Budgeting a £4000 income - help!

[Financeq]

Potentially a how long is a piece of string question, but DP and I are house hunting and slightly differing opinions. We know what we can lend in theory, but that doesn’t mean we’d be comfortable borrowing the maximum.

So, approaching from a different angle and looking for views.

If you had a combined income of £4000, a young DC (childcare costs of £100 a month) with no plans for more, and no other debt/cars etc, what would you be ‘comfortable’ earmarking for everything?

Mortgage/house bills:
Childcare: £100
Food:
’Fun’ money;
Savings:

All views welcome!

https://www.moneysavingexpert.com/banking/budget-planning/ Would recommend you use the spreadsheet you can download here. It turns all your expenses into monthly equivalents so you can really see how much you have to spend.

A rough rule of thumb is that housing should cost no more than 33% of your gross income. I think that includes things like council tax.

This is what we,ve always done and things have never felt particularly tight even through the expensive childcare years.

On that basis then personally I'd be comfortable with:

Mortgage/house bills: £2,000
Childcare: £100
Food: £500
’Fun’ money; £600
Savings: £800

But I fully expect you'll have people telling you you should be saving £3,000 of it each month and anything more than £200pm on food is complete extravagence

Mortgage/house bills: £2000
Childcare: £100
Food: £600
’Fun’ money; £500
Savings: Whatever is left!

Also, what about cars / commuting / travel?

Surely you just go through your bank statements and see what you spend now? Your food and fun costs aren't going to change just because you move house are they.

Here's me thinking 800 savings is doing really well!

I think you need to break down your costs a lot more as it's all the other things that add up too rather than grouping house as one thing. Various insurance (home, building, life, car), petrol/diesel, gas/electricity, council tax, broadband, mobile phones, TV licence/any subscriptions, presents, haircuts, clothes, days out/memberships, union fees (if applicable), any clubs child currently does (or maybe plan for the future).

I think it depends a lot on other bills. You say no debts / cars etc but if you have a car then you need to factor in running costs, insurance, MOT, what happens if it breaks down etc. Council tax can vary hugely from one area to another as do people's household bills.
I take home £3400 but single adult household.
Mortgage is £600
Other essential bills (including mobile, utilities, insurances etc) approx £600
Regular Savings (including overpaying mortgage), gym membership and subscriptions account for approx £600
So that's outgoings of around £1800 without food, petrol or public transport commuting costs.
I think I'd be comfortable with a mortgage up to £1000, in your circumstances maybe £1200 a month depending on how much you like holidays!

This depends so much on where you live - i.e. cost of housing. I could say what my breakdown would be but it's irrelevant if housing is wildly different where you are.

If you aim for the 33% of your net income for house expenses, then work backwards from there. Unless you have any other particularly high expenses. I would probably want to do a full budget though and confirm you have enough wiggle room
33% of £4000 is £1334 basically. So taking into account council tax, gas, electric, home insurance, water rates etc in the area, deduct that from the £1334. So maybe £1334 - £200 council tax - £150 gas and electric - £20 home insurance - £35 water = £929. Then depending on home many years you want the mortgage over and how much you have in a deposit, see how big a mortgage you can get with that.
It's hard to give a definite answer to the question as it'll be area dependent, age dependent and you may have different bills to consider than other people. But that sort of exercise should give you a general idea of what you can afford

I’d say you take what you spend now, see how much more of it you can spend on a mortgage (and the costs that come with a house like council tax, buildings insurance, etc).

Dh and I probably have more like £5000-6000 a month income combined (self employed so variable).

We have a £1600 a month mortgage on an £820k house (that we have a lot of equity in, large deposit).
We spend probably £600 a month on food.
All together total household expenses probably something like £3500, but we have children with expensive activities, no car finance.

I can’t speak for Dh, but I have about £1000 a month personal spending money after all the above is paid, which I use for personal bills, like my phone, travel, I have a horse in livery, if I want a coffee somewhere.