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.

To answer how I decide to split everything. I start with all the essential bills and then add up all the one off essential costs (mot, home insurance etc). Take this away from my income and work with what’s left. I list out my categories which largely look like:

• spending
• family spending
• kids classes
• pets
• prescriptions
• clothes
• work expenses
• Christmas and birthdays
• savings

I allocate what I think is reasonable to each category and if it adds up to too much I reduce some to make it fit. Christmas and birthdays I can work out quite accurately

It's good that you have identified a couple of areas where there is a problem. Now you need to only buy things that you actually need, not just because you want them. Stop buying things on Klarna, if you can't afford them outright then you can't afford them.

I buy clothes maybe once a year? usually 3-4 items and then that is it. I don't follow trends and I don't buy labels. I never got sucked into that "must have" world. It's fine if you have the money, but I seen people buying everything on credit cards when they really can't afford it.

I save money every single month and that is what pays for things when you have something unexpected. I recently had to fork out over £1K for car repair bills and another £500 for a Dyslexia assessment for DD. I had the money in my savings.

Once you have that money in savings, if you need a new pair of boots because yours are falling apart then you will have the money already set aside to pay for them.

I have a separate account that I pay into monthly and things that come in chunks comes out of that, so annual insurance payments, Xmas gifts etc.

I think that's a relatively low income for both of you supporting 3 kids. It wasn't 10 years ago, but cost of things have increased way more than normal wage increase. Even minimum wage is about 21k a year now which was a good wage 10 years ago! Not a helpful answer but I'm in the same boat where my salary for a professional job had been watered down hugely and what was a great salary pre covid is now not.

I thibk that’s how much things cost I wouldn’t expect any spare money from that really so say 1000 food another 500 on other bills 500 quid if not more on cars and transport , then the kids school trips school bus clothes pocket money clubs mobile phones - then the extras like Christmas birthdays holidays (with 3 kids that could easy be 800 a month to save) then the normal odd meal out family occasions the odd treat for you ! If you have pets coukd be another 200 easy. I can’t see how you would have spare tbh

I use zero-based budgeting, which is really good for accounting for all the various life things. In your example, if I suddenly needed new clothes and didn't have enough in my clothes budget, I can move stuff from another category - maybe I take money out of a holiday bucket or maybe I take it out of my birthday bucket. Then next month I will try to refill the buckets that I had to empty.

I use YNAB, which is amazing, but there are some free alternatives. Budget with Buckets is one.

It entirely depends on circumstance. We live in the expensive south east, our mortgage is double yours. We are a family of 5.
our total combined income (not disposable) is £3500 currently. That will drop to £3000 when my maternity pay ends in a months time.
things are tight, very tight. But we are managing. We are not racking up debt. We have 1 teen, 1 primary age and 1 6 month old.
if we had your income we would be comfortable I think, but not rolling in it.

For example, here are my categories and if I expand them there are sub-categories that collect money every month. The money is just in our account or in instant access savings, it doesn't really matter where it is, because I use my budget to keep control of finances. My account is now just the physical place my money stays and that's it. I don't use it to decide I can afford anything.

In the cars category, you can see I've just renewed one insurance so that category has been spent, next month it will start collecting money again so next October I will have the money sitting there. The other car insurance is building up and will be ready for renewal time. Breakdown coverage will also build up every month till renewal. My road tax has been paid.

Same for the other categories.

Oh snap. A teenager, 11 year old, and 10yr old. We bring home more than that and find ourselves scraping at the end of the month. Today we needed to buy a basics shop - Puppy pads, bread, milk, jam, butter, cereal, small pot of cream - £30. We buy the cheapest we can, as well.

Wages are not keeping up with inflation.

So true! This is how I used to be when we went through a really hard time financially. As things have improved for us, I think my spending has become more loose!

This

Sorry all. That arrow was way over the top.

I also use YNAB and really love it.
it has helped me get so much more control of my finances.

month to month I’m fine when it’s a “normal” month but there’s always something!

I was also guilty of over spending because I could see my bank balance looked healthy ish, but now I have “pots” for everything coming up Xmas or kids birthdays or annual insurance so all my money is assigned to things. It’s so nice that money is sitting ready for those things and they don’t send me into my overdraft.

Write down literally everything you spend in a notebook and then look at what isn't essential. On that figure you should have plenty left over so somethings going wrong!

On the ‘spend for myself’ thing - as a start, give yourself a reasonable chunky monthly budget for, that you’re mentally going to stick to averaging over the year.

if you say you’ll stop spending, you’ll find you still do the odd thing here or there which adds up. If you’ve got £1500 for the year for you, you can then focus on choosing how you want to spend it. You’ll spend it on stuff that you really want, and feel like you’re getting more even though spending less.

On the weddings, gifts etc - similar approach. Look at the last year of spending and give yourselves an annual budget for it. Then choose how you spend that budget.

for home improvement stuff - same again. Annual budget that you put the money aside for monthly and then spend from as needed and you’ve built up the fund for it.

For Some things it’s easier to make it an average monthly cost but track the spend over the year. Smooths out stuff that’s lumpy and still helps with the ‘this, or that’ mindset.

im old school, I use nationwide who’ll let you have several savings accounts and name them for stuff.

My bank has savings pots and I use one of them so all direct debits come out of it and money to fund comes straight out on the 1st. Other pots safeguard for exceptional spends eg holidays, car servicing etc.

i suggest your dc’s are given a clothes/ spending allowance and they balance their needs/ musts. Ditto yourself and DH.

We have an income of £5k but have a £1.1k mortgage and £900 childcare fees so still have less than you after those have gone out and yet we manage a couple of holidays a year. Food is our absolute killer.

Hi op,

No it isn’t much with two teenagers whom probably eat everything in 5sec. Plus the feeling to be skint is also coming from all the things you’d like doing but aren’t.

It seems that you are making ends meet and with no debt so that is really really good.

What about your teenagers get some gigs? Like babysitting or homework with kids to get some cash? They could pay some of the stuff you pay…that will teach them and you can treat everyone more with money « left »?

Good luck 🌺

There looks to be something amiss here.

It can be really easy to fritter money away, log into your online banking app and have a good detailed look.

Tbh if you've no debt outside the mortgage maybe you're doing well. Is any going in savings?

£3400 after tax and mortgage sounds a lot but depends on things like cars? If you're away from the city is petrol costs high? Cooking from scratch isn't always cheap?

You'd have to go through your bank account to work it out.

1 tip.
Work out all yr fixed essentials like mortgage bt not food etc as thats flexible.
Take that amount from the 3900.
Whatever ur left with take half of it and put it away.
Try to live on the other 50%.
It'll make u see things differently.
Trust me, it works

I, sadly, have a spreadsheet where I categorise all my spending. I needed it for renovating my house and doing my taxes etc but its been helpful, and scary, to see how much I spent on non-essentials like takeaways. The little payments just creep up on me. I am trying to get better but I really wish interest rates would reduce!

More than enough to live on.

@WhatIsWithMe pp have recommended the MSE budget, it’s great! I noticed your workings don’t include birthdays, big spends like furniture or even little things like haircuts.
I spend as though I’m poor, which I’m not, but I do have a debt to pay off, which I overpay every month. So it’s clothes from Vinted, and selling clothes on Vinted to pay for at least 50%. Bare minimum clothes for the kids as they are growing, 1 really good pair of trainers each until they grow out of them. I dye my own hair, we eat simple meals and I don’t have loads of lights on, or the heating when it’s not necessary.
Every month is a joy to see how much I have saved. I still go out and enjoy myself, we still have holidays etc but the day to day I am careful with. Good luck!

I think that amount is pretty decent for a comfortable living . I only earn £2300 a month before my mortgage of £500 and I’m a single parent to 4 children . I’m literally living hand to mouth so have nothing spare but saying that even then my kids don’t go without and we have the odd treat and take away etc so not sure 🤔 I also have things like Creche and some debts I pay off