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.

I use YNAB and have a for a few years. It´s not gone up especially in the time I have been using it and is FAR superior to other free apps. You can a month´s free trial.

https://ynab.com/referral/?ref=M1yh3-POcR992Zaa&utm_source=customer_referral

So is that around 47k annual salary? We have a similarly low mortgage though we live in the South East, and we couldn't live on that as a family of 4. We are on around 75k annual combined and we have to really watch what we spend and struggle to afford an annual holiday so I don't know how you manage on 47k.

QQuestion to ppl who budget really well. How do you split everything. You have your non negotiable expenses like bills, car etc but how do you know how much to allocate for things that keep changing like gifts / weddings / clothes etc . Sometimes I might need to buy a lot of stuff all of a sudden. How do you plan ahead for things you don't know you might need

Savings!! That’s what a rainy day fund is. Start saving as much as you can initially till you have a cushion for such things

You don't need an app, certainly not one you have to pay for! Just track everything on a spreadsheet.

I don't think I could manage one child on that combined income. I don't mean to be rude, but did you not think about this before having 3 kids, or have your circumstances changed?

I have a 'calamity' fund to cover unexpected expenses like car repairs/ things breaking and needing replacing.

You can budget for normal expenditure but it's the unforeseen/ unanticipated costs that can throw things out.

Write everything paid in cash down in a little notebook. Print off statements for card transactions.

Sounds tedious but it's the best way, I've done it and found over £1000 in savings with no pain - stupid spending you just get in the habit of. Was a few years back but the take away had crept up, coffees and pastries in the morning, bought lunches, Ubers rather than buses etc. I live a different lifestyle now (kids left home, marriage broke down etc) and my dp and I just don't live where there's as much temptation, and we walk to things in the evening etc.

They are expensive day trips.

Get a Monzo or Starling account and use the tracking and pot functions which are £3 a month

I agree with this. That's a low salary for 2 people. You do have a low mortgage though so should be OK.

Your point being?

@Crazycatlady79 you do all that and run a house on 1400? I’m finding that very hard to believe. What are your monthly outgoings?

You gave the impression your days out were cheap. They aren't. So how do you manage the rest of your bills?

I didn't give that impression at all; it's what you surmised.
I manage my bills by being careful. Well, possibly beyond careful: I'm pretty anal around trying to get the best deal on pretty much everything.
When your income is as low as mine, you HAVE to work out what your priorities are and budget accordingly.
My main 'expense' is rent, which is only £540 a month (Social housing flat) and everything else?
I get pretty much all clothes and shoes 'preloved' online/charity shops/'cast offs'/redistribution from friends/local families. I don't buy for myself more than ever few years (it's the price I pay for having children 🤷🏼‍♀️).
We don't have thousands of subscriptions and I keep costs low by having a very basic Internet and mobile package.
Food, I get from 2 or 3 different supermarkets.
Work? Wfh, so no costs.
The girls are on school transport because of one having an EHCP.
Everything we do is free or low cost, apart from one 'big' trip out a month that is always booked yonks in advance and I always look out for deals/discounts.
We don't do annual holidays - abroad or UK - and we 'celebrate' Christmas, Easter and birthdays frugally.
I imagine things will change as the girls get older, as they're not - I imagine - going to be satisfied with the 'simple life' forever.
Just because someone on MN finds it 'hard to believe' that some families can get by and still enjoy life on a low income doesn't mean it's not the lived reality of hundreds of thousands- millions? 🤷🏼‍♀️ - of people.

@Crazycatlady79 contradicting yourself already…

I have 2 x 6 year old girls, 2 cats and 2 dogs: I cook from scratch, the animals are raw fed, we do one 'big' day out per month and have one holiday per year, plus one times extra curricular activity per child and...everything else.
I do this on £1,400 a month, with money left over to save.

1400-540 is 860…so there’s still council tax, electricity, water to add on there. You sure you’re not getting UC to top up?

Sorry, you're absolutely right: I take the girls one week a year to the South East, staying with a family friend, to ensure the girls have a decent period of time with their Father, siblings and cousins, whom they rarely see.
Thanks for pointing out this omission. My brain is fried after a full on weekend. 🙃

You don't need to preach to me about being frugal as I am on UC. However even being very frugal doesn't mean you can go on holidays or big trips each month. The main big trip this year was UC cheap tickets to London zoo.

Sorry, I forgot to add that I get something like £12 a month via CMS.

Every single time you go to buy something, ask yourself if it is essential, or just something you want. If it's something you want, put it back! If it is essential, then check whether there are cheaper alternatives. Make a habit of doing this all the time, and eventually it will become second nature.

Look after the pennies and the pounds will take care of themselves.

I've paid for you need a budget (ynab) after doing the free trial. We're on a high income in a cheap area - money was just being swallowed up by frittering and lifestyle creep. If nothing else, it cuts down on the metal load of determining whether we can afford something and I can spend on bigger items without guilt. In practical terms, I have £700 more in my account this month that I did this time last month.

I'm not preaching: being frugal isn't a prerequisite for being on UC?!
Sorry, I should have added that I sometimes get carers rate discount entry, as Twin 2 has an EHCP.
But, I make it work by travelling with other families and, thus 'pooling' costs', as well as always on the lookout for a bargain/discount.
I used to be an almost compulsive overspender - and got myself in a lot of trouble financially as a result - so me penny pinching and accounting for everything may be tedious, but it means that I can at least give my girls some good experiences, if not the same quality of living as the majority of their friends.

I haven’t read all messages so I’m not sure if someone has already said this but you are underestimating some spends in my opinion.
We are a family of 5 and things that stick out to me are
-your grocery budget - we spend way more than that per month with top up shops etc.
-day trip/treat - even a free day out to the park with a family of 5, if you have lunch out it costs us around £80 at least, I have never seen a paid trip somewhere as a family of 5 for £60, most places are about £120 for a paid day out somewhere & then lunch on top of that & snacks etc you’re looking at even higher.
-your holiday budget is very low, I know you say uk holidays, but I think you’re probably spending more there too.
-fuel & kids clubs are very low also, but obviously that depends on how many cars you have & much you use the car. Plus how many days you use kids clubs for.
I think your joint salary is very low with having 3 children but your £500 mortgage is also thankfully low. Hopefully it’s a fixed rate for you.
I think your main expenses are going on the things listed above - plus what about mobile phones, insurance, healthcare/prescriptions, school uniform/trips, netflix/subscriptions etc…
I think if you go through and account for every little thing, it will be clear where everything has been spent.

A quick Google of 'free budgeting app' will bring up lots of guides... but that's not the point OP. You need a mindset shift.

You don't stretch your budget to do things. It's the other way around. I appreciate that this seems difficult in certain circumstances, I mean you're surrounded by a large family that seems to spend money freely.

But you need to take control.

I use an account like Monzo where I split my savings into pots, for house repairs/white goods, car expenses etc. I have a fixed amount allocated for 'fun'. When it's gone, it's gone.

I don't buy clothes willy-nilly (2-3 things need replacing a year, I get them off Vinted, I have a running list). I also don't do gifts. How much crap can you possibly have room for anyway?

It's easy to stop spending once you've gotten into the habit of frugality.

BTW I'm not saying to not have fun, just to think a bit more and do what you value. You can eat out, but do you need the full 3 courses and drinks for example? Alcohol is so expensive these days.

If it's a treat place, I do the full spend but for a 'social obligation' I do a side and tap water, brought same timne as the main. Nobody notices or cares.

Thank you @VWAirbag & others for the link to the MSE excel budget sheet - it's really good! It shows very clearly where that "decent monthly income" is disappearing to. It's not the big ticket things that you think like the mortgage & cars, but instead the scores of much smaller direct debits that make your bank account bleed.