Disposable Income

[IndecisivelySally]

Hi

I just need a bit of geeing up that this is a normal amount of disposable income to have and that surely a lot of people are in the same boat.

We’ve just bought our forever home! With the currently housing climate and just sitting on it really our current home gained a lot of equity in a short amount of time and we were also able to part ex it at 105% of the value; long story short it was like everything aligned and was telling us now or never. We’d never get the amount we’re being offered right now again.

This house is obviously larger therefore more expensive especially with the interest rates. My move is being tainted as I’m not panicking that myself and my partner once all bills, food, fuel, nursery etc are covered we will have £500 left to spend on ourselves. (Not £500 each, £500 combined as well as our son)

is this enough disposable income? Is this the average? I’m stressing out that we’ll never be able to afford to go out for a meal again 🤦‍♀️

£500 after everything is paid for is loads. What do you want to spend (waste?) £125 a week on? Why is that not enough?

I don't know about the average but £500 seems like a tiny amount between two people. Do you have savings to cover for emergency expenses (car repairs etc)? Is affording things like Christmas outside the budget? I'd find it much too close for comfort personally.

£500 is a great amount of disposable income after bills, you could put half of it into savings each month and still have £250 to play with which is a large amount, plenty for meals out, day trips or whatever type of things you want to do

I'd that to cover things like clothes, hair cuts, socialising, birthdays, Xmas, holidays, savings etc? Or have you accounted for that and this is completely extra?

*Is

You'll get a variety of responses on here @IndecisivelySally.
For me that would feel like loads (even split the way you say) whereas others would say it's not nearly enough! Are you still able to factor wiggle room into the mortgage and put a bit away every month? Those would be my concerns more than having loads of money to routinely spend on myself.

£500 for what? After food and bills only, it will feel tight. After savings, holidays, Christmas, birthdays, clothes, £500 for discretionary personal spending should be plenty.

I'd highly recommend investing in YNAB as it lets you see exactly what is 'disposable' and what really needs to be saved / earned marked for annual expenses / predictable monthly or random spends that aren't bills.

After taking our direct debit bills and an allowance for food and petrol, it would appear we are rolling in jt.

However take out a monthly amount to contribute towards our annual or random bills:

Car insurance x 2
Car tax x 2
Car MOT / service x 2
House insurance
Gadget insurance
Kids activities
Kids clothes
Toiletries
Christmas
Kids holiday clubs
Birthday presents
Homewares (mainly Amazon stuff)
Saving to decorate bedroom
Annual week away with my family - only pay for groceries / activities

That leaves very little (£180) for Entertainment and Eating Out which is what I consider our 'real' disposable income.

Is the £500 after savings? I would say quite a few people have more than that but housing costs are very uneven. How much does your mortgage as a % of your mortgage?

Totally depends. Does that include savings, gifts, Christmas, holidays etc?

It also depends on your lifestyle + whether £250/ month each is going to significantly impact that. I get my hair done every other month for £250. I don't have loads of other luxuries, but spending half my spare cash on my hair would feel a bit close for comfort!

However, if I stopped the hair, I'd be absolutely fine with £250 / month spending.

Just depends on you x

That is tight but presumably you’ll have a lot more post-nursery.

I don't think it's tight if you don't spend the full £500 every month and have a wee bit rolling over so that come Oct/Nov when you need to spend on Christmas it's covered. Unless you have another system worked out for this
Do you have money somewhere you can deip into for emergencies? Otherwise you'll have to think about building one up

Included in our ‘bills’ we put roughly 220 away in savings and split this 100 savings/emergency spends, 100 Christmas/Birthdays/Holidays and 20 into a pot for our dog (vet trips, boosters and saving up for neutering).

Just to add I am currently working part time whilst my son is young.

I agree it depends what it needs to cover. Came out to a flat tyre this week, that's a fifth of your budget gone and I've not got a fancy car. If that's purely for frivolity it's great, if it's got to cover car maintenance, birthdays, clothing, haircuts, dentist etc, it'll feel really tight, most people budget for bills and groceries but not the other stuff.

Do you not have insurance for the dog?
It would make me uncomfortable because you're really not saving that £100 for emergencies and incidentals and £100 for birthdays, Christmas, holidays, probably won't fully cover it all, but it's temporary, nursery bills aren't forever and neither is a part time salary. Tighten your belts and you'll be fine

so its only for clothes, going out, etc? It should be tight but enough.

If you've already moved then it doesn't matter, you'll have to make it work. Are you planning on having more dc? Or have you done something to make sure you definitely don't have anymore? I think £500 will be tight if you need all your entertainment, holidays, clothes, meals out, gifts, anything fun or frivolous coming out of it along with car repairs etc. I'd look now to see if you can increase it slightly by cutting elsewhere.

I know some will say it's a lot but I'm guessing as you wanted the large house, you want the lifestyle to match

I’d not bother asking OP.
For some people it’s a dream come true.
For others it would be an unpleasantly thin existence.

You just need to work out if it suits your lifestyle.
What others think / have is totally inconsequential.

What @alwaysmovingforwards said.

The average is meaningless as everyone defines disposable income differently and has different lifestyle expectations.

Plus what people have will vary from less than zero to thousands of pounds a month.

You have a lovely new home and have a decent amount of spare money at one of the most expensive stages in life. You're in a better position than many and of course you'll be able to afford regular meals out.

You can do quite a bit on £500 pm as long as you prioritise according to what's important to you and don't waste a lot of money on crap you don't really want or need.

Sounds tight. You could get by, but it would probably go quite fast.

As others have said - it depends! But a little reflection from our experience . . .

Ten years ago we went from a 60k mortgage to a 185k mortgage (I know seems small compared to some of the figures I hear now!), for a bigger house in a nicer area, with more space. We also added another 115k of savings to to the purchase, so we could have been mortgage free if we'd stayed. So, pretty much cleaned out, with no expectation of promotion or falling costs, as DD was already out of the childcare years, and about to hit the 'needing tutors' years!

What we found was that we were so happy in the new place, our expenditure dropped - we preferred sitting in our house and garden to going out (not as sad as it sounds). We realised we'd spent an awful lot on not being at home!

I suppose, what I mean is that if your new house is everything you want, and perfect for your family now, that £500 may be more than you need. And as your childcare costs drop, perhaps you up your hours, everything will feel more comfortable.

😄 at the first two replies being diametrically opposed.

I think the reason these threads are all over the place on MN is because people mean very different things by disposable income - some people really do mean disposable income, and have worked out all annual expenses like birthdays, MOTs, and glasses etc. And some people really don't mean disposable income, and haven't.