Is this enough after bills?

[Birobob]

Thinking of offering on a house but scared to overstretch ourselves. I have calculated all bills and other usual monthly outgoings including groceries and petrol and have calculated it at around £2840. Our current outgoings are £1340 but we live in a 1 bed flat with a tiny mortgage. In addition we save £400 per month. We have a baby on the way and have bought most things for the baby.

With our outgoings being £2840 this will leave us around £1600 leftover monthly. We will keep around £15k in savings for emergencies, car repairs etc. We are also fortunate that we will not need to pay for childcare.

Do you think £1600 leftover a month is enough to live comfortably enough?

Take a quick pause OP. What’s your budget if working reduced hours / paying nursery bills. That will make a huge difference!

You are the one who holds the answer to this, not anyone here.

The answer lies in a carefully analysis of your current spending. It sounds like you could choose to live more cheaply than you do, but you can only know that if you go through 6 months of spending and analyse it all.

Then, the second question is, if you find areas of overspend (eg takeaways, coffees) - do you actually have the will and commitment to change those habits? You need to be a team and both make this commitment or it won't work. But it sounds from the information here like it's perfectly possible - IF you are willing to do so.

Plus as others have said you need to bake in childcare costs and so forth as best you can predict.

I recently got a better handle on my savings so now have a lot less money to play with each month, and it took a bit of time to adjust to my new reality, but you do get used to it.

"Our current outgoings are £1340 but we live in a 1 bed flat with a tiny mortgage. In addition we save £400 per month."

If this is the case then your money is going somewhere, possibly lifestyle choices. Please make sure you can adapt if that is really correct.

Yes - but not very stealthy imo

@Boomboom22 this is something I need to take a closer look at as off the top of my head I can’t tell you where the entire remaining £2500 goes!

When I say we save £400 at the moment, this is the minimum we save which comes out by direct debit and gets paid directly in to premium bonds. In reality we save a lot more than this as we have a number of Monzo ‘pots’ set up for different things such as holiday, hair cuts, MOT/service, mat leave fund for example. I’m definitely going to go away and reassess exactly where this £2500 is going!!!

As you've now realised, you're spending quite a lot on takeaways, clothes and holidays! That isn't necessarily a bad thing, but the fact that you don't even know where it's gone means you aren't even enjoying and appreciating the things you've spent it on.

Fwiw, we have a similar combined income but save a lot and don't spend anywhere near what you do on extras! Neither is wrong, but you at least want to feel the benefit if you aren't saving very much and are living in a wee flat.

Ok update, goodness knows where I got my original figures from. I’ve sat down and worked out all outgoings which are currently £2263 if my calculations are correct.

Mortgage £395
Council tax £176
Tv licence £13
Gas and electricity £110
Tv and broadband £66
Home insurance £24
Pets £205 (this covers all costs including topping up a sinking fund for vet fees worth less than our insurance excess)
Food £350
Petrol both £200
Life insurance £44
Phones both £65
Savings £400
Union both £30
Work lotto both £20
Car tax both £30
Car insurance DP £40 (I pay mine annually)
Contact lenses £15
Subscriptions £50 (this could be reduced)
Hobbies £30

I have estimated new outgoings as £2840

Mortgage £1150
Council tax £260
Tv licence £13
Gas and electricity £150
Tv and broadband £66
Home insurance £40
Pets £205
Food £400
Petrol both £200
Life insurance £75
Phones both £65
Union both £30
Work lotto both £20
Car tax both £30
Car insurance DP £40
Contact lenses £15
Subscriptions £50
Hobbies £30

Our joint income after tax in December 2023 was around £4100 but due to pay rises our joint income in January 2024 will be £4440.

Numbers really aren’t my strong point which is why I’m worrying whether we can afford this house!

But that's still £1600 a month left which is exactly what you previously said 🤣

Yes the calculations for the new house were correct, leaving us with £1600 leftover. However my calculations for the current flat were out by a few hundred pounds… oops!

I have a lot less then that on a good month after all bills, food, petrol etc. and I still manage, days out and holidays. My savings are also a lot less, but I keep adding to it every month. You'll be fine with £1600 a month.

Water? Any maintenance contracts? Ground rent/communal maintenance charges? What about when your income drops for ml?

In Scotland so council tax covers water costs. There is a factor fee of £10 per month which I haven’t included, thanks for the reminder. Hopefully by cancelling a subscription that will cover it.

Re income dropping I get 6 months full pay and have maternity leave savings to cover the remaining months I will take.

I will also need to think about window cleaner, possibly a maintenance contract for the boiler. Even things like when the baby starts eating solids the food bill will increase and of course the costs of nappies and formula etc

I know you said you pay for your car insurance annually but you still need to factor it in to a monthly budget

We have recently moved with our mortgage going from £550 to £1250 so similar to yours but a little over, we also earn £4250 so a little less than you. I've worked out we will have around £600 surplus after paying all bills/groceries/mine and DH spending/fun money/hobbies at £300 a month. That £600 is towards loan payments or holidays (haven't decided) but just wanted to let you know it can be done!

(Mind you the first few months are hard - Christmas and then a massive first mortgage payment!)

Yes, same here. More like 1300 per month for me, before any expenses whatsoever.

So you will have £1600 a month after you have bought everything, after your mortgage, bills, food, petrol, after all expenses?

@Terrrence I would say so but as mentioned earlier I forgot a few bills such as the factor fees and window cleaning. Someone else also pointed out that as I pay for my car insurance up front I need to factor that in to the monthly budget. I’ll also need to pay for nappies and formula etc out of that too. So perhaps we will be left with around £1400-1500

Well, if you have accounted for everything, TV licence, home insurance, car service, life in insurance etc then you'll have more money than you will need.

As others have said, you should be ok, but you do need to look very closely at where you are spending on takeaways, days out, holidays, etc.. as you could be spending nearly £20000 a year, 12 times £1600, that’s a lot. You are already spending over £4000 a year on food, so spending on takeaways should be added to that in your analysis of actual spend. It would be really helpful to look closely at where you are spending, as if you have a problem that means your household income drops, you may well struggle in your new house.

looking at your spend, there are areas you can save I’m sure. Mobile phone costs look high, are you both still paying high costs even though you are out of contract? There are lots of cheap deals around. If you have savings, why is your OH paying his car insurance monthly, as that will probably mean he’s paying a significant amount of interest, far higher than the interest rate on your savings.

You say you have £15000 of savings, is this all in premium bonds? How much have you won in the last year? Currently you can still get 5% interest, so on £15000, that’s £750 a year, so over two months of current food spend.

Potentially lots of areas to improve the amount of surplus income you have.

Thanks for your helpful reply @Residentnumber1. Re the mobile phones I’m on a SIM only for £8 a month (bought a new phone outright two months ago) but DP is on £55 a month. Once his contract is up in around 18 months he will go sim only too.

I have savings in lots of different places at the moment ISA with good interest rate, premium bonds, savings account with good interest rate however we will be using a big chunk of our savings towards the deposit for a new house. We don’t know what the flat will sell for but we will be left with at least £15k-25k in savings once we have paid fees etc for the sale and purchase of the house.

We will definitely have a closer look at our spending and see where we are overspending. Previously we’ve been spending around £4k a year on holidays which we will definitely be reigning in!

You still need to add in your annual bills, like your car insurance and split it monthly to ensure you include everything

You are currently only saving £400 a month so where is the rest of your money going?

Thanks @PickledPurplePickle, will do. The £400 goes straight in to premium bonds but I would say we do save much more than that if I’m honest. We have separate finances at the minute and both have monzo ‘pots’ for different things. In addition to the £400 a month we save I pay around £100 a month to a holiday fund sometimes £200, around £30 a month to a car repair fund and DP is the same, £30 a month to a gift fund, DP sometimes travels a few hundred miles away to watch his football team and pays around £50 a month in to a pot that’s just off the top of my head. The football and holiday fund will stop but it’ll be sensible to keep paying money towards a gift fund and car fund. The last couple of years have also been busy with weddings so we went through a period of time saving an addition £100 a month towards weddings.

We then also spend money now and again on clothes, hair cuts but will be happy to take that out of the £1600 or however much we have leftover. We will likely save a little of the £1600 and then split the rest down the middle and we can pay for clothes, hair cuts, takeaways, meals out etc from our own ‘fun money’

Bit worrying that you already have to dip into savings when you have even more money currently and are paying less in bills right now

As for the £1.6k perfectly fine amount to live on for extras BUT you really do need to reign and budget your spending like previous posters have said. It’s about wants and needs. You can live a great life with a couple of takeaways a month for example or meals out. Can still have takeaway coffees but one a week rather than a day. You can still save for holidays etc but maybe not as many as you currently have.

You will have to budget and prioritise a lot more than you do now because you pro, maybe make pots in banking accounts for savings towards holidays/celebrations and the like.

The £1600 includes groceries and petrol but doesn’t include takeaways, holidays, clothes, days out.

So you have £1600 of essentially 'fun' money after all essentials are paid for, and you're asking if this is enough?! If it's for luxuries then only you can decide that, and if not you may have to cut back on a takeaway here and there.

All I'm going to say is that many people take home £1600 as their monthly pay and pay all bills, rent and all essential spends to come out of that. So it's a bit ridiculous asking if it's enough.

Thanks @Musiclover234 I agree. The £400 savings never gets touched but if we are short at the end of the month we will tend do dip in to one of our ‘pots’. We only tend to need to do this when we have a bigger expense such as an ad hoc roof repair or if there have been a few birthdays in one month for example