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.

https://www.moneysavingexpert.com/banking/budget-planning/

Haven’t read the whole thread so apologies if this has already been posted. Use the MSE budget planner to work out your spendings. Be honest! Account for Everything.

Then set up a separate account for birthdays, Christmas, school uniform, shoes, club fees etc, so come August, December etc, you’ve got the money there, rather than scrabbling around. You may initially feel poorer week to week, but richer in the long term, when you don’t gave debts to pay off. Send the money automatically each month as a direct debit, and after a while you won’t notice it going.

No but this link said it includes benefits given by the state (if you scroll down)

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

Correct.
People on here always quote average salary as if having an above average salary is the same as having a good salary. That isn’t the same thing. It just shows how dire the pay situation is in the UK vs cost of living that the avg salary is so low.
Where OP is going wrong is thinking their combined salary is “good”. Unfortunately it simply isn’t that great. So you need to either look to save where you can, which won’t be much, or look to increase your earnings.

Very basic question here - so is "disposable income" classed as household income after income tax, NI and Council Tax have been paid, but before mortgage/rent?

I think you are just massively underestimating what you are spending. You’ve given you and dh £50 a month personal spends - what is this covering? Do you really spend so little? Nobody having curry night or going to the pictures in the same month they get their hair cut and buy a paperback and a packet of liquorice allsorts? Is there no socialising with friends, no work collections for retirements or babies, birthday presents for parents or siblings etc no hobbies that need anything at all - not even parking or shoes or a coffee while you do it?

Are 5 of you really only spending £1300 on a holiday? You don’t get a takeaway when you are there or buy 5 ice creams or go on the dodgems or pay for parking at the beach? No bottles of water or a bucket and spade? No bag of chips or Kendal mint cake? No new walking boots or body boards needed?

Are you only spending your £400 a year each on your dc - £33 a month each - £7.70 a week - new school shoes and trainers each as a min. Christmas and birthday presents, haircuts, uniform, school trips, waterproofs, Easter eggs, food tech ingredients, tech, gcse workbooks, tennis balls, shin pads, sketching pencils, knickers…

We have a similar income and similar mortgage but I know where the money is going - 2 dc at uni need to be subbed (plus 2 greedy teens still at home), paying off business debt, paying off the credit cards we lived on when the business was getting going, private pension and savings. If you have no debt then you should have plenty left over - you are spending it somewhere.

Exactly

What other people earn is irrelevant.

What the OP needs to focus on is that they have £3400 pm after housing costs, are struggling for money and think they're living a budget lifestyle yet have nearly £1300 pm that they can't account for.

They need to do a proper budget, save for annual and irregular costs, cut out or cut down any unnecessary spending or any that is not worth the cost to them and work out where all their money goes.

Plus reduce the cost of variable expenses, eg phones, broadband, grocery shopping and food and drink outside the house. There can be huge variations in the cost of these items, often with little difference in the quality, frequency or enjoyment factor. Eg if you just let your broadband contract run on without negotiating another deal, it could be nearly twice the cost of swapping between introductory deals. You can get a perfectly decent smartphone for about £200 on a Black Friday type deal and use a SIM only deal and your mobile costs will be about a quarter of a standard contract phone. Repeat for most of your spending and the difference can be hundreds of pounds a month.

@SallyWD It lists disposable income.

That is income after tax and NI etc, not gross income.

So the OP has a bit more than the average disposable income - unclear if she gets any benefits - child benefit will certainly be there.

Yes.

Yes, that's what I said. And their definition is very specific in that it only includes those taxes and not other expenses like utility bills and mortgage (just saying in case others dont know). Yes, child benefit is included in the average household figure.

This maybe tedious to do bit you need to look at your past few months bank transactions and put them all on a spreadsheet in categories. I thought I spent x amount on food but when I added in the extra trips to the supermarket or just picking things up it was a lot more than I thought.

This is kind of similar to me. The fact is, things are way more expensive than they were even 2 years ago. 2 teens will be eating as much as adults, so you are feeding 4 adults every day. Clubs etc with three kids will be expensive; scouts for my 13 yr old just set me back an extra £200 last month for fees/camps. A blooming burger in a mid restaurant is now £15 ffs!!! The UK is expensive and if you want to have any treats whatsoever it costs you. No advice, just want to say ‘same’ 👋🏻

And their definition is very specific in that it only includes those taxes and not other expenses like utility bills and mortgage (just saying in case others dont know). Yes, child benefit is included in the average household figure.

'Disposable income' is net income. End of.

It doesn't include child benefit because the figures are for individuals, not all of whom have children.

Highly recommend the MSE budget planner and downloaodng all your transactions into a Excel spreadsheet then using the MSE categories to analyse where the frittering is going.

Before Covid, when we were in the office every day, I did this and found I was spending on average £25 per week on coffees & muffins/snacks. That's over £1200 per year and it didn't include lunches!

I still track spending and it's amazing how small purchases that fly under the radar add up. A packet of batteries here,, a cheap smelly candle there, a pair of socks, some new kitchen utensils or tea towels etc. I watch my spending in places like Dunelm, TK Maxx, Robert Dyas as I know these are my downfalls for unplanned spending!

It is exhausting having to remember everything you spend, from memory. Bits here and there soon add up to large amounts each month.

you need to capture all your expenditure on a spreadsheet or budgeting app until you feel you've got things back under control. You can then give it less headspace and more peace of mind because you know how your money is coming in and out of your household account.

it's good that you're thinking about this rather than waiting until it gets to crisis point 👍

It says it includes state benefits, so if they're calculating a national average, it will include all households: those who receive child benefit, those who don't receive it, and then work out the average.

I think the simple fact is cost of everything has gone up so much in past few years it's hard to estimate what you spend cos our brains go back to few years ago.
Essential bills minus a mortgage of £500 is
£650? So for that you are covering council tax, gas/elec, tv license, phones, Internet, subscriptions, childcare, insurances, public transport. Any professional fees/subs? Do you have debts that you are paying?
Guarantee if you download your statement you will be shocked. I'm amazed you spend £75 a month on activities for 3 kids - I'm more than that in fees for 1 before I've paid for never ending extras new uniforms, weekend camps, competition fees, raffles, coffees when waiting etc. I'd also struggle to do a day trip/treat for 2 never mind 5 on £65.
Highly recommend the mse debt free wannabe forum lots of great advice and a budget tool there.

I seriously doubt families getting a UC top up have an income anywhere close to the top earners. Benefits are not very generous.

Top earners?

They are either on £30K each or a £40/20K split.

How does that make them anywhere near a top earner?

Two newly qualified teachers (not renowned for being well paid) would have that or a bit more.

Other things you seem to have missed are e.g. in car costs other than fuel, you've put £150 a year. Does that include car tax, getting the MoT done, servicing, any little replacement parts, washer fluid/other fluid top ups, tyres replaced when worn, parking, any road tolls...

Someone mentioned £90k earners not getting much more than those on benefits. . Don't get me started on teacher salaries. Most teachers I know manage fine. The TA's however... Most of them are on UC. Although I haven't mentioned teachers so what relevance does your point have?

@MrsLBrown Do you really think two teachers are struggling more than another couple who need UC and who have a mortgage for example? I doubt it.

Let’s not let this thread descend into a benefits v non-benefits earning discussion, save that for another thread.

let’s help the op sort out her finances.

They don't. It's just lies people like to tell themselves. I've claimed for 15 years and have nowhere NEAR the equivalent of a £90k salary.