Is this salary okay for a family of 5? Why am I always skint!

[WhatIsWithMe]

I live in a large town in the north. It doesn't really have much going for it but weirdly house prices are pretty high here. Maybe as it's close to a popular city but generally it's not an expensive place to live.

We are a family of 5, 2 are teens and one in primary school. We have a small house with a mortgage of £500/m.

After tax, etc mine and my partners combined income is £3900/m. Its looks like a great figure but every month we always find ourselves scrimping as we don't have enough money.

The thing is, we already budget, we cook from scratch, we don't have any other debt, we don't spend much on clothes, restaurants etc much and buy only what we need. Yes, we do have the odd takeaway, day trip, treat etc but they aren't a regular thing. We don't holiday abroad and can only afford a week away in the UK.

I'm just confused. Where am I going wrong? Is it that the cost of living has crept up on us or is it that, that income is just low.

My father was an abusive POS who I cut out of my life at age 14. I lsarned no DIY from him, lol. Unfortunately, my mother wasn't much better, but she could at least sew, so by watching and learning, I can too. Most of what I can do has been self taught or picked up by observing others. Since the invention of YouTube and other content platforms, picking up new skills is so much easier. You find a lot of schools and colleges offer free taster courses, like tiling, painting and decorating etc. There's also barter. There will be people in your area who need your skills and vice versa. I'm actually trying to set up a skills exchange here, for that reason. Great way to create a community too. Maybe see if there's something like that in your area. Also, I'm old. I'm 46 next week and have been looking after myself since forever. These things take time. You'll get there.

I haven't read all the replies sorry, as I've just woken up and put the washing machine on a spin 😆 I would say be honest and either jot down every purchase, or get a free money app (me and hubby hubby use the fudget app ) to keep track of spends, so that you know where the money is going. 🤔
We found that we squandered a fortune on all the small purchases, and that soon built up over time. 🙈
As my old dad used to say... You look after the pennies and the pounds will look after themselves! 😆

If you don't want to pay for YNAB when your free trial ends, you can still get Microsoft Money for free (the latest version is 2005, as it's no longer supported, but it works on Windows 10 and 11): https://www.garethjmsaunders.co.uk/2011/11/27/download-microsoft-money-2005-for-free/#more-3044
I've been using it for over 20 years and am currently doing so on Windows 10 Pro. It's brilliant - so simple and intuitive to use. I'm on it every day, reconciling my records with my various accounts and keeping an eye on spend so I can rein things back before they get out of control. I don't know what I'd do without it - before I got it I used to write everything down in a ledger! 🤣 MS Money has been transformative to managing my finances. Anyway, best of luck with your finances. You've already done the hardest part; admitting there's a problem and getting to grips with it. 😃

I'm guessing you have lots of monthly direct debits- car payments, phone plans, TV channels etc , etc as well as council tax, water and power. I'd get your latest bank statement and look closely at where the money is going- if the whole £3900 isn't eaten up in monthly payments then you are spending too much day to day- find out where it is going and cut back-£3400 a month is more than plenty to feed and clothe a family of five with all the needed outgoings.

How much are you spending on things like mobile phone contracts? Are you spending more than you need to on these? More data than actually needed? Latest handsets bought on contract? Check if you're out of contract and switch? Teens could use GiffGaff if not already? MSE has lots of advice. Maybe review how much is spent on insurance and streaming subscriptions- could be potential for saving.

I can email you a spreadsheet if that helps. By the sounds of it you may be in the same "town" as me or close by. I'm in a very similar situation so I have a really clear spreadsheet that lays everything out in front of you, you can see where you need to improve things too.

Congratulations... You have won Knobhead of the Year!

@WhatIsWithMe There's a YNAB support thread on this board if you wanted to join! It's definitely the best budgeting method I've found. Tracking where money went after you've spent it isn't that useful really, but assigning where money actually needs to go is a game changer.

I'm two years in and still tweaking my categories as life changes etc., but the first time something happens and you have the money sitting there ready is a revelation. You will feel YNAB poor though, which is when you simultaneously have more money than you're ever had but it's all assigned to stuff so it feels you have none

Oh and Nick True has a really good YouTube video about starting YNAB. It unlocked a lot of the more complicated bits for me.

I find it’s quite helpful to put things into carergories, food, clothes, beauty, household etc. then it helps see if there’s something that isn’t ‘essential’ that you can cut down on.

If it is any consolation but everybody I know finds that there is a period in your life when you have children that you never have enough money or it is stretched to its limit. Generally, the youngest child is between 5 and 16 and the eldest is approaching, or at, secondary school.

Everybody goes through this stage but there comes a time after the youngest has left school (I was in my late 40's) you suddenly find that there is some money left over every month. I put this spare money into an emergency account thinking that as we have lived so long without it for general living expenses then it can be used as a fund for living it up when we reached pension age - not that long in the general scheme of things - and with the mortgage finally paid life became more affordable and easier.

I am now 66 years old (with my husband dying 2 years ago and left me a good package of an insurance policy and a private pension that had a brilliant policy of spousal provision) and I am now in a position where I have a very healthy amount in the bank and more than adequate amount to live on.

You are going through that period of hiatus where there are too much of a demand on a limited supply of money. It does come to an end. I tell this to anyone who mentions the same problem and as sure as chips are chips everything works out.

Not sure if this is aimed at me, but OP asked me to explain how I increased my income...

What you on about ! £3400 is more than enough to cover all that with about £2500 left over 🙄

Another one who isn't honest about what they are frittering their money on or you just don't even have a clue where it goes but your income is more than enough by far

No I don’t think it’s that I’m not honest. I know what I spend my money on but what I consider comfortable is probably not what you consider comfortable.
I don’t want to have to watch every penny I spend, if I want lunch in a coffee shop once a week then I don’t consider that a luxury. I don’t own lots of clothes but if I do see something maybe once a month, I want to be able to buy it without worrying if I can afford it or not.
I don’t consider that frittering, that’s just spending your hard earned cash on things
you enjoy. They’re not luxury’s or treats.
You may feel differently about that and consider that those are luxuries and would never spend money on those things. I would consider that being frugal.

If you want a lifestyle that means you can just spend without thinking about it, even just on everyday things, you will not have enough money.
The harsh truth is people got used to a lifestyle they couldn't afford when borrowing was cheap- now it is much more expensive and we have had inflation-so you definitely can't afford that type of lifestyle.
The fact you never have any money at the end of the month is the clue-believing you "deserve it" doesn't alter the fact you can't afford it

I don’t know if all banks have this feature but I tend to use the balance after bills. Most of mine are set up by dd /standing order & it will show a monthly cycle from 1 pay day to the next & give you the available balance each month.

I think it’s a good amount to have after mortgage payments but if the bank has this tool it might be worth setting up as I find it helpful to plan, particularly when there are additional outgoings.

My easy budget trick… have two bank accounts. Add up monthly essentials & monthly bills. The rest of your income (whether spare, for annual bills or big purchases) transfer monthly by Standing Order to a savings bank account.

If you have an annual bill or big purchase you will need to transfer the money out of savings. If you are overspending you will need to transfer money out of savings. If you need to transfer money often cause your overspending look at why. Is your budget too low or are you spending needlessly.

I have 2 bank accounts, one my salary goes into and direct debits get paid from. The other is a 'pocket money ' account I put in money for monthly personal pending eg £400 a month and I keep a close eye on that so I can see the money coming out without it becoming confusing due to dds/ essentials.

I also have a 'dipping' savings account and a 'dire straits' savings account which doesn't get touched although it's in premium bonds so any winnings I see as free money and use for treats.

I used to be abysmal with money but having gone the contractor route with work and several periods of unemployment I've through necessity become a lot better.

If you know you tend to crack and order a takeaway when stressed OP, its worth getting in some decent pop in the oven/pre prepared stuff for those days where it's not going to happen.

Only read page 2 and sounds boring but do you have savings? You save for Xmas which is brilliant what about actual savings?
Boring but for a year I'd try and save that 100 each for something.

It's the cost of living.Gas/leccy companies are through the roof and keep rising.shopping for food etch is also high and keeps rising.Broadband companies take the piss with higher costs per month.School uniforms,trips etch are higher.Now water company wants to jump on the band wagon of taking the piss.Yet wages have barely gone up.Were all in the same boat apart from the snooty rich toffs

Agree wages have flatlined for decades.

I look at my bank account every morning first thing which does help. I can see above people keeping spreadsheets and records in various forms.. I have also for decades every January done a detailed consideration of what goes out and what comes in.

I agree with the person earlier who said for most people there will be a very very expensive time of life with small children but that when you are older it does get better. This year 2024 is the first since I had children when (other than letting adult ones live here) I am not supporting a child and last year I paid off the mortgage - I am in my early 60 and work full time for myself and hopefully will work until I die. So I certainly understand the different life phases (and have adult children who work and have children so see it all over again). God know what the Autumn Statement this week will do to some of us - it is going to be blood bath in terms of even more being taken away in tax.

Yes, although I compared my 1985 starting salary (£13,500) at a big London law firm (I still have my employment contract I recently scanned) and after inflation today that is £40,600 but those people get £150,000 today (4 or 5 years after finishing their first degree). Even the £13,500 felt huge as I was on less than half the year before. So whilst some wages have flatlined in so very many sectors these rare top law jobs (for which people fight and are like gold dust to get because the pay is so high) do have higher pay.

Really hard to answer that question as it differs for everyone. We don't have kids but we do have a few pets (1 dog 2 cats) and have about 4 times that income, but of course our other expenses will be much more, for example mortgage. It wouldn't be enough for us but that doesn't mean it doesn't work for you. I do think not being able to afford some of the nicer things in life (holidays etc) means you prob don't make enough, but again maybe that isn't as important to you as it is to us.