they set up again in the new country.

2-3 years will be a short time to really capitalise any savings. You may also have issues with where to save it - do you want the money in the UK eventually? So think about currency transfer and exchange rates.

Good luck.

My husband is paid in pounds despite working overseas. Financial implications of our return move to the UK are covered. Also, the country we are living in is an expensive part of Europe so our day to day living costs are greater here. If my husband does end up living apart from us, he will continue to be offered heavily subsidised accommodation so thankfully the impact of that won’t be too bad.

I hope I don’t sound as though I’ve got an answer for everything. I really don’t. There really are a lot of unknowns and I find that really daunting.

How is £50k not enough for three children?

It might not be enough to send 3 children to private school, or to have the flashiest most fancy new everything all of the time. But if you are going to be working school hours then childcare costs would be minimal and that’s the biggest factor early on. Teens don’t have to cost the Earth. If you want to be a family of five then sounds as though now with a guaranteed maternity pay not losing you any income would be the best time to do it.

But then I like big families even if we live in hand me downs.

www.lv.com/life-insurance/cost-of-raising-a-child

Do you know where you will settle in 2025? If so buy there now, and rent it out. Also gives time to do any work necessary before moving in.

You need to own a property for a BTL. Think about security and housing for your current children and also the cost of teenagers who will want tech, high end items, be doing things their friends do.

Put as much as you can in ISA savings for the next 2-3 years. You will then have bwtween 48k-108k to put down as a deposit for a family house in the UK when you return. Getting your deposit together is the hardest part of getitng on the ladder. You will be saving at the right time as interest rates will be going up (but so ultimately will the costs of borrowing on mortgages).

You will be 36 by the time you are taking out a mortgage. How old will your husband be? A family home is long term investment for all your futures.

I would set up a dd each month so it goes straight out otherwise the temptation to dip into it will be there. You are being sensible not frittering it away. With the 2-3k 'extra' have you factored in extra/higher tax as you may not receive as much of it as you hope?

How is £50k not enough for three children?

rising inflation: mortgage, rising fuel costs, council tax

you may be able to get through month by month but you'd have little in the way of savings

Even if all you do is put that money into a savings account, it will be money well saved.

If you want maximum growth, you need to think long term and put it towards your retirement.

@onelittlefrog

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 have three children and earn less than that jointly. So do lots of people to be honest...

Anyway, OP, I think it's really really good that you are giving such consideration to the finances and what best to do with this money, but there is way way way way way more to think about when deciding to have another child than just whether you can afford it.

Personally I would treat the 'money management' dilemma as a separate issue from the 'should we have another baby' issue. Just because you can afford one doesn't necessarily mean that another child is the best thing for your family anyway, and I think you need to unpick the pros and cons of that in detail aside from the finances.

The reality is that three kids costs money, maybe I've fucked up by having three when I don't earn enough (according to this thread) but they are here now! But it's not just the money, and getting bogged down in that might not be the best approach to making the decision.

Look into the build to save/life time ISA.

I’d put the money towards a house deposit in 2-3 years. That’s your long term investment.

You obviously want a 3rd child very much but only you can decide that along with thinking about the short and long term costs. Bigger car, more £ holidays, driving lessons, university, environmental cost…..

@SilenceOfThePrams

How is £50k not enough for three children?

It might not be enough to send 3 children to private school, or to have the flashiest most fancy new everything all of the time. But if you are going to be working school hours then childcare costs would be minimal and that’s the biggest factor early on. Teens don’t have to cost the Earth. If you want to be a family of five then sounds as though now with a guaranteed maternity pay not losing you any income would be the best time to do it.

But then I like big families even if we live in hand me downs.

OP said working "term time" not school hours. If she's going to be a teacher she will most definitely need wrap around care.

If OP has 3 children she may be able to manage financially, but there will definitely be things that she won't be able to afford. Is she prepared to have a lower standard of living to enable her to have 3 children? Are her existing children so keen to have a sibling that they will give up opportunities in the future? It's not about living in hand me downs. It's about not being able to afford a laptop to work at home (necessary these days), even a cheap phone, money for school trips (vital part of the course), adult prices for clothes and shoes, extra money because your teen is permanently hungry ...

You cant contribute to an ISA until you are back resident in the UK.

Glad most of my previous post was saying things you'd already considered - you'd be amazed at the number of people who haven't, or spend to the point they cant afford to move home in the way they want.

@RedskyThisNight good point re teaching, my apologies. But by the time she was teaching I assume she’d be earning more than her current £10k/year, I assumed that was simply her working things out on current salary.

Agree it’s about choices but many many people do have 3 or more children on less than £50k - does depend on mortgage costs too I guess.

Reading between the lines, is your husband military? If so, think about what he might do when he leaves, as he may well not be able to earn as much when he leaves (unless he works abroad in Saudi or similar, which has its own issues).
Combined salary of £50k isn’t loads, we earn more and live in a cheap part of the country (have a nice lifestyle, but aren’t rolling in it) and decided against having a third. It’s a separate issue to the investments however. And it sounds like you want something with easy access, so I’d suggest not property, unless you were buying now to live in it on your return.