To ask for deposit saving advice. For the first time ever we might be financially ok. Any advice on how to budget the income and finally save for a house deposit ?

[Seasidecoast]

After over a decade of financial struggles , making sure we got enough to pay bills, moving countries, changing jobs , having 2 children, living in badly rented flats DH (34) and I (32) might finally have some financial stability soon. We always lived from one bill to another and never had any disposable income, no financial or childcare support from our parents. After two long maternity leaves I have finally secured a wee job at the local school and DH is due a promotion this summer. Its a big thing for us as we used to live on a student scholarship with our eldest barely affording food. We never even dreamt of saving up for a mortgage as barely had anything left each month.
We might be able to start actually saving up soon and perhaps manage to save a decent deposit within the next 4 years. So I would appreciate any advice on how to not blow the money away and save wisely to save up for a deposit? I might be earning about 20 k before tax and DH about 60k from this summer

P.S its not a boasting post, we have never had any disposable income ever. There were times we simply survived and we used every little bit of our savings during Covid to move back to the UK for a new job and to rent somewhere. So to think that it all might finally pay off is a very strange feeling.

There is lots of advice on Martin Lewis' Money Saving Expert website if you look for "First Time Buyers" advice. You could look at opening a LISA which is a Lifetime ISA. Depending on where you live, this could be really helpful as you can save up to £4000 a year in it and whatever you save gets a 25% boost from the government (so up to £1000 bonus a year). You can use this money as a first time buyer to buy a house to up to the value of £450,000.

If really depends on what your outgoing are, you can only save what you have left after that?

id look at shared ownership - you’re saying you’ll be nearly 40 by the time you get a deposit and I reckon at this point it would make more sense to get into home ownership asap.
You’ll probably only be able to get a max of 30 year mortgage which is ok for now but means that you’ll have less opportunity to buy a more expensive house down the line by extending your borrowing, so sooner rather than later imo

Pay yourselves first before any other discretionary spending.

As we got promotions, we chucked it at the mortgage rather than uplifting our standard of living day to day. We kept a modest car, kept buying from ebay and vinted etc and yes, some of what we buy is expensive, yes we have nice holidays, but we deliberately didn't just start "living better" with takeaways and buying convenience (like having a cleaner) and consequently we are in a very comfortable position and don't feel like we are giving anything up.

Best of luck!

Definitely open a LISA each for a start.

If you have managed financially up to now can you save your entire take home salary? Save it jointly so no question of one person paying everything and one saving everything e.g. if you bought premium bonds each month 50% in your name and 50% in your husbands name.

This way when your husband gets his promotion you can enjoy an uplift in your family money but you could for example save 30k in 2 years and have a 10% deposit on a 300k house (or 20% of 150k).

Then you would just need to save a little longer for any stamp duty and fees and you will be ready to buy.

Good luck whatever you decide!

I agree with the thought of living off one wage. If you can live off DH wages then save everything and anything you make. You'd save very very quickly

Your DH will pay 40% tax on anything he earns over £50k and you'll lose child benefit. So it might be worth him salary sacrificing £10k into his pension.

Both of you open a LISA and put £4k in each and that will give you £10k a year with the government top up.

Once you've got your £1k emergency fund and 3 months worth of household expenses in a high interest savings account and you've made a budget, then you can start saving for your deposit.

The You Need a Budget (YNAB) app offers a 30 day free trial.

Best of luck.

I like the living off one wage idea, and save the other.

Alternatively, save big chunks as soon as you get your pay each much. You do not touch it. Live off the rest. Anything that's left just before the next paycheck comes goes in savings too.

We havent got cars or anythings else expensive of that kind. We use any spare money on our children and making sure they can go to clubs they enjoy/ have birthday gifts.

Our expenses at the moment and they will remain the same are
rent 1400 (cannot go any cheaper or move as we have no cars)
Council tax 250
Electicity and gas 180
Internet 50
Kid clubs and classes 300 (not monthly every term )

We do not want to try and save money on food as its important to us to eat well. Our weekly spendings on food are about 180 at the moment. So whatever is left a portion if it is what we will need to save somehow. Is it even realistic ? We are not in a rush to buy because we might be almost 40 as we just want to find a right home for us and ideally dont want a mortgage for more than 25 years.

How many years do you think it will take to save a decent deposit (also what is a decent enough deposit?)

I am aware of things like LIsa however not sure after years of just managing by I am mentally prepared to put any money I get into any kind of scheme (what if we want to go on a small holiday and need the money ) these kind of scenarios. We are careful with money so its not an issue of us spending it on silly things. Just trying to think how long it might take and how much is it realistic to save up.

Save for a deposit in a LISA
You will receive some free money from the Government

Quick and dirty;

Take home for both- 5055

Outgoings 3000

£2k left say you Save £1k per month as you’ll need money for birthday Xmas holidays repairs one offs etc too.

You can save 12k Per year

To buy a house you’ll need a minimum deposit of 10-15% of the purchase price plus stamp duty, solicitor and removals

my first house was £275k, and I had to put down £40k deposit.
That is because i earned approx £55k, and could only borrow x4 that as a mortgage. So I had to make up the difference in cash.

you need to check property prices in your area and use a mortgage calculator to see what you can borrow to get to these figures

On top of deposit

You will need money for

Solicitor fee
Mortgage arrangement fee
Property survey
Moving costs
Post redirection costs
Emergency costs

Stop setting yourself up with excuses to spend any extra income if you want to actually save up for a deposit.

Nobody 'needs a small holiday' more than they need a roof over their head.

That is how people expand their living costs to mean they can't save even when they are on double or triple their previous income, by coming up with more things they 'need'.

You have to do the hard thing if you are serious.
You live on the smallest amount you can, you don't start splashing out on extras because you haven't had them in so long, you put every penny you can into getting the largest deposit you can as fast as you can.

No one can tell you how much you need to save - it depends on the house prices in your area. You can borrow in the region of 300k for a mortgage, everything on top of that (or min 10%) will have to be your deposit.

You'd be foolish not to open LISAs, by all means save a bit of money separately for emergencies, but a Lisa is basically 25% return for free.

We saved our £10k deposit in a year, when we were younger and earning MUCH less, by giving ourselves spending money in cash each week.

EVERYTHING discretionary came out of that cash. So that meant toiletries, makeup, coffees, drinks at the pub. I walked to work and took pasta pesto EVERY day for a year. No clothes shopping, no trips away, no new items for the house. You'll be shocked at what we allowed ourselves - £15 each a week in 2010!

This. It’s a bit harsh but you are currently on an unstable financial footing. I really like the Dave Ramsey method. Do you have any debt? If so get that paid pronto. Then get 6 months emergency savings. Whilst doing all of that suss out the sort of house you want to buy. Then work out what a 10% deposit looks like and and 25 year mortgage.

How Old are your kids?

Congrats on gaining some stability.

Best of luck.

Kids are 8 and 5. We dont want to save for a house by taking away all the experiences from them its something we are not prepared to do. I appreciate a lot of advice but for us it is not an 'emergency'. We live in a lovely rented flat and we dont feel less because of that. Housing is something we want to save up but we also want to live. We never splashed out on takeaways, or clothing, or holidays ever so firstly yes we want to go on a trip somewhere as we never had any money to even think of that. Our children are desperate to swim in the sea. I appreciate harsh advice to forget about it all and save every penny but would prefer a more gentle approach. Its our big goal and dream but not something we lose sleep over. Saving my whole salary and living off dh's is a good option to start with.

It’s not that you feel less for living in a rented flat. It’s that you can have the rug pulled under your feet by your landlord at any time and have to move.

Try YNAB as well. It’s amazing and a small holiday budget well for is going to be ok

Ok, so you are about to bring in an extra 1400 a month. Plus DHs pay rise.
What about keeping 400 of your salary every month to improve your standard of living above what sounds like a pretty tight financial situation. Then save the remainder. You can add DHs payrise to the savings pot once that comes through. The best way not to blow the savings would be to a)have enough for a month to month basis and b) have a small amount in a savings account you can access. Then put all the rest into an amount that is harder to access.

Open two accounts.

One is for the bulk of the funds say £1000 to a long term or notice account. Cannot access with shoter term notice.

The other is for say £250 and can be easily accessed for emergencies like car repairs, new washing machine etc.

You need an aim. Realistically, what mortgage payments over 25 years can you afford? And therefore what money do you have to spend on a house. This will tell you what you’re aiming for deposit wise. Add 10% for price increases.

save your salary. Live off your husband’s salary.
have lots of different saving pots - LISA that is locked away. Savings you can access to go and see the sea. Christmas / birthday pots.

I agree woth this. Ots hard but it's just a few years. And term time is so expensive for so little.

Camp with kids and take some mini breaks just adults in term time (assuming you can get a few nights childcare) x

An alternative is to pick a house you'd like on rightmove, use a calculator for how much the mortgage would be, and sve that amount each month. If its too much pressure, you need to save more or adjust your expectations (I don't mean that rudely)