So unsure of how to protect our financial future

[Tobie]

Hi everyone

I am so unsure of which practical actions I should be taking to protect myself and children's financial future so need some real financial advice

But if background on me, 38yrs full time employed and make around £60k. DH is a SAPH (joint decision as we have no wider family support, childcare had been expensive when children younger as we have 2 children very close in age which would have meant 2 in nursery, breakfast and after school care etc) and with my job being unpredictable in terms of not always able to leave work bang on 5pm, we agreed that for stability one of us would stay home and as the higher earner it made sense for this to be me. We had unreliable nanny in the past when we both worked but decided the stress was too much etc

I have progressed in my career in the last few years to a senior management role and DH is honestly really hands on with kids, homework, house etc which has reduced my stress to focus on work

Now the dilemma.... our source of income is very limited at £60k which is shared between us, we own our mortgaged home which has an outstanding mortgage of £208k in London

Kids have a junior ISA each with around £3k in, i now have only about £800 in savings, DH has none

Through work I am contributing to a LGP at half contributions, work also contributes

We get about £3,336 pm salary net. Outgoings around £2k including all bills and on average we split the last £1,300 he takes £500, I take £800 for my own travel to work, food costs and stuff for the kids such as clothes etc, DH's money usually on petrol etc

I used to locum and take home around £4800 pm but obviously wasn't saving for a pension, getting annual leave etc and had limited career progression now I get all the benefits of being permanent but with a significantly lower salary

Ideally I would want to invest for the kids eg get 1 cheap BTL property for my children each, they are still only 10/11yrs so looking for a long term investment over say 10yrs

Their ISA's make only £50 on average a YEAR!!! I had stopped adding money to the accounts based on horror stories of 18yrs olds blowing the money on crap!

I am struggling to add to the savings any how

But I am unsure of what is the best way forwards. Ideally want to help my children with first deposits at 23yrs after uni and the £3k in their ISA's can help with initial uni costs such as a new laptop, clothes for uni, uni halls deposits or car insurance

I am unsure of what is the best wealth development strategy, my initial thoughts are to somehow buy the 2 cheaper flats in the West Midlands as investments, that can be used as their deposits, then the current property we own in London can be sold in 10yrs and we downsize to somewhere cheaper so I can purchase a home outright and be mortgage free, of course long term my children will also inherit the home owned outright later

I hear so much about people inheriting property etc but I had to save as an adult for our deposit which took much longer and do ideally I would like my kids to have an easier time of it all in the future so please advise me of the practical steps I can take

It doesn’t make sense to me to be thinking about buying flats for your DC before sorting out you and your DHs pensions. It will be much more straightforward for them to access student loans / get mortgages like most other people do than to have to support two households after you have retired with only a low income.

Stop trying to plan for your kid’s future when your own is really shaky.
Can you and your husband really retire on half a work pension and only one state pension ? so about £15k a year for the both of you at current rate of adding to pensions ?

your husband needs a job to get his own NI contributions up and running. Check with the .gov check my state pension website for you both

have you got six to twelve months in your savings of normal expenses, in case of redundancy ?

have you got a savings pot for white good, boiler and car replacement?

do you have holidays and days out, most kids would rather have these than a future pot of money

you need to stop thinking about investing and actually get a solid financial set up NOW, today and for the next two years

do not go back to agency work; your pension, sick pay and other perks are solid gold in your current job

What do you mean support two households? Do you mean the BTL properties? By my retirement I would have sold the properties and given the proceeds to the children for their deposits

I think you are overthinking. There's loads of time to save for a deposit for kids, no need for buy to let. Once DH has a job, put a couple of hundred into an ISA every month (in your names not a junior one)

Ok I hope so, just feel worried about how my kids will get on the property ladder as house prices are going up, the won't get any inheritance from grandparents so it will only be what they or we can help them to save

I normally have around £2k savings and have insurance in the event I am unable to work etc, now I am permanent I will get sick leave entitlement etc

Have you been paying dh NI ?
Or ensuring he gets ni credits as sahp?

Most personal pensions set an age when you can start taking money from them. It’s not normally before 55.

So you have 2k, ie less than one months outgoings🙄

your kids won’t thank you for needing them to give you money when you are retired and they are working

https://workingfamilies.org.uk/articles/nicreditsforparentsandcarers/#:~:text=If%20you%20are%20not%20earning,caring%20for%20a%20disabled%20person.

Not a good time to get into BtL... why do you think so many landlords are selling up?
Also it's not free profit - you have to earn it by taking risk, paying for repairs and refurbs, budgeting for problem tenants etc.

If you want to build wealth, so need to build on the income. If that's static then just pay down mortgage and invest in pensions for your retirement.

If you turn really want to get your kids in the housing ladder in the future, then downsize the family home, buy a little place for the two of you and use the equity release for kids housing deposits.

The govt set a limit of 55 that goes up to 58 in a couple of years. To stop people taking it all out and spending it foolishly.

OP - there are cash ISAs paying 4.5% at the moment. You should be using each of your 20k annual allowances to do something like that - which is about the rate of return you’d get on a BTL without any of the risk.

Your husband needs to get a job.

Based on the price of rentable houses in the Midlands, plus the necessary 25% deposit plus stamp duty and legal fees, that's a hell of a loan you'd be taking out. Plus what costs are tax deductible now? From 2025, houses that are let have to conform to much higher standards than they currently do. Can you afford to upgrade a 'cheap' house. You'll need to have about 5k in an emergency fund to cover repairs in case a boiler goes for example, or a period of no rental income. You'd be paying back a loan and a mortgage.

I known exactly where you're coming from, but frankly, you can't afford it. There is no saying when or where your children will want to buy. You're currently facing the prospect of a retirement in poverty or being topped up by benefits. You don't know how much university is going to cost or how it'll be funded. You're far better off building yourself a big cushion, paying full pension contributions and then paying off your mortgage ASAP after. You can down size in the future and gift your DC's money if you have it. Helping DC's get on the property ladder also comes in the form of letting them live at home rent free which will allow them to save a decent deposit much quicker.

Has your DH looked at working in a school as then he'd still be around for school holidays.

If you are going to invest in anything, invest in your DH retraining. Data, project management, procurement, sales force, data protection, anything where there is a skills shortage. Ideally a bit of compatibility with his old career too. Other than that I dont see anyway you are going to change your financial situation. The slum landlord idea is terrible and there is no money in that now anyway. And you cant invest as you have no money to invest with.

Personally I think you're mad only paying half contributions to the LGPS. A defined benefit pension scheme is generally great for your future.

Most people are selling their buy to lets for a reason... with interest rates as they are and all the recent changes it's hard to make any money on them now.

I mean supporting you and your DH! You need to make sure they aren’t having to worry about how you’re managing at the same time as looking after their own children etc.

I really thought I was being smart by only doing 50% contributions some people I know have totally opted out!

I will look into increasing my contributions though this will mean less net income for the time being

Paying full pension contributions is the best possible investment in your future, so totally agree this is worth doing. The lump sum may be how you help your kids. Have a look at your pension projection, and see just how much the lump sum might be.

BTL is like getting another job and there is a lot to learn.

I will definitely look into this

I'm so sorry, OP, but I think you have a screw loose. You have a huge mortgage for a start - why are you
thinking of taking out more debt? There is no money to be made in BTL which is why everyone is selling up. It's also quite stressful. What happens if another lockdown occurred and you had no tenants in place? What if you bought properties with problems (neighbours for example) that then don't let. You need to pay off your mortgage, pay into your pension and look at helping your children out when they need it later on. And if you want to increase your wealth, your husband needs to get a job. Good luck!

Thank you for the various responses, to be honest I feel so much better about my next steps which seem so much more manageable and less risky

Deep down I know that things will be easier once DH is earning money

This thread had shed some light on the reality of BTL's rather than the romanticised version as an investment strategy

I have taken on the point re the pension top ups, DH looking at getting pension credits whilst I will focus on overpaying the mortgage and building my savings up again

I will review my budget tomorrow to see how much I can overpay on mortgage every month eg £50pm could help

Then when kids are older hopefully I will look at what is in my pension pot and hopefully house will be paid off to enable me to have a more comfortable retirement (fingers crossed )

BTL is no longer the "get rich" dream that it once was

There is also a housing crisis so maybe don't take up 2 x homes that a family somewhere desperately needs just so your children can get rich

It's not about 'taking up homes for my children to get rich'. I would be making sacrifices for them to have a better future where possible, perhaps these will be 2 less children/ young people needing housing support!

Parents can never win! Like it or not it is not getting easier to get on the property ladder without a significant deposit

You are not in a position to be a landlord. It's not a way to earn money. Even a minimum wage 30hrs job for your husband would top up about 15 to 20k. I don't see why he's been out of work for so long when both have been at school for 5 years?
I hope the child benefit was always in his name and continues to be although at nil rate now you are on 60k for his ni state pension credits.
The best thing to do would be move out of London, Kent always needs sw at high levels and often in cheaper areas. If your kids are bright good grammar schools. If not be more careful but still good.
Although I've got just under 200k left in kent in a 450k house so not everywhere is cheap but cheaper than London.

As stated in my OP I know what it's like to try to save a deposit for a family home whilst paying market rent! I had no financial support from my own parents and was also not entitled to council housing, if I can help my children to do better than myself, I will do my very best! Or do you deem that as undeserving of support for some reason?