36 year old couple… How bad are our finances?

[UpQuick]

DH and I both work. We have £25K saved in a Lifetime ISA as a starting point for a house deposit. We have a combined income of 4,000 per month, after tax. That’s to cover all of life’s expenses. We do have £2,000 on a 0% credit card.

we have recently moved from a rented house into accommodation provided by a family member. They are giving us a discount on this, so it’s helping us to save. We also have two DC age 12 and 9. The thing is, we would really like another, but I’m worried that would be totally irresponsible.

very grateful for opinions…

In your case you already have a 9 and 12 old and you have yet to buy a home. Your currently renting off a family member and paying a lower rent than the general rent of the area. This will gave you a chance to build up your savings and to buy a home.

The relatives your renting off may not want you want to rent there house to you long term and you don't want to go back into private rental.
Your priority is buying your own home and not having another child.

Also you have a 9 and 12 year old. I see friends with kids of those ages and above. They have all said the cost of food, school uniforms, branded clothes, expensive runners and education gets higher every year. In a few years time your 12 year old will be at the university stage and if they live away from home it not going to be cheap. With a 12 and 9 year old you could have 2 kids in university at the same time.

Also having another child will cost you more. You won't be able to borrow as much for a mortgage with 3 children as 2. You then dealing with teenagers and a newborn/toddler and each age brings it's own challenges. It not fair on your older child trying to study for exams and listening to baby/toddler crying.

I currently know a lady who had baby when her kids were around your ages. She found the pregnancy harder as she was older. Then she was dealing with a teenager, an older child and a newborn at the same time. As the 2 older children reached the teen years and secondary school she said the expense went up a lot. Then she had to try get them into a good secondary school. She has had to deal with a few issues common in the older kids ages. Then she is trying to help everyone out at the same time. Imagine trying to help a child with GCSE homework and having a 4 year old wanting attention at the same time. Then the older kids want to go places that are not suitable for the youngest one and she dragging the youngest one to football ect.
I don't think she would tell anyone to do the same as her because it stressful, expensive and it's made her life far harder.

Your getting to a different stage with your kid's and your priority now is getting a mortgage for a house near a good secondary school. You currently paying less rent and you need to save hard, cut back your expenses and have no holidays to get this. Then you need to be putting money aside for the university stage and some money into your own pensions also.

I have a friend with 2 kids and her husband wanted a 3rd child. She realised that having a 3rd child would not be fair on her both for her physical and mental health. Also it was not going to be fair on her existing children and it would leave them worse off financially. She said no to a 3rd child and now a few years later she is still happy with her decision.

I wouldn't be very impressed if I helped out a family member to allow them to save for a deposit and they used the chance to have another child tbh!

I totally get the wanting another, I've been there (I think its a late thirties-forty thing) and your finances are better than most but only because someone is helping you!

Don't let doom mongers on Mumsnet put you off living the life you want. I have a massive age gap between my older children and the baby - had a child doing GCSEs with a 3 month old in the house. It was totally fine. Not everyone struggles with the newborn stage!
We are a similar age to you and have a similar income. I have more children overall, and my older children have not lost out financially. I have uni savings for them, a driving lessons savings pot, they all go on the school ski trip, they do extra curricular activities etc. We have no debts.

The difference in my experience though was that I had already bought a house. How far from a deposit are you? Where I live, £25k is enough for a deposit to get a small family home, but you refer to it as a 'starting point' so you maybe live somewhere more expensive. Can you buy a house now, then decide if you want to try for a baby once you are settled and paying the mortgage?

Financially, you sound fine to me. But like I say, I live somewhere cheap!

Before making a decision I'd also look into the cost if both current children want to go to university. www.moneysavingexpert.com/students/student-loan-parental-contribution-tool/

This could begin in 6 years. If you jointly earn over £50-60k gross, they will have their loan reduced quite a bit and you will be expected to top up to what the max loan would have been without your earnings. The max loan is already too little for a student to easily live on without working a few part-time hours (£10.5k). If they get less than this and you cannot afford to top up, then they end up having to work far too many hours to easily study alongside. It's one of the biggest causes of uni failure/ drop out. It's a cost to parents that the gov are not very clear about, but martin Lewis 'link above explains it well.

I had the same age gap. Would not do the same again.
Prioritise getting your own house. How far off are you?

Remember, as things stand you won't get child benefit or tax credits for number 3

There’s no cap on the number of children you can claim child benefit for.

I suppose it depends what type of life you want to give your children. You sound sensible so you will know that a third child will obviously be an extra strain on finances. Especially with today’s cost of living. If you’re not bothered about travel/savings/universities and happy to work hard for a long time to support three kids then go for it! Personally, I hate the sound of that and wouldn’t in your position but that’s because I love having money to show my DS the world and the ability to be flexible with work, it makes me a better happier mum…but everyone is different and if you love children and can give them a stable loving childhood then do it. I would urge you to consider how you would cope with pressure and stress of finances down the line though, not only at the best of times but if one of you lost your job etc. good luck!

The issue @UpQuick is you're not giving enough info about your finances.

All you've said is you are both on roughly £25K each and you have £25K savings (and £2K debt.)

We don't know how much a house is in your area.
Or how much you can now save per month as you're living below rent-value in a home of your family.

You've not said how much mortgage you could get or over what term.

You've not explained (if you had a 3rd child) whether you would carry on paying your mortgage (if you would have maternity pay, how long for, and how long you'd not work ) or pay for nursery fees when your baby was 6 months, 12 months, or whatever age.

To put it very simply, if a mortgage was £1K a month, how would you afford that if you stopped work and relied on 1 salary? How would you afford nursery fees (maybe £800 a month) if you went back to work?
Do you and your partner have a career-path where your income will increase?

If you haven't sat down with your partner and worked this out, it's the first step or the house you want will be just a 'dream' without a real plan.

Again, I was replying to @Neetra30 post saying that parents who don’t provide extra-curricular have “low standards”. I don’t know how many more times I can say that!

You think love alone will feed a family?
You think that having more children 3+ kids is a good idea when you know timing is tight, resources are tight and you haven't secured stable housing?
You think it's ok to deprive giving your kids opportunities because you dont have any money spare?
OK then.
YOU do you but I want more and better for my kids. And other mums who do agree with me, will want the same for their kids too.
And yes. I have a certain level of standards for my kids because I am thinking LOGICALLY regarding their longer term outcomes

If you have another child you will never get the house!
Pay off the credit card...why do you even have the debt when you can just clear it.

You’re on low incomes, you have low savings and you have no property. I think you need to get yourselves a lot more secure before you think about increasing your responsibilities and outgoings.

How much are you saving into your pension, that’s the critical missing information?

Believe me the way things are happening in the world with an unstable economy and some questionable leaders and their actions, I would be grateful for the 2 you have.

This. Why would you want another baby now when your children are growing up? It’s a lot more difficult to go through it all again when you’re older, and you’ve already done it.

Does your partner want another baby at this point?

Is your goal to own your own property?

3 children is a lot more expensive than 2, eg most stuff is geared for a family of 4.

Ultimately we can’t tell you what to do as it’s your life and your decision. I just think it’s batty and I’d concentrate on the children I already have, and making the best life for them.

£4000 take home is a bit more than 25k each, I take home less than £2000 a month and I’m on 29k.

Your fine have a baby no offence but you arent getting any younger.

It depends on your expectations. I have never had even close to £25k in the bank nor has any member of my family other than my parents after an inheritance. £4k is a good monthly take home income. But you will get others with thousands put away and 6 figure salaries who think you must be on the verge of starvation. How do you feel deep down?

You already have older children and you still rent-you should focus all your efforts on getting a property, which even then won't be quick because £25,000 is tiny as house deposits go. It is in fact only just over one years cash ISA limit for one of you, and presumably you should both have been saving all through your relationship which must be at least 13 years.
The rate at which you manage to save, means another child turns your chance of your own home (on current trajectory) from slow, to never.

Having a baby at 37 would mean you'd be 58 by the time they finish uni . Even then they may not be fully financially independent if they go into a career that is low paid until you're fully qualified.

That would bother me more than the finances, tbh, although you'd have to throw money at your pension for that last 10 years or so of working life to have any hope of a decent retirement income.

This.

Personally I wouldn’t it’s not just now it’s things like paying for 3 mobile phones maybe needing a bigger car and holiday accommodation & even food is packaged for 4 people not 5. However it’s a lifestyle choice many people don’t care about not having much as long as they have lots of kids and that will be individual to you.
it’s a big gap I have a large gap although smaller than you and there’s lots of years where they aren’t much company to each other but the gap close once in late teens.
life is expensive. Really think it over and both be on the same page whatever you decide

Also as others have said you may go down to 1 income through anyone of your kids or you or partner needing long term care. Health isn’t always guaranteed. I’m sorry to be say this it’s just many of my peer group 50s aren’t here anymore strokes and cancer and diagnosed with ms. It’s scary what this age can bring.

I know many women who had a 2nd (or even 1st) child at 37 and the idea of uni costs or being 58 etc didn't enter their heads.

I don't think OP is in a position to raise another child but nothing to do with being 37.

What do your pension provisions look like? Are you both whacking the maximum possible contributions into your employers’ schemes? Did you have any hope of retiring with your work / private oension(s) earlier than your state pension ages? A baby in your late 30s means a teenager / student you’re still financially supporting in your mid to late 50s, when you might otherwise have liked to retire, and you could even have one or more grandchildren from your older DC by then.

I think you’d be absolutely mad to have another. Buy a home and really focus on your pensions.