…to ask you for your opinions on this monthly budget?

[FiscalResponsibilitea]

Hi everyone, I always love reading budgeting posts on MN, and I’ve just been approved for a mortgage and had an offer accepted on a flat so I wondered if anyone could give their opinions on this monthly budget?

Background: have just been through a horrendous, protracted breakup where we joint owned a flat. It has now finally been sold, and being able to live on my own has been a long held dream. I’m very excited about the prospect, but want to be sure I’m not overstretching myself.

Figures as follows, per month:

Net salary: £2900
Mortgage: £1200
Service charge/ ground rent: £160
Other bills (Spotify, Netflix, phone, council tax, water, electricity, gas, internet): £300? This is an estimate - opinions welcome on this.

That leaves £1,240 left for absolutely everything else: food, going out, holidays, savings, gifts for people, weekends away. I live in London and am in my early 30s.

Main questions - does £1660 out of £2900 per month seem too much to spend on fixed costs? This is obviously much more in terms of proportion that when I was living with my ex. The proportion seems high to me, but the main issue to me is making sure there’s enough left over per month for everything else.

Has anyone else lived on their own in London on a similar budget, and what was your experience?

Thanks - opinions, budgeting tips and ideas welcome 🙏

Bills seem too low. Have you looked up the band for the property and the council tax? My bills are more than £300, but I'm in a house with older children. Gas/Electricity are so expensive at the moment.
Is Netflix your own TV or do you need a TV licence?
Do you have a transport to work cost?
Have you got NHS dentist?
What's your shopping bill at the moment (food,house stuff and toiletries)?
Do you need any insurance (life/critical illness/income protection/house)?
How many people do you need to buy presents for through the year and what's the budget per person?
What's your saving budget (does that leave you enough for weekends away/holidays)?

I feel for budgeting it really helps to break down the 'other'

Meal plan and look at cost (what's lunch cost as well)

Good luck with your new independence.

Your fixed costs are high and don’t leave you much wiggle room. What about pension contributions and savings?

Your mortgage is too high for your salary, but I appreciate you may not be able to do much about that currently. Would you be able to get a renter, so they can help you with the mortgage?

Can you change jobs and aim for a higher salary?

I think you've not given yourself enough for bills...

What size property is it, CT banding?

I live in a 2 bed. My bills are:

£10 Spotify,
£11 Netflix,
£20 phone,
£210 council tax,
£35 water,
£150 electricity
£30 internet

Which is £466

But that doesn't include transport, food, insurance, dentist, hair...

I'd add an extra £300 month for that stuff

I'm also early 30s and live alone. That looks more than doable to me, depending on what kinds of things you eat (I mainly shop in Lidl and Asda), what you do in your free time and what kinds of holidays you go on. I tend to eat at chains/pubs, do city breaks (although I'm going on a big holiday this year), visit friends/family by train every couple of months, but I spend quite a lot on gigs. Is your net salary after pension? What are your travel costs to work like?

My net salary is about £2450 (after tax, NI, pension, student loan), mortgage £1000, service charge/ground rent a bit lower than yours (around £70/month), and I save around £400 a month. I don't think I really scrimp and save but I hate shopping so don't spend much on clothes, rarely get takeaways (maybe 6 a year), and only Uber home once in a blue moon.

£300 is a fantasy. Mine are about £600 for 3 bed house. Food and household shop about £400 per month, so a grand a month in total. Council tax alone is £180!

I'd expect bills and council tax to be higher but I still think it's doable. I'm assuming you already contribute to a pension. There should still be room to save.

Blimey that sounds loads! DD net salary is £1450 and bills including food come to about £1000 so she has £450 for everything else. Going out, clothes, toiletries, transport, presents (not really any holidays she can’t afford them).
I suppose the biggie is transport, do you need a car for work? Fortunately DD can walk to work, shops etc.

Have you had a go at working out your budget using the 50/30/20 rule or similar? There’s a good explanation here - www.starlingbank.com/blog/50-30-20-budgeting-rule-is-it-realistic-in-a-cost-of-living-crisis/

I live on my own (up north so salary and cost will differ) but I set up a sinking fund in a Monzo account and created different pots for annual expenses. So as an example here are my monthly contributions:
Car service/repairs - £30
Hair & beauty - £20
Garden/allotment - £20
Dentist check-ups - £25
Clothes - £25
Holidays - £50 (usually camping!)
Gifts - £75 - I set a budget for everyone for Xmas and b’days, so £20 for godchildren, £25 for a couple of good mates, more for boyfriend etc, multiply it by two to cover Xmas and b’days, and divide by 12.

I pay my council tax over ten months so for the two I don’t pay I put one month into a misc pot for things like flowers for special occasions, sickness, godchild passes exams etc.

I occasionally borrow from my other savings account which I put £200pm in but usually I’m all covered from the sinking fund account.

That's for a 3 bed house though... I live in a one bed and gas (£60) electric (£45), water (£23), council tax (£95), mobile (£7), internet (£25), Netflix (£7), Spotify (£6 student, was doing a post-grad), Amazon (£8), professional fees (£30) so £306 a month

You're missing insurances, contents at least, possibly building depending on the set up if it's lease hold or free hold, don't forget life insurance, do you run a car? If not how much does public transport cost you? Things like haircuts, gym membership, clothing.
I think you'll find utilities much higher than you're anticipating, what heating system do you have? How old and well insulated is the property? Do you have a gas boiler or will you need to use an immersion for hot water (very expensive) . When I owned a flat each year on top of service charge etc we would get a bill for any larger maintenance/repair jobs, you should be saving for that. Have you checked CT band? What's your plan for saving?
I wouldn't want a mortgage of that size plus service charge on your salary

Your fixed costs are high compared to income but your mortgage provider seems to think it's manageable which I guess is good. You can look up actual council tax for that property on line as £300 does sound very low estimate for all the things you listed. I would attempt to break that down and get more accurate figures in there as far as possible.

I think if you are happy with things being a bit tight for a while you will be okay as your mortgage payments could come down and could your income go up in future giving you a bit more wiggle room? As you are on your own do you have any emergency savings funds, illness cover should you be unable to work and pay the mortgage?

Food likely to be at least £400 a month if you include cleaning products, laundry stuff and toiletries

@RewildingAmbridge not for one person

Bills seem too low. At the moment my 2 bed is costing 310 a month for gas and elec and that's me being very frugal with heating.

yes I live in London and had pretty much the same incomings and outgoings when I first bought my flat. It’s fine. I wasn’t rolling in it but I wasn’t struggling. I have a one bed flats council tax is £109 and gas and electric is £50 so I don’t think people in bigger houses with higher bills are accurate in their assumptions.

You don’t have a budget yet, OP.

Look up the council tax.
Look up an internet deal.
You know how much Netflix & your phone cost.
Gas & electric & water are trickier but depending on the size of your flat it should be possible to estimate.

You need to breakdown your figures, for example check want council tax band and take off 25%, contents insurance, gas, electricity, is your water on a water meter, commuting costs. Do you have a vehicle?
You have to include all regular expenses however minor.

I live alone in London and spend about £250 a month on food/cleaning stuff/basic toiletries. You will need contents insurance, OP.

My commuting costs are about £180 a month, too. Don't forget to allow for dental costs, if you can't find an NHS dentist (none where I live). Hairdressers? Opticians? Sinking fund for Christmas/holidays/boiler repairs etc?

Think about everything you pay yearly and divide by 12 so TV licence, home and contents insurance, car/ commuting costs, life insurance?

For holidays think how much is a holiday? How often do you usually go away? Again divide by 12. Can you put that much towards it each month? If not do you need to cut your expectations?

Ditto clothing.

Ditto socialising.

You'll need to include an amount each month for home repairs. If your boiler goes bang can you replace it?

Take a look back through your transactions and see how much you actually spend on things and what you spend on.

Bills definitely sound far too low.

Don't forget insurances, travel costs, vehicle costs if applicable, dental and prescriptions, opticians, haircuts, clothes and food of course!

Congratulations on the flat and mortgage offer.
Even if it sounds tight, probably better than renting and being subject to the vagaries of short tenancies. How does the mortgage cost + service charge compare to rent that you'd otherwise need to pay?
Spend cautiously for the first few months, get a real feel for budget and analyse your spending - if you absolutely have to, you may need to think about a second job.
Yes, living alone is more expensive than living as a couple - but if the relationship is over, that's no longer an option.

Your other bills are far too low

my council tax alone is £210 a year

Then add in electricity, gas etc. waaay more than £300.

Granted different living situation but our other bills are more than £1000 a month. It’s also a bit weird this is an estimate, surely you know your current usage and how much you spend on food etc.

Council tax rates will be on your local council website but £300 for all those sounds low, you get a third discount as a single occupier. My gas and electric is around £100 a month at the moment in a 2 bed flat, although it’s not particularly well insulated and I live further up north so maybe need the heating on more.
it sounds like you have plenty spare for other things but now I’m wondered where all my money goes as I earn similar to you but my mortgage is half that 😦

@ThinWomansBrain is right about comparing to renting. Renting a one bed would be similar costs but with less security and nothing to show for it. Really it's a question of making a budget that works, and unless you have expensive tastes, that should be easy enough.