What's the best way to budget with the "piggy bank" theory?

[Terribleluck]

After all essential bills (including childcare, in year we'll get the 30hrs funding which will be a relief) we have around £2300 to "spare" each month. This might sound like a lot, but once we spend "everything we want to spend on/save for" we're only left with £200 a month for actual real emergencies, which doesn't seem enough? Does anybody know any good advice of what the actual %s for spending/savings should be? It came out to a shock to both of us, because we thought that we could still buy/spend as we wanted and have some healthy savings left.

Yes, it's easy to say that you don't overspend when what you mean is that you just happen to spend less than a largeish income.

That's how a lot of people became unstuck at the beginning of the pandemic. They habitually spent all their money and had no savings, even though they had a good disposable income so struggled if they were out of work/lost bonuses/received less in furlough pay than their full salary.

Given you have kids OP, do you have a university/house savings account set up for them? I don't, but I have one set up for my nephews as my relatives live quite hand-to-mouth. I've been doing it for 5 years (since birth of the second one) and it's amazing how much even £50 per month adds up to long term. It could even be a few grand towards a house deposit.

[quote Terribleluck]@Barbara we know exactly where our money goes. That's not the real issue, it's more "now that we have this extra income how do we distribute it to improve our quality of life but also bake some financial sense". A year ago my net salary was £1500, from January it will be £3600, for a few months this year it was £2200. So we're getting a lot of financial freedom that we didn't use to have. What we're trying to figure out is how to spend it wisely. [/quote]
In that case, something like 50/30/20 is probably a good aim.

Try to keep your essentials to 50% of your income, discretionary to 30% and save 20% 'just because' or retirement, ie plan to replace cars, home improvements etc from the 50 or the 30%.

If you have a good income and surplus, it shouldn't be so much of a hardship to save 20% of your income and you will be able to spend it by retiring early etc.

How you distribute the fun stuff depends on what you like doing. I spend a lot on holidays and eating out and more than I should on 99p books for my kindle that I never read and almost nothing on personal grooming, clothes and gadgets because that's my likes and dislikes. If you aren't fussed about holidays and 'must' have the latest phone, your distribution will be different.

I mean just thanks to childcare, we'd only be able to cover our basics within the 50% after the funded hours start to make an impact. I mean it's fairly close 2900 Vs 3100, so I think we can live with that for the time being.