AIBU to ask for a high level outline of your budgeting?

[mummyandmeguru]

Background: I work very long hours in a stressful role. I am very well paid for this, but it has a massive effect on quality of life, time with family, health, etc. We (DH and I and DCs) are thinking of a career change to a role that involves more normal hours. But a big fear is that even in my current well paid role we seem to manage, comfortably enough, but not with loads left over, and so I wonder whether it is unrealistic to expect to change jobs without fundamental lifestyle changes.

AIBU to ask for a very high level idea of how you budget from your income?

E.g. say your family income is £50k, £12.5k goes on tax, £12k on a mortgage, £5k on food and drink, £6k on nursery fees, £5k on council tax, utilities, etc £2.5k on cars + fuel, £3k on holidays, £2k on clothes, £1k on going out / leisure.

Or put another way, at what income level can you fund 2 adults and 2 DCs in reasonable comfort?

This is no way intended to be goady or anything of that sort - rather to help me (and perhaps others?) see how others allocate what is available and to think through how I might re-budget and therefore feel better equipped to consider rebalancing life and finances.

Our family income is about £70,000 both me and OH work and we also get Child Benefit. Two teenage DC. I would say we are quite comfortable on this income, for us it's enough to lead a decent but not extravagant lifestyle, run two cars, a holiday once a year. We have 2 cats and they not cheap to feed and maintain their pampered lifestyle. OH has an old banger but I lease mine and get a new car every three years on the scheme. If we want to buy something we can usually just go ahead and get it without worrying but we haven't got loads left over at end of month or anything like that. I'm terrible with money and love spending so I put extra into my pension where I can't get at it 😂Also we have a very small mortgage as we could have gone for a better house but we decided to stay in our basic 3 bed semi and pay down mortgage instead. But we are up North I imagine that in some areas £70 000 household income wouldn't go very far even though it sounds like a lot. All of DC friends seem to have much better houses and holidays then us, I really don't know how people do it.

Thanks very much OldGrinch - that's really helpful. Not least as it seems to confirm what I suspect - namely that moving into a job which provided an income even a fair bit above the median household income of c. £30k wouldn't necessarily allow a comfortable family lifestyle.

Your biggest outgoings are going to be mortgage (or rent) and childcare (if the dc are little).

So asking me won't help as we are 'out the other side'
But, seriously, look at what you are committed to -

mortgage
council tax
what you need to pay out to commute - be that in car or train or something else
your utility bills
car costs
insurance costs

then start the next list down of things you can spend less or more on - what you spend at the moment is a starting point

phones
2nd car?
eating out?
holidays?
hobbies? (you and the dc)
clubs / membership of gyms ?

then things you treat yourselves to that aren't necessary, even if they are nice
clothes (obviously you need some clothes, but what do you spend at the moment ?)
hair?
nails?
tans?
on make up?
takeaway coffees?

Obviously there could be loads of things I've not listed - I've just done an 'example' of the kind of thing you could do.

Us saying what we spend things on isn't relevant if our dc are different ages or yours are used to Private school or you need to spend £6K on a rail pass whn someone else can walk to work, or someone else has no mortgage and you are currently paying out £1k a month.

It is very hard, if you are just about comfortable on your salary, to downshift and make do with less. I assume your dcs are still little. If so it is do-able especially if you expect childcare costs to fall away and assuming you are not considering private school. Children get much more expensive in secondary school.

I earn about £850 a month, and universal credit give us between £800 and £1000 a month. Family allowance of £192.
DH gets £66 a week carers allowance but they take that off the UC so it's basically just that that goes into his bank and my wages go into mine.
We pay £400 rent a month, £100 council tax, and have three children at home. Two of them get free school meals (well they get £2.25 a day to spend in the canteen, which isn't enough for a proper meal)
We spend about £100 once a month on a big shop and buy bread and milk as we go along.
Phones are £70 a month (for five) and we have PAYG gas and electricity so we top up what we can, when we can.
Our outgoings are usually more than our income, we are truly lucky that my mam helps us out when she can, but we live in our overdrafts and pray nothing major goes bang every month.
That said, we get by. We don't starve, and we have lots of blankets and hot water bottles so we don't freeze.
The boys don't possess proper coats, and I own one pair of (work) shoes that leak.
It is what it is.
To my eyes, you are rolling in it!

Rough breakdown, on £70.000 pa after tax pension etc we end up with about £4200 per month for household
Costs per month approx for family of 4
Food £500
Pets £100
Mortgage £300
Holiday Fund £400
Kids pocket money £80
Petrol £300
Kids dinner money £100
Maths tutor £150
Car leasing £200
Car maintenance etc £50
Clothing £150
Entertainment £200
Adult "fun money"£500 (£250 each)
Gas and electricity £100
Other utilities Inc council tax £300
House fund £100 ( replacement white goods, repairs etc)
Haircuts £50
Mobile phones £100
Savings £300 aprox

If income is 100% the rough split is...

20% mortgage
10% car/credit card repayments (we are overpaying to get rid completely in the next year)
20% bills/council tax/cleaner/travel etc
10% savings
15% food/household essentials
20% "fun" money (meals out/clothes/nice things for house/holiday savings etc)
5% miscellaneous- there's always something!

Do you know exactly where your money is going now?
Have you made sure all your utilities etc are with best value providers?
What expenses might fall away if you worked shorter hours eg few childcare hours, fewer takeaways or meals out, lower travelling costs.

Try living within your proposed reduced income for a while before changing jobs to see what would have to change and if you are comfortable with it.

Thanks all - much appreciated (and please keep responses coming!)

BackforGood - that's a really apt checklist and OldGrinch - that breakdown seems very sensible (though we would be stuck with a slightly higher mortgage but could prob spend a bit less on 'fun money' as young DC keep us in the house more!).

PomBear - absolutely love the phrase "it is what it is" - a favourite of mine. Sounds like you have got it v well thought through, even if things are tight. I agree that it looks like I (or others) are 'rolling in it' - and yet its amazing how difficult it is to reduce the budget.

Chazs - part of the difficulty is that a decent part of current spending compensates for lack of time (e.g. the Mumsnet favourite - a cleaner) which makes it hard to run a trial on a lower budget without actually making the switch, though I definitely need to know more about exactly what is going where.

This is all really useful in helping me think this through :)

We're in almost exactly the same position as PomBear.

I know what you mean about reducing the budget, we used to have a LOT more than we do now.
Our mortgage was only £340 a month, council tax was less, DH earned a LOT more, and we got a lot more tax credits. We used to be able to have the heating on, go shopping for "fun" do Xmas presents from Santa, go on holiday etc.
I think being forced to cut back made it much harder psychologically, it was a very hard time, although we've sort of come to terms with it now.
I guess if you do choose to downsize so to speak, you won't have that - it will be what you want, reduce your stress, and make your family life better, so that's something.
Just be careful that it's not a "grass is greener" thing - don't leave yourself in a boring dead end, and remember, the children will be grown up and away so much faster than you think...

It's a bit easier to live more cheaply if you have more time. The busier DH is, the more I'm doing the household stuff on my own, the less menu planning I do, and more quick shops and quick meals, with more expensive ingredients. We definitely spend less on food during quieter periods.

Keep a note of everything you spend for a fortnight.

It might be worth keeping track of your general spending for a while before you make the jump, just so you’re fully aware of where your money goes. I don’t mean so that you can cut out £2 here and a fiver there but because I know dh and I often use our higher income to “buy time” so to speak and it’s worth considering how much of that kind of spending you’re doing right now. It may be a lot more than you realise and could reduce quite a bit if you had more time and energy!

So for example sometimes we‘ll buy ready prepared fresh food that can be put straight in the oven so that days dinner costs €25/30. Meeting friends for lunch/dinner we might get a taxi costing €15 rather than use public transport because we were pushed for time. Some people will buy lunch daily because they don’t have time to prepare something the evening before. Those examples could add up to a couple of hundred a month easily!

Also, childcare/after school clubs/summer camps - would those costs reduce? Our dc go to breakfast club twice a week and do 2 after school clubs. They also do @ 3 camps a year which are expensive. Now I’m not saying we’d cut those out as dc really enjoy them but they are largely there because it’s childcare and we’re at work.

Of course it’s also possible to have a less stressful job but still not have any more free time than you do currently. Still, it’s worth considering whether money would be freed up just by having more time or energy without too much belt tightening.

Our household income into the bank every month is about £6,000 (varies as one of us is freelance). Out of this we spend £800 - £1000 on the mortgage (sometimes we overpay a bit). Our next biggest expense is private pensions. The rest allows us to be comfortable - we can buy what we need within reason, have the heating on when we like, go out for meals and drinks with friends, run 2 old cars, have a cleaner, premiership club football season tickets x 2 every year, go on a European villa holiday in the summer (budget for that is approx £6000 all-in including flights, car and spending money), spend £60 pw on private music lessons, replace the washing machine or pay for car repairs if we need to. We don't have any childcare costs. We give £25.00 per month each to 3 charities by standing order.

We don't have enough to do all the repairs and upgrading we need on our old shabby Victorian house, couldn't pay private school fees, don't buy much in the way of clothing. All of our furniture is second hand or Ikea apart from our bed and two sofas. I buy and sell quite a lot on local FB pages.

So we consider ourselves very fortunate and comfortable but there is nothing lavish about our lifestyle on that income.

Roughly it costs £37k to run our household including all bills, insurances etc, mortgage, food and drink, child lunch On top of that we have petrol and our lunches and then holidays and clothes etc. Our gross income is approx £100k, net approx £67k. We currently don't have to think before buying anything, but we are careful as we don't make impulse purchases.

Family income is around £40,000. 2 adults, 2 children. I think that's around £3000 a month after tax. Of this, we pay £530 a month mortgage and council tax, maybe about £50 a month on car insurance and tax, £90 a month on home and life insurance, around £70 a month on three phones. Not sure what my husband pays on petrol, probably around £160 a month but some of that he will get back on expenses. I cycle so my travel expenses are pretty much nil. There's other things like home broadband, netflix and amazon subscriptions etc, prob £50 all in.

Other regular expenses are flute lessons for one child, £80-£100 a month, climbing club for one child, £60 a month. Food shopping, about £400 a month. Gas/electric, maybe £30 a month.

It feels like we're doing fine; probably the one car helps a lot. If we were better at saving we would be able to put away maybe £2-300 a month, but unfortunately we're a bit slapdash in this department.

2 adults and one kid here.

Our current take home after work pension contributions is circa £6.5k a month.

Just under £2k goes on essentials (714 mortgage, 190 food, 130 council tax, 24 water, 300 on car (we buy cash so this covers petrol for one car and repairs/savings towards next), 390 husbands train fare, 71 energy and 60 on mobiles and internet)

500 then on annual costs or expenses that come up sporadically (save 12.5 towards home ins, 50 towards teeth eyes and other health bits, 55 towards cat vets/emergency care, 25 on web subscriptions/Netflix, 15 a month for gifts, 60 for clothing for all, 10 for makeup for me and 10 for DH haircut)

Then about 500 a month for fun (pocket money for me, DH and DD, holiday savings, Xmas and birthdays)

The rest is saved/invested. We put an extra 2k a month between private pensions, 1k into investments held in an ISA and the rest is kids savings/house overpayment.

We choose to try and live on under half our income as we want to retire early and my husband works in finance - you never know when the markets will next implode!

We only work with net pay and don’t really think about tax other than when we are thinking about our pension contributions or working out what a pay rise will mean.

In answer to your question I feel like comfortable for us is anything above 4k a month. 3k for living and fun stuff, then another £1k a month for saving so we always have an emergency fund saved and can sock some away so we can retire at a personable time.

Mortgage £570
Council tax £110
Water, electricity, gas - £110
Tv licence & broadband £45
Mobiles £32
Pets £310
Food £250
Fuel £300
Subtotal: £1727

Cleaner £156
Savings £400
Pension £800
Subtotal £1356

School lunch, pocket money, club fees £120
Eating out £250
Clothes/misc: £200
Subtotal £570

Total: £3950 ish. There's some more money being frittered away somewhere, god only knows where.

If not working then the pet care fees, cleaner fees, eating out, fuel, clothes, saving and grocery sum would all be reduced drastically or to nil, which would cut down on about 50% of the total budget. People cut their cloth, you just have to become much more mindful about spending.

Would recommend YNAB to help with this.

I also use YNAB! Best thing I spend my money on!

Our household income is around 50k. We struggle to afford holidays and have few treats. I rarely by new clothes as we can only just afford the children's. We are in the south east. Living is expensive.
But we have a large 4 bed house and our mortgage is quite a lot. We could have a smaller house but I prefer daily comfort over an annual holiday.

Take home per month around £6k total. Two adults and two teenagers.
We have no mortgage and around £1300 goes on bills such as council tax, food, petrol, subscriptions, utilities etc. Clothes and leisure costs are extra, we spend around £12k a year on holidays, but that's our only extravagance.
The rest goes into pensions and ISA's as we hope to retire early. We also have the buffer of a decent inheritance, currently in an ISA. Very lucky in many respects. I only work twenty hours and could easily do more now the dC are older, but I'm a nurse, it's hard work and I simply don't want to!
Four bed house, North West.

I would recommend taking a month to painstakingly write down every last penny you spend. It will help you to get an accurate picture of where your money is ACTUALLY going (vs where you think it is going) and will enable you to make realistic adjustments accordingly.

Also, instead of looking at where your money is going and just making that your budget, I would start from the 50/20/30 rule and then parse out from there what your budget should be. Right away that 20% savings commitment will help you to grow a healthy savings fund that will cushion you against financial shocks. Of the 50% that is meant for needs, no more than 30% should be going to your housing costs, which means your other needs like utilities, transportation, basic personal necessities and food should come in at around 20% of our take home pay. 30% can then go to ‘wants’ like holidays, restaurants, days out, gifts, lessons, a cleaner, nice clothes, etc.

We choose to give 10% of our net income to charity, so 5% comes out of our ‘needs’ and 5% comes out of our ‘wants’.

Have you shopped around for the best deals on utilities and phone contracts recently? Changing that alone can save hundreds or even thousands over a year.

We are on a healthy income, but we have tried to guard against lifestyle creep as we have gotten more comfortable. We still only run a single older car (which we bought outright secondhand) and I shop at Aldi and Lidl. Maintaining little frugality in some areas of life mean we are able to save more and have extra room in our budget to be generous with others.

Afternoon all

Thanks again for this - it is very useful, and there seems to be a surprisingly clear picture emerging as to how much is needed to be 'comfortable' in a family context - obviously with significant variations to take into account mortgage costs, utility costs etc.

Very useful to considering parameters for what I would need to be looking for - and then I can start looking at how realistic that is and whether it would in fact give a better balance in other areas...

YNAB looks interesting - have signed up for the trial - so thanks for that. Will definitely take on board the advice to track everything for a while to see where it is all going - it can seem mysterious!