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!

Fyi.. I was 29 when pregnant, 30 when I had my first baby and then shelling out £1300 for childcare just for me to go back to work full time. And paying a £1000 mortgage and bills on top. This was 12 years ago so cost of living is higher now. Not trying to shock you or anything but you're 26, still plenty of time to save but just to put into perspective how costly life can be.

£1300 a month childcare bill that is.

I said nails done! OP said she bought her clothes from Primark. Be fair!

I'm from a private school background too OP. That's what I meant. When the "wealthiest" member of the group says, let's just not, everybody is grateful in my experience.

Also, in a big city like London searching for a good place to eat/drink on a budget can be really fun. Especially if you make it a kind of group challenge. And if you're into food. You're London born (I imagine), whereas I'm from the sticks, never lived in London and am now in a completely different country, but I recommend the Momo place by Woolwich Arsenal to get you started. (So central, I know)

Some very good points being made here. I have to admit I feel a bit silly after seeing people with far more responsibility get by on less than £600. I will try living on £100 a week but have an extra £100 put aside for an emergency top up. I will try my absolute hardest to not touch it though. Most of the flats I’ve seen are around £180,000 so I will need a deposit of £18,000. It sounds very selfish but I’m hoping the market will be in my favour after/if brexit happens. I’ve realised I’m in a very fortunate position and I’d hate to waste it so I’m going to tighten my belt a bit. I plucked up the courage and suggested going somewhere more affordable for my next outing with friends and they both jumped at the chance. Next thing I know they’re telling me they both wanted to suggest cheaper places ages ago but didn’t want to be “that” person! So looks like I’ll be saving a bit of money on the social front for the foreseeable. Thank you @Limpidpools that momo place looks fabulous and I’ve suggested it to my friends

Bit of a bizarre question, surely you just save as much as possible and live off what you need? With that salary you have the additional bonus of also spending what you want to an extent. I bought my flat at 26 three years ago, had about £800 a month left for petrol, food and socialising etc after bills. I managed to save a bit and still go out a lot and then spent the savings on at least one holiday a year. Someone earlier said you cut your cloth, that's all it comes down to.

See?! As I'm on a forum and a bit pissed I'm just going to go with I told you so

For your next trick, try Dotori. You'll need to book that though.

I wouldn’t say it’s biza @ashmts I suffer with anxiety and wanted honest opinions before I meet with my advisor as I don’t know what is “normal” when it comes to money as I have an unhealthy attitude. Once I go through my finances I will have a better idea of my cloth so to speak but until then I wanted a general idea of whether £600 per month is too much

That's great about your friends, OP! I seriously wasted so much money in my 20s, and while I had some great experiences, a lot of it was same old same old, and I'd love to have some of that money now for extras that can be hard to afford on our budget.

I'd save up for a bigger deposit and a smaller mortgage that you can choose to overpay. And definitely look into that pension - anything you put in now in your 20s is worth so much more than probably double that amount in your 40s.

Haha @LimpidPools you were certainly right! I was shocked at first but it was so refreshing to have an honest conversation and admit that none of us really need or always enjoy the fancy outings. It’ll be nice every once in a while but not every time we go out. Ooh thank you I’ll add that to the list too. I’m a tad pissed too on Asda’s finest Lambrusco. See, the penny pinching has already begun

It really is @Apileofballyhoo! I’m so glad they agreed with me. I’ll be honest I’m a little lost on what to do on the property front. I just wanted to get my foot on the ladder so didn’t really think about overpaying as I plan to get a two bedroom and take on a tenant and then sell in a couple of years. I’m hoping I’ll meet someone in the not too distant future so the property won’t necessarily be my forever home. There’s a lot for me to think about but thank you for your advice! I’ve added it to my notes

Fair enough, I appreciate that maybe I'm more of a saver and some people are spenders. What helped me was transferring money to my savings on payday with the intention of living off my current account. Psychologically it made me think about what I could afford.

Consider having two savings accounts - one for mortgage that you CANNOT touch, e.g. put in 1k of your 2k that's left after bills etc. Then put say £500 into savings that you could access if necessary. Then leave £500 in your current account to live off. Once your 'fun' savings account reaches a certain point (2k?) either use it for a treat like a holiday or transfer the extra into your mortgage fund. And if you have an expensive month, like December or say it's someone's birthday, you can dip into the fun account and spend more than £500 that month. You can replace those numbers with whatever you decide is reasonable.

Get a Monzo account to help you budget!

You're very welcome, Ebony! I wish I'd had MN in my 20s, I would have a very different life as I had zero cop on in lots of ways. Great advice there from ash above, money you can't touch, and money you save but you can touch if you need to.

Thank you @ashmts I’ll take that on board. I have a Monzo account @WTFdidwedo but true to form seeing all those notifications flashing every time I spent money stressed me out. The budget feature is very handy though so I will give it another go after a few therapy sessions

I would start off thinking about your ideal discretionary spending and working backwards.

I definitely wouldn’t go for a % approach - don’t fall into the trap of thinking that you need to spend more if you earn more.
You’re perfectly happy on current salary, right? So you could actually save ALL salary increases. You don’t need to spend more.

So, ideal discretionary for me:

• theatre once a month, but happy with cheapest seats
• cinema once a month
• hair once a month
• holiday once a year at £2K budget / 12
• 2 weekends away, budget £500 each: £1K / 12
• gym membership (cheapest)
• phone (2nd or 3rd latest so £££)
• able to eat out 2x per month
• clothes: not a big deal for me, so more a case of annual /12, I wouldn’t buy clothes every month
• £50 of “just because” money so I get to feel extravagant without blowing my budget. This month, that would have covered me deciding I fancied a new badminton racquet

Be honest with yourself about what you would LIKE to spend.

Nowhere on my list are things like make up and take away coffee.

Then you can start looking at % and what is left - and if it’s not enough, start prioritising.

I would recommend keeping your treat money in a different account. That way, if you under spend then you start to accumulate treat money - so under spending becomes a reward.

One thing I would say - I earn a good salary and I love being able to get things (I have a child now - so mainly for her!). But... I was just as happy on half my current salary. You do start to spend up because you can. I was just as happy with my cheap travelodge really, as with the boutique hotel. Looking back, I kind of wish I had saved EVERYTHING over my salary of 10 years ago. And I am a saver so it’s not that I regret frittering it all away Just - I could have retired earlier. But that depends on your goal. It’s only at 50 that I’m really thinking it would be nice to retire early. At 30 I thought “I love my job, why would I stop?!”

All the above aside... as soon as you hit 40% tax bracket, work the hell out of pension tax relief whilst it’s still in place!

Oh and a little bit of relationship advice for you I’d say this even without your parent situation.

Do not think that love conquers all, and gloss over a boyfriend having a different attitude to money, or think that they will change. (sometimes people change a bit with age or increased income - but don’t expect or assume that, wait for it to be evidenced before committing).

There’s a thread on here at the moment by someone long term married and frustrated that she is going without now, for her pension, whilst her husband “lives for today” on his wages. She can already see that she’ll have less money her working life, then in retirement her sacrifice will benefit Mr Have It All Now.

Money is up there with fidelity for marriage counselling (my Relate counsellor confirmed that!)

You don’t have to be identical in approach. My husband earns a quarter of my wage, and is much more “it’ll be OK”. But he has saved every month for his sons, and never spends what he doesn’t have - whilst at the same time enjoying a blow out when he comes into money.

If you meet someone who isn’t compatible with you financially... enjoy the fun times and the sex, but then move on

Thank you for your wonderful advice @Ellisandra! I definitely have my screwed on when it comes to men now. I refuse to go through what my mum went through with my dad. He was just hopeless with money. I turned down an engagement when I was 23 because deep down I knew we’d end up divorcing later down the line because of money. Now I’m 26 most of the guys I’m interested are in their thirties so more often than not they’re somewhat stable.

So if you want to buy somewhere for £180000, you need around £25000 for deposit, solicitors fees, mortgage fees, survey, etc. You also need a mortgage of about £160000. Looking at money saving expert if the interest rate was 3.5% (you should be able to get it cheaper) then you will be paying £800 a month back. If you can overpay early on then you will save more. Generally you can over pay by up to 10% of the balance per year (though an advisor can talk you through the options), so let's say you overpay by 10% a month, your total mortgage is £880 per month. Add council tax of 150, water £30, gas/ electric £70, broadband £50, insurance (life and property) £50. These are very rough estimates, but bring you to around £1200 per month, add on £200 for food. I would aim to save around £1400 per month as this will mean when you buy you are used to being without this amount. Any extra which you can save now will speed up the purchase. If you take a tennant you will obviously save some on the bills, plus the rent, which can be saved towards maintenance/ future childcare/ lump sum for when you remortgage/ deposit for when you upside.

I have £400 a month budgeted for non essential spends. Hth

600 sounds perfectly reasonable to me, if you save the rest then you will meet the saving goals you've suggested. Yes some people have less but I'd enjoy life personally.

I think it isn't that unusual to find having more money stressful, I've seen that with DH but it's also completely irrational. I'm not sure it's about therapy more about accepting the shifting responsibilities of adulthood. But as part of that you need to take responsibility and start making your own decisions and ignoring parental disapproval.

Tbh when I was saving for a house on then minimum wage with my now husband on about 30k (so less than what your potential salary will be) and we were paying to run a household, I saved most of what I had left. I still bought clothes and treats and went for meals/on holidays but was frugal/looked for bargains. I kept a spreadsheet to track my progress and seeing it climb helped me stay on track. It really depends how much you want to get on the ladder and how soon. Imo £400 pcm would be plenty spending money for a social butterfly but actually if you really want to save hard £50 a week is doable and go out less or spend less when you do

I budget £300 and often spend less BUT I'm at a different life stage to you. I don't feel the need to buy new clothes, don't spend on beauty or gym, and unless it's a special occasion I'll eat out somewhere cheap or just meet for drinks. You're earning well and may as well enjoy life a bit - although I'd strongly recommend spending on experiences over things! £500 seems realistic.

Save £1000 and put the other £1000 in a separate account that is for your monthly spends. You won't obviously always spend £1000 a month on treats so this will eventually become an additional savings account without you realising. After few months transfer the surplus of your spends account into your savings account and repeat! This is what I do

One thing to note re saving for a house is that,yes, saving for a deposit is really important but also as you will be moving into your first home, you will need a budget for things like furniture, any redecorating jobs that need done when you move in, blinds etc etc. This can all add up!
Perhaps if you were originally wanting to have around £1000ish "fun" money you could budget for your £400 and put the £600 into a separate account saving pot for all this? It's good fun "making a place your own" when you move in so it's technically still fun money!

DH and I each have salaries just below £50k. We run a large house and have 3DC. We each save about £1k a month (mix of long and short term savings). If you are living at home paying £100 pcm to your Mum you should be able to save way more than that. How much would it cost you to rent a flat and pay all the expenses associated with that? Save that each month otherwise you will find it very hard to live independently without getting into debt because you'll be used to having an extravagent lifestyle. And if I was you I'd put a lot into your pension, you are as rich as you'll ever be with no expenses and no dependents.