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.

So after paying your mortgage you have £3400 a month. That's around £800+ a week.

Where is that going? I can guess that with 3 kids you may be spending £150+ a week on food.

What about lunches- bought at work/cafes or made at home and taken to work?

How about other fixed annual costs, like house insurance, car insurance, council tax, water rates and monthly bills like utilities paid by DD.

Are you spending a lot on things like Sky or other TV channels and mobile phones?

It always amazes me how people fritter away so much on those and then say they are skint. We have no subscriptions other than the BBC TV licence, and our phones are bought outright and SIM only.

You might want to look at changing your deals and keeping an eye out on switching utility providers etc.

I guess it can be. My mother was a single mother (still a family of 5) on far less than that and made it work but it was a struggle.

Conversely I have a higher left over income than you and your husband but as a family of 1 have little left over!

I guess stage one is to start with a budget which can help you see where you are going wrong?

You will already have the information available in your bank and any credit card statements. Download this for the last year into a spreadsheet or sometimes there's in app tools and look at where your money goes.

Also review all your costs of things like phones, broadband, subscriptions etc.

Many people are spending more than they need to or have subscriptions they don't use.

Also add up all spending on food and drink out of the house. Regular coffees, lunches, snacks etc can add up to huge amounts of money if you spend regularly on these things.

Car fuel?
Life insurance?

Okay I missed your update.

£100 mine and Dh spending
£60 day trip / treat
£20 kids pocket money

I think you need to break it down into absolute essentials that can't be changed like the mortgage, council tax and childcare.

Other essential outgoings like utilities and any subscriptions could be investigated for cheaper deals.

Is the £100 mine and dh spending £50 each ?
What do you spend that on? Is it clothes, make up, coffees?

Do your kids really need that much pocket money?
Are they able to work at weekends or do odd jobs like a paper round, dog walks, etc to earn their own money?

£150 Car costs which I split over the year to save

What do you mean? How are you saving by paying monthly? Usually that's more expensive.

Is this insurance and fuel?

It's just under £2K a year so what's it for?

We used to use Microsoft Money which was brilliant!
you could section everything and it just meant keeping every receipt to add to it.
Then they stopped it and we switched to something called Twilight or something.

This way, we knew every area of expenditure and incoming money and could save accordingly.

If you don’t do it religiously like that, it’s mega easy to forget about all of the ‘extras’ that all add up to your total.

Do you teens work? If yes, they could helping buying their own clothes and leisure activities in that case.

It is so easy to spend money. I always transfer money to my savings and investments on payday so it doesn't exist for me. The few £ here and there really adds up but since it is all from my 'spending money' since savings has been transfered away it feels okay.

Life insurance is not always a good buy. We stopped ours decades ago as the payout at the end was less than we could save ourselves.

As long as the mortgage is covered in the event of death that 's the most important thing. A lot of people are tricked into having life insurance when other ways of investing are better (ie a private pension that has tax breaks.)

The payout reduces the older you get - which it has to- as everyone dies!

Phones and WiFi? There are often great savings to be made by combining accounts. To you have broadband and a BT landline? You rarely need both these days.

Just hobbies, clothes (constantly growing feet too) school lunches, transport, music lessons, pocket money, phone contract is getting on for £500 a month.

Wow that's crazy! I'd say my 12 yo son is more like £60-70, but his hobbies are cheap and he cycles to school... Not sure I could manage £500! I guess you have to cut your cloth accordingly. You don't need expensive phones or hobbies.

I wasn’t suggesting she gets life insurance!
i was asking had she accounted for it and fuel in her adding up!

One thing that struck me OP was you stated your outgoings as £500 a month.
That's your mortgage. And it is very cheap.

There are lots of other essential outgoings that you have to factor in - as 'fixed costs' which you have done in your updates.

You need to be looking carefully at what exactly you can cut back on.
If you're in the red each month you may have to trim the clubs your kids go to, their pocket money, the £50 you and DH spend (not clear if that's essentials like some cosmetics/ clothes or coffees.)

Your food is slightly on the higher side for the north where food is cheaper but not excessive if that includes all cleaning and laundry stuff.
(Are you near Newcastle- the only big city that comes to mind?)

Kids' lunches- are you paying for school dinners - or taking packed lunches?

As others have said it all needs itemising very carefully.

It's certainly a good income, but I'd say good incomes don't go far these days!
We also have a good income (more than you and 4 people in the family), but I feel we have very little money to spare. We're not saving. I've asked to increase my hours at work so we have some extra money to put away.
I don't think we're extravagant. We're driving a 12 year old Skoda, I get our clothes from Vinted, I cook from scratch (but suppose I do buy high quality food).
Our outgoings are so high - mortgage, council tax, gas and electricity etc etc. When I compare our gas and electricity bill to a few years ago, it's almost tripled. There are also so many costs relating to the kids - activities, school trips, lunch money etc.
Every month there seems to be some big "one off" expense, like we suddenly need a new dishwasher, or the car insurance is due, or something needs repairing in the house. Really hard to keep up with all the expenditure.

Fair enough

@WhatIsWithMe Your joint income isn't huge.
I know you think it's good but it's less than the median salary each .

Together, your earnings are around £60Kpa.

(What about child benefit- is that included in your total?)

This is the same as £30K each which is not a high salary.

This is not a criticism, at all, but you don't have money to waste.

The bonus is your mortgage is tiny (many rentals are over £1k a month and in the north you can pay £800+ for a basic 2-bed rental.)

So- the bottom line is you're spending beyond your means - or very close to it.

Same

How is your income split? Ie are you claiming everything you are entitled to?

For kids club are you using the gov tax free childcare thing to top it up (you pay in £8 gov pays in £2)

we just completely knocked take aways on the head- I keep 2 fancy frozen pizzas and 1 x frozen donner kebab kit in the freezer works out a lot cheaper

Have you forgotten to factor in anything else substantial - pets, hobbies?

The average household income is actually about £34000 so they are way above average. I think people fail to realise how little most people live on.

Looking at this from another angle, is there any way either of you can increase your income?

Is it evenly earned or is it more like your H on £40K and you part time on £20K?

Do either of you need to consider more training , promotion, etc?

Is either of you going to earn more in the future?

The median salary is around £34K.

Average annual earnings for full-time employees in the UK 2023, by region
The median annual earnings in the United Kingdom was 34,963 British pounds per year in 2023. Annual earnings varied significantly by region, ranging from 44,370 pounds in London to 31,200 pounds in the North East. Along with London, two other areas of the UK had median annual earnings above the UK average; South East England, and Scotland, at 36,560 pounds and 35,518 pounds respectively.

If it was household income, both people would be on £17K which is less than a minimum wage.

This ignores all benefits

Someone posted an interesting graph on here a while back showing when you add in benefits there’s surprisingly little difference in take home £ between 30 something and 90k which in part explains all the “I earn 100k where am I going wrong” threads answer: no where really

edit: this isn’t designed to benefit bash just to highlight the fact non contextual data doesn't always paint a full picture.

Yeah, this.

We have two teens and a primary school dc and the overheads are pretty hefty. The rapid inflation of food at the very same time as the older kids became adult sized means that even though we still eat the exact same way as we did three years ago with plenty of home cooked food, the cost then is completely unrecognisable to the one we pay at the till now.

Similarly, everyone still has a shower each day. No change there. But the length of the showers has massively increased at the same time that the cost of electricity has been on the march.

Everyone still needs clothes, but the inflation in clothing has rocketed at the exact same time as the kids have out-grown vat free clothing.

So you can say, "oh, we haven't changed anything" but when you look at it in more detail the base line has completely altered.

www.ons.gov.uk/peoplepopulationandcommunity/personalandhouseholdfinances/incomeandwealth/bulletins/householddisposableincomeandinequality/financialyearending2023#:~:text=median%20household%20disposable%20income%20in,)%20Household%20Finances%20Survey%20(HFS)

Well, this says the average household income is a similar amount, after taxes such as income tax, national insurance and council tax. I suppose there must be many houses with one earner or people on benefits. I don't know.