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

Sorry that was to rootsandwings89

The responses are because you have not really sorted your own security and pensions, so thinking about kids house deposits is a bit early.

The Child benefit was previously paid to me but will look at putting in his name

The Money Saving Expert website has a good mortgage repayment calculator which is worth checking out to understand the potential savings.

I would definitely go up to the full pension contributions, otherwise you're basically giving up free money as the benefit is worth far more than your contribution.

I understand, I feel like I have been 'winging it' re financial planning as have not really had any proper advice before

You asked about when one can withdraw cash from their pension. That age is 55 now and I think it's being pushed up to 57 soon. So honestly even now cheapest way to help kids would be to have huge pension as thst 25% of your pension pot is tax free. Who knows what the government will do by the time you are that age.
Get your DH to look at Civil Service jobs. Plenty of them in London. He will get a good pension too.

Firstly I think you need to take two steps:

• increase your monthly income if possible with your DH working
• start saving into your own account.

I think you’re a way off the buy to let’s. Firstly you need some savings. Can you reduce your monthly outgoings and start saving hard- ideally you want three months pay saved in an accessible account as your buffer. Then start putting money elsewhere. To do this you need to start budgeting hard imo.. I don’t think it’s impossible on your one income but obvs would be easier if both working. Thinking about it all is a lot to chew on- just start saving every month into your account first and after six months of this start saving into another pot. Little by little!!! After you’ve got a buffer you could consider a high interest savings account or shares if you think you could manage it. Shares are a better option if you can think v v long term. But initially get yourself that buffer built up. Xx

If the child benefit has always been in your name, your H needs to sort out his state pension qualifying years as a first priority.
Do a state pension forecast. You too if you’ve been working agency, you might have failed to accrue full years. There’s a deadline for ‘buying’ missed years and it’s really soon. 31st July.

Then save up 6 months’ living expenses as an emergency fund.

Then think about investing.

Definitely check both your state pension contributions and thus your future state pension today. And add in if you need to, you may have enough working years left not to need to buy the lost years. Find this out today.

if you pay off a little of the mortgage, £50 a month is brilliant, and get your own savings and pension into a really good place, you will be able to afford to have your kids live at home rent free until they are 28 or so, and they can save from their own salaries for their own deposits. This is a brilliant way to help them out, and just as good as giving them a lot of cash.
And you and your husband will be financially independent in retirement, which is also a massive gift to your kids

This is really good advice thank you

You are not able to save for kid's deposits now.
You have to put that on the back burner , also Uni - they might not even go ?
Stop panicking and try to improve your lives as they are now.

Lots of people aren't able to help with deposits it's not essential.

Skipped half the posts but question for you since your married are you getting the tax benefit from your husband not working and using his income tax allowance?

I'm another one who is here to tell you that I think you should focus on improving your own situation and future. Absolutely do not take on any more debt. Mum is now in her late 80s and the best thing she did for us was to make sure she was in a decent position with an adequate pension and some savings.

1. Stay in your job, pay the most pension contributions you can.

1. Build a £1000 fund for unexpected big bills (you've done this one) and keep it accessible. Some banks are now doing instant access savings accounts that carry a little interest - maybe try for one of those.

1. Aim to save towards a six month outgoings fund in case of redundancy etc - so around £12k? Keep that longer term in an ISA maybe. I'm currently using Chip, an app which moves money around to pick up best rates. It's working for me as it offers 3.7% right now. It irritatingly saves loads from your current account each week but you can choose to skip saves each time if you want to. No idea if it is really any good.

1. Support your dp back into the workforce by any means necessary. He should go for full pension too.

1. Overpay your mortgage as hard as you can.

Stop worrying so much. You're doing fine. I've been told to try buy to let at a couple of points when I had money and I think it's a fairly crazy thing to do at the moment tbh.

Another one chiming in to say a BTL is not a good idea. I have two that fell into my lap mortgage free ( I know I’m very lucky). In the last 2 years I have only made a few thousand profit and that’s with a LOT of work and stress. 2 major refurbs, void periods during covid and last year a major leak which my landlords insurance found a let out clause not to pay out for repairs and lost rent, angry tenants ringing every evening ( leak was not my responsibility to fix even if I’d been able to , it was due to buildings infrastructure and the freeholders delayed repair by nearly 2 months) , etc.
Now I’m 56 I’m certainly glad I’ve contributed to the NHS pension since I was 25.

Don't buy BTL.
Max out your pension
Pay into pension for DH, if not earning max is £2880 with government top up grossed up to 3600.
Do not worry about DCs property. They can stay at home rent free and save once out of education. You can downsize and free up cash for them if necessary.
You have at least 20 years before they will think about buying a property, I would invest every penny. With compounding you will build up a good lump sum.
And DH needs to get a job. I was SAHM for a long time. I've been back at work for 5 years and have tripled my salary. Has made a huge difference to our finances.

"There is zero reason with kids that age to have a full time stay at home parent." Agreed with PP - Get your husband back to work OP and his income Will increase available funds.

• Your kids are 10/11 so you have time to strengthen your own savings position.
• You are in a defined benefit pension so you have time to build that up.
• You are permanently employed, with solid benefits in case of emergencies, don't go locum - you did the right thing in terms of improving your stability in terms of going permanent.

Well done you for thinking ahead and wishing you all the best.

I am a lone parent and have a lone income. I would be definitely getting your husband to work- or to at least transfer your tax-free allowance- but if he was working, the first £12,000 is tax-free, so that's basically £1000 a month of savings you could then invest wisely! I would love to have the option of a second income in my household. It annoys me immensely that I will tip into the higher tax-rate as a sole earner and that two people earning £25,000/£30,000 get far more favourable tax arrangements for their household.

He could work p/t but in a more lucrative area, if you want the flexibility of him being there for the children/one parent at home.

"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"

Some great advice on their thread . BTL is not the answer .

Sale or gift of the properties to your children would generate a capital gains tax bill, payable by you within 60 days that is assuming the properties increased in value . Better to help fund deposits at a later date.

You need protection first to make sure your dependants can carry on if something happens to you. Life insurance if you die, critical illness insurance if you're unable to work. You can chose mortgage protection insurance if you prefer to just pay out mortgage in case of your death.
Then you need an emergency fund saved in case of redundancy, think 3-6 months of monthly expenses, obviously the bigger the better. Then pension contributions - max out your employers schemes.
Then any debts outstanding with high %% (except mortgage).
Once you've got all the above covered - invest in S&S ISA (not cash ISA).

Overall, you need to think how to make you sure you have enough money to live in - your kids can get grants, loans etc to secure their own future once they are 18 and above but there will be no such thing available to you in retirement.

Bear in mind, even with a gifted deposit, most 23 year olds won't be in a position / won't be ready to buy property. They might want to travel, move around with work, etc etc. They probably won't be earning enough for a decent mortgage either. So don't worry about that too much. Average age to buy in south east is in your 30s. Which gives you/them an extra decade to save.

Oops, sorry, old thread!

So you are one income family with two children, next to zero in cash savings and sounding like you have limited ways to improve on your current income?

But you are proposing buying two flats to rent out, not only with a mortgage but also borrowing the deposits? Whilst at the same time stopping contributing to your pension? this is madness in my opinion.

you should focus on increasing your household income and build up cash emergency fund. Keep paying into you pension.

OP invest your spare cash in gold coins, bullions. It will go stratospheric. You'll be able to cash your gold when your kids are older. Don't buy property now.

We're in a similar financial position, just with a little more savings. I really wouldn't get into any more debt. Just build up your savings gradually.