To ask how much disposable income is enough to live on?

[Ebonyandivory2]

Hi, apologies this is long. I wanted to name change but I don’t want others to think I’m a troll or stealth boasting. Fully aware this is a sensitive topic so I’d like to start by saying I’m after practical advice and really don’t want this to turn into a bun fight or some kind of competition with regards to who has it worse. Right, now that’s out of the way.... I’m currently looking for a new job and I’m in the running for a few. The salaries offered range between £43k and £48k. I’m now 26 and have moved back home as I think it’s time to get serious about saving for a house. My question is this, and again this really isn’t meant to be goady, but how much do you think I can have as disposable income? This will be for fun and separate from bills/rent. I’ve done the maths and once bills/travel card and upkeep is taken care of I’ll have between £1700 and £2000 left over. I currently pay £100 “rent” a month. I’m aware I’m very fortunate and I’ve offered to pay more but charging your kids to live at home isn’t really the done thing in my family’s culture. My mum and I have agreed this will go up to around £150 once I’m earning more. Currently earning £33,000 and I’m not great with money. I go through feast of famine cycles where I’m sometimes itching to spend money and sometimes so anxious about money I barely spend a thing outside of the essentials. My mother is a very high earner but my dad was the total opposite. Never did anything with his life and they argued about money a lot as a result until they split. It’s left me with a very unhealthy attitude towards money and I’m booked in to see a financial therapist and a financial advisor about it as I really need to get serious about saving. A friend of mine is very frugal and lives on £300 a month. Not trying to be ignorant but that just seems like such a little amount as I have very social friends so I do go out a bit. She earns less and has more financial responsibilities so I take that into account. I discussed my anxiety about money with my mum and said I’d set aside £600 every month as “fun money” she made a face and said that’s far too much so now I’m really confused 😐 my mum is also quite frugal and doesn’t really go out much so she can get by on a lot less. My question is how much is a sensible amount? I want to save but I also want to live (within reason of course) any advice on how to get over money anxiety would also be greatly appreciated. I was earning half what I am now last year as I was part time and I worried much less. I find the more I earn the more I stress and it’s really getting me down. I’ve suffered with anxiety since I was a teenager and it just isn’t getting better. Again I don’t mean to sound woe is me as I know I have a good salary, it’s just stressing about money is all I’ve ever known thanks to my parents. I’d like to have a rough idea of the right thing to do before I see my therapist and advisor. Thanks if you’ve made it this far!

@DailyMailcanfuckthefuckoffthank you so much that was incredibly helpful. I’ll go through my bank statements and see where I can cut back. For those asking yes I currently pay into a pension and have done so since I was 16. I’m aiming to save around £25,000. If I’m strict I should be able to do that in a little over 18 months if I get the job offering £48k

I go buy the 50% needs (rent/mortgage/bills and essentials), 30% wants and 20% save method. Except the "save" goes into wants and needs so it isn't really working!

Thanks there’s a lot of helpful suggestions here. For those asking I’m based in London. Work is business casual so I usually just buy work clothes from primark. For the last two months I’ve managed to put aside £875 each month but have dipped into a little. My mum gave me £2500 for my 25th (again fully aware this is ridiculous but it’s a cultural thing. 25 is a very big one where my family is from so she insisted and will give the same to my siblings when they reach that age) and I’ve managed to keep most of that saved. I will try and start with £100 per week. And try hard to stick to it. My heart is palpitating as I type this. Not because I think £400 is a tiny amount but because I’m worried I won’t stick to it. It’s usually a good £40-£50 every time I see friends so maybe I’ll try suggesting cheaper places that are still nice.

I always mentally think that for "fun" money (day to day spending not including saving for holidays) £100 a week or so is a nice amount but honestly OP you will get huge variety on here as you cut your cloth iyswim, and it depends where you live etc, your hobbies & the like. to some people £100 a week is astonishingly lavish, to others it's bloody tight.

My personal opinion is also that, due to extended life expectancies and rising house prices etc this is exactly what parents should be doing where possible. There aren't many other realistic ways for today's "youth" to get on the housing ladder and so reach the same degree of security that their parents have. But it's a comfortable alternative to freeing up personal equity or dying relatively young.

And my parents certainly did not do it for me, for anyone who thinks that's relevant.

I will 100% do the same for my children @Limpidpools. I’m very grateful to my mother as I wouldn’t be able to save a huge amount if I was paying “proper” rent elsewhere

Are your friends aware of what you earn OP? What is their situation comparatively? London really does shine a different light on things. You don't want to end up looking too tight, when you're potentially in a much easier situation than they are.

Rightly or wrongly, that's how it can be. But you might not be the only one who's grateful for the cheaper option.

Unfortunately, and ironically, being at home presumably means you can't really host people at yours. Could you look at teaming up with a friend who understands to host though?

The house prices/wages situation is rubbish for many people Ebonyandivory2. I think it's great that your mum is there for you and well done for the strides you are clearly making in your career.

Do maximise it though

I earn about 5-6k more than most of my friends yet it’s them that suggests the more expensive places!

Thank you @LimpidPools that means a lot

Personally I would stick to your thought of £600 a month but be clear at the next pay cheque that anything that is left over is deposited into savings.

If I was in my twenties again, I'd be putting more into a house deposit, more into a pension, and more into savings to cover child associated costs for in my 30s

This.

£600 a month fun money seems rather crazy - you're in such a good position, OP, you could set yourself up for life here! Your mum may well have been shocked - living with her presumably was to allow you to save etc, especially as you're only paying nominal rent, and the suggestion of £600 a month may well seem to her like a slap in the face/a wasted opportunity.

You could well get on course for early retirement. I wish I'd known about/invested in things like SIPPs, stocks and shares ISAs etc at your age. Have a look at info about compound growth and see if you still want to spend £600 a month on clothes and the like then

Also have a look at Mr Money Moustache - i think he's one of the American ones but there are a few similar type sites.

Get as much as you can into your workplace pension and then stick a good chunk, a few hundred quid at least a month you could do at the moment, into a SIPP. You'll kick yourself in later life if you ignore pensions now, and the more you put in now, the longer it has to grow and you won't have to put in anywhere near as much later in life.

Thank you for the advice about pensions. I have to admit I haven’t given it much thought as my earning potential will go up again in two years once I’ve completed further study so I have been a little complacent about pensions if I’m honest. I will look into SIPPs and stocks and shares. Does anyone know where I can get sound/ clear advice about stocks and shares? I’ve researched it a little but always get a little lost in the technical jargon despite working in finance myself

Oh and if your friends suggest more expensive places - have a scout about for little independent veggie type places- often amazing food and cheap!

I think we started with a site like the mustache one (early retirement/frugal living type) for info about stocks and shares, probably not the best type of place but clear and easy.

We've got some (s&s isas) in Vanguard Lifestrategy, it spreads it out across loads of different things and tracks the market. As you can tell, I'm not too sure on all the jargon either

Definitely get money into a personal pension though, and don't forget you'll get the tax relief on that.

Good advice about pensions etc here OP. Sadly it means very little to me.

What I would say, is start watching your friends more closely. Do they really all suggest the more expensive places, or is it actually just a couple of loud voices and the others falling into line/only coming out with you one time in 3.

You may very well find that if you suggest doing cheaper things at least some of the time, some of your group are actually grateful. It's one of life's little ironies that often those with the least disposable cash feel least able to say that actually something is just too expensive.

Thanks so much @Notajogger , I’ll take all of that on board and thank you to everyone else for your helpful comments. I fully expect to get torn apart by the Mumsnet mafia ( not my choice of words. My mum once got her arse completely handed to her in AIBU so she’s referred to MN as the “mafia” ever since)

I think you have a point @LimpidPools although I’m not perfect as I could suggest cheaper places myself. I think we’ve all fallen into the trap of thinking we have to impress. We mostly come from a private school background and whilst we’re all good friends there is a hint of competition when we meet up. I think we’re afraid to suggest somewhere cheaper in case it looks like we’re “struggling” which is so silly now I say it out loud. To be honest they’d probably be secretly relieved if I suggested somewhere like Nando’s for a change

Good luck :) just spend a little time sorting it out now and you'll be in SUCH a good position for years to come!!

If you're looking to buy a property I would probably take advantage of the cheap rent & just save as much as possible. I think the average ftb deposit in London is around 100k

@eeksville £100k?! I won’t be able to save that for years! I thought it was less since most lenders will accept a 10% deposit? Another option I’m considering is buying a house up north for about £70k as an investment property since I could realistically save 7 grand in about 6 months if I get into the habit of being strict with savings

Thank you @Notajogger

Well that's the average so it doesn't have to be quite so high & I assume most people are buying in pairs so you could aim to save 50k?

How often do you see your friends if you're spending £50ish each time you see them, and you want money to be able to get clothes/make up/nails done? Even if you see them once a week/4 times a month thats £200, and then you don't need new clothes or your nails done or anything every week/month?
Is the £2000 after bills etc are sorted or before? It's too late to do maths to work it out. I'm going to assume it's after because of your wording.
So I would budget:
£50 each week socialising (if you want to save quicker I'd cut it to once a fortnight but that's up to you)
£50 nails every six weeks (I don't know how much it costs for your nails to be done in London, where I am it's £30 so I've just added £20 🤷‍♀️)
£50 a month on new clothes (if you've spent your money on a new top and jeans that you didn't need but suddenly your work shoes break you'll either have to wait until the next month for some like I do, or take however much you spent on the shoes out of savings and then use payday to pay it back in)
And then £50 on small treats like a bar of chocolate or a bottle of wine at the end of the week.
That's £300-£400 a month "fun" money.
It seems daunting at first of course if you're used to all money being fun money/not having to budget but honestly you're still having a lot of disposable income. On the months it's £300 is when you could plan to get a haircut, but only go for basic things like just a trim. And always shop around on prices.
I hope seeing it all laid out helps a bit better.
If you're interested, I live in the south west, our income each month is roughly £1400 and our bills come to £1002. The rest has to pay for food, formula, nappies, and if there's anything left over (usually a little bit, £50 maybe) we can get a takeaway or some new clothes for the baby, or with Christmas coming up starting a stockpile of food for then. It is doable, I just socialise with friends at my house with a cup of tea (you could do a bottle of wine and save on going out if you all got a bottle/had a pot you all paid into and got the drinks and nibbles from that or you all took it in turns to host and when everyone has hosted you have a night out then start taking it in turns again), or we go get a cheap coffee somewhere local as they're usually cheaper and better than big name chains anyway. We also do baby groups but that's obviously not an option for you.
Life whilst saving isn't great fun but the end result is worth it! Good luck!

£25k deposit for a London flat is on the tiny side!! What house price you looking to purchase at?!