Starting a family with 110k combined income in London

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How comfortable would it be?
Net income £6100 as I don't have student loan.
Based on the rates of a local childminder, childcare would be £1600 excluding tax free childcare (mother in law has also agreed to help when she can)
Current mortgage is £1020 but our 2 bed flat is teeny and we are looking to move to a 3 bed flat which would probably increase mortgage by £700 per month. Current flat is on the market and I am paranoid that I can't move once I TTC.
Current service charge is £150 per month, would be £200 in the new flat
No car. we use public transport and bike.
We could move to a big flat in St Albans for the same price as our london flat but probably would not have MIL's childcare support and DH & I both work in the London office quite a lot so even the season ticket costs would add up quite a bit (and St A's transports costs are quite low for a Home Counties town).

I just got a new job offer verbally (which is what this figure is based on) and DH is looking for a new role (expecting to get an increase in salary as well).

I am 30 and DH is 32
Just interested to know everyone's views.

I dont have lunches out everyday even now? I have it once a week, never thought that it was unreasonable.

I would look at moving to outer London rather than St Alban's personally - because season tickets just seem to rise and rise and TFL is so much cheaper. Also you can do without a car in London.

I would recommend the money saving expert budget spreadsheet, it's really helpful for capturing all spend.

You'll be fine but won't be living a luxurious lifestyle on that income in London with childcare costs, I would say

I don't think i live a luxurious lifestyle even now. But I think DH and i are definitely middle class as a couple with 2 kids on that income. We can afford to not worry too much. With a child, it would be tight but probably no reason to put it off. I do plan on trying to earn more and DH is definitely to earn more as well.

Yes I think the outer boroughs will become more popular due to extortionate & unreliable train services plus more hybrid working. Plus generally they haven't seen as much growth as inner boroughs.

i already live in an outer borough, barnet. z3. new flat would be in z3 too but in haringey borough- crouch end

i don't find there are huge differences in flat prices across london whether in z2 or z5. the z2 might be smaller but the dollar amount/number of bedrooms you get isn't that different.of course kensington and the like is unaffordable.

sorry i'm South so most z3 is inner london boroughs. A z2/3 flat will often cost the same as a house in z4/5.

It's impossible to advise you without knowing how much you currently save and what elements of your lifestyle will change. Its definitely doable though what that might mean regarding what you have to cut back on (travel, going out, shopping etc) I can't advise you on.

I wouldn't wait to sell your flat before starting to try for a baby. Just go for it. Its worth buying the bigger flat now if you can come up with a budget you and your partner agree with post baby. Buying baby stuff can be expensive- crib, cot, pram etc but otherwise food and nappies aren't a major expense relative to your earnings. Clothes is however much you want to spend. Child care is the killer.

I crunched the numbers and it is doable, would save only £400 per month though! And this is based on current spending which can be cut down,; DH gets a coffee at Caffe Nero daily for example! Spent thousands on bike gear though I suppose that's not something he is going to be doing again any time soon! He is also quite motivated to look for a new job that will pay more, hopefully he will get another 15k increment (that's what he got the last time he switched).

We also eat out quite regularly but have cut back on that recently.

£400 per month during the nursery years is brilliant, don’t stress.

Consider Milton Keynes / Bedford / Northamptonshire / Leicestershire and crunch the numbers. I know a colleague who has a country pile in Bedfordshire, sends the kids to the grammar, and it only costs him 10k to get into the London office & the length of his commute (end to end) is shorter than if he lived in Greater London. I commute to London twice a week from the Midlands and it’s fine.

Would rather spend 10k on the mortgage. The thing is houses in those areas are often the same price or more expensive than flats in London even nice parts of London. People who do move out there often have other reasons like family being there. I have a MIL who is on a very low income (below minimum wage), doesn't or can't afford to drive but enjoys free public transport in London as she is above 60. If i move to bedford, i would not only be isolated from a possible source of childcare support, but on a meaningful level, i would also have family who cannot afford to visit me often unless i pay for their rail fares. That would annoy me. And my MIL is not willing to stay anywhere that doesn't have a synagogue and she can't use electricity on saturday either.

Its just easier if I stay in London. We see each other every week now. my DH is very close to his mother and I think he wouldn't like not being able to be near her either. She would never move as she needs to be near synagogues plus she already owns a house in London.

10k is him going to Central London everyday to be at his desk by 8 & his mortgage is only £1.5k a month (he only needed to borrow 250kish as his London house covered most of the cost). I only spend £200 a month going in from the midlands and my mortgage for a 5 bed detached home in the suburbs (walking distance of 10 good or outstanding schools) is 1.3k a month. I live within a 15min drive of a synagogue, hindu temple, and a mosque.

Spending 20-30k on a mortgage in Central London when you both only earn 110k gross between you seems like a huge waste of money to me.

My mortgage would be £1700.. and it would be 20k for two of us.

So for £200 more per month, you don't need to spend £20k per annum? I am sorry I don't compute.
Synagogue needs to be within walking distance for his mum or she would walk she cannot use electricity on Saturdays.

Honestly his mum was on 12k per annum 30 years ago and had 3 kids in a 1 bed flat and even she didn't leave London..even if you account for inflation, she was still earning less than us.

I mean, the maths is clear

£1700+ £173(unlimited z3 transpoetfor me)+ £200+,DH transport (free on bike)

£20k per annum + £1500 mortgage is far more.

Mortgage can be eroded by inflation. Season tickets can't In my new job, i have to be in the office daily, DH WFH 2 days a week.as many people are unwilling to go into the office, it's actually a good time to be in London as it will open up more jobs for us including those that require you to be in the office more often.

Ultimately it's a cost of living crisis. Not an earnings crisis. I mean 3 years ago, DH and mine combined income was only 70k when we bought our flat, it is now 110k. I think it would have been much more difficult if we had not been in London as we are very flexible about number of days in office. This could be the case even after we have a child as you need to pay for childcare anyway and MIL can help provide childcare

I meant Ultimately it's an earnings crisis. Not a cost of livings crisis. We all need to aim to earn 6 figures in future or we would not be middle class whether we live in London or outside of London..it's the sad reality of being a PAYE earner as majority of wealth is now derived from assets rather than labour so you have to be the elite in PAYE earners in order to not be trapped in poverty.

We have two kids. Joint earnings were £140k.

To be honest, kids cost next to nothing. We've used hand-me-down clothes, a £90 Uppababy buggy from Schpock, etc.

The real cost is lost earnings. We're now in the 4th year of me earning substantially less - currently on maternity leave, but that money is based upon me only working part time after the birth of our first son.

We get by and we're certainly not struggling.

It all depends on how willing you are to be sensible with regards to 'lifestyle' purchases - e.g. flash cars, holidays, comparing yourself to others on social media, feeling the need to keep up, etc.

If you're a brand monkey, and worried about what other people think, then it's going to cost you a lot more to project the image of a 'perfect' life.

I am not fussed about cars and I generally only have one holiday per year (in addition to visiting my parents in Asia). We spend money in the sense that we eat out quite regularly but not usually in expensive places- Christmas Eve and I had a bubble tea, DH is having a coffee at Caffe Nero and we spent £10 at a sushi place. We are also generous with DH's younger sister and mum, paying for their flights and hotel stay for them to come to our wedding, bringing them out to nice restaurants when we go out, buying them nice stuff..DH used to send £200 regularly to another of his younger sisters but she has a job now so we don't do that. I think thats something we probably would do less of in future. One part of me is concerned about finances as DH's instinct pre DC is to always help support his mum (he is British btw)..when the pandemic started and there was a danger that his mum would earn less, he immediately offered to transfer £10k to her for 'safekeeping'. We could definitely support them if they needed to at the moment (her mortgage and expenses are small) but definitely would not be able to if we had to pay full childcare. I am a bit wary about this state of affairs,; in my culture, it feels risky to not have enough to not support extended family, my parents have always supported their extended family including siblings when needed. My dad used to jokingly call himself part of the hamburger generation - supporting the old and the young..

His mum didn't accept the £10k btw but I think DH feels better he can offer it when needed.

A bit premature but as you are only wanting 1 dc I certainly would not be buying new baby furniture/equipment. You can get stuff very cheap on marketplace or charity shops. I wouldn't be moving away from your MIL either. I think you will be absolutely fine OP.
Would it be cheaper for you to pay someone from your community for childcare, if that is an option?

You'll be fine. Where there's a will, there's a way.

I think you'd be foolish to up your mortgage and add childcare when your outgoings are already going up and you're worried you've not got enough spare. There's plenty of time for a bigger place when your child is a few years older and free hours are in sight.

Our outgoings have not increased much relative to our income which increased by 35k this year. And there is a good chance we would not be eligible for free childcare at age 3 in 4 years time if DH gets a promotion or shifts job. DH's direct line manager earns close to 100k for example without bonus(which is the cap for tax free childcare).

Being a parent of two young kids with more than your gross income - I would strongly suggest that you wait before upsizing on housing costs.

every child gets 15 hours of free childcare from the age of 3 - that’s not means tested. And it does make a difference.

also it’s just better to wait I think - just to see what happens with interest rates over the next 12 months and to gauge what will work for you and your child in terms of housing and location

If you put money into a pension via salary sacrifice, it reduces your 'official' income. If you do things sensibly, you could still get free childcare.

I am not buying immediately,I put my flat on the market as it takes time to sell and to go through a chain anyway. I also haven't started trying so there is some time lag in that regard.

2023 is supposed to be the year house prices fall, I am not sure what it would be in 2027 etc.