72% of income goes towards expenses

[dchange]

My husband and I decided to run through our expenses as I am due to return to work soon. The big shocker was, 72% of income goes towards expenses. This figure was a little alarming. The big expenses; Mortgage, childcare (same as mortgage)!!! We are now reviewing our expenses and looking for ways to save more. For one, we have cancel our gym membership and plan to go for a run outside

But that means you have 28% of your salary for saving and fun money, that's quite substantial assuming you're both average earners or above. Why was it such a suprise that lots of your salary is required to cover expenses?

what do you class as expenses?

yes this is normal but it's only for a few years until the childcare bill goes down dramatically. the trick is to get into the habit of living fairly frugally during those years and then don't make significant changes when nursery charges stop. you will start feeling genuinely wealthy. wealth is always a matter of perspective after all - an income of £45kpa is rich to some and barely scrapping by to others. use this opportunity to manage your expectations. money can never buy happiness, but feeling your disposable income ought to be more can certainly help you be miserable, so learn to manage your expectations.

Even in the 1980s when we had our first child 50% of each of our net full time earnings went on childcare. Nothing seems to change much.

Hopefully if you both work full time you may get promotions over the years so things will get easier. For those of us who pay/paid school fees full time childcare is actually more expensive so the private school cost particularly with before and after school care available made it a cheaper time

Means nothing with no context.

What are you classing as expenses and how much is your income?

If your income is £2k pm and you're spending over £1400 of it on basic bills, with less than £600 left over for food, travel and any discretionary or irregular expenses, that's a very different scenario to your monthly income being £10k and absolutely everything you could ever need within the next year being covered with an average spend of £7200 pm, leaving nearly £3k to just blow as you wish.

We have reduced our bills to the bare minimum it’s so refreshing. We have no mortgage (aware that we are very lucky)
So our monthly bills are:
Electricity 50
Childcare 200
Insurances (life x2 and home) 70
Phones x2
Netflix 7.99 (I think)
And that is it!!
We found that nothing else was necessary for living. Internet is unlimited on my phone contract so I use that for home too. We watch movies on the tv through Netflix.
You’ll find you can reduce/get rid of more than you think.
We just create sinking funds for yearly car tax and insurance.

Sorry for slow response. What I classify as expenses is everything from mortgage to the food we eat. Of course childcare is there!

I think I was just so shocked as this was the first time we sat down to review our finances in real detail. I always had the assumption this was around 60%. On the positive this has made me realise there is a lot we can cut out and we are working towards that's. Like; sky, gym membership, car finance (do we really need that big car).

That sounds OK to me. 90% plus is ours. Inc food, bills, travel etc.

@Parttimers How do you get away with paying no council tax?

I spend 80% on non discretionary expenses, 20% is savings, clothes, going out

@fluffygal we’re not in U.K.

@Parttimers don't you use any water in your house?

@OldGrinch yes but we don’t get water bills.

We finally came to end of our hefty childcare bills in September when DS started preschool 30 hrs a week. We now 'only' have to pay for after school pick up/clubs for both DC and DP's childcare voucher covers almost of that. We are over £1k a month better off and I put almost all of it in savings. It's a bit of a slog OP but time flies quicker than you realise and you'll have a higher disposable income again one day!

About 90% of our income goes on expenses. Children cost a lot to raise.

@Eastie77 this is promising. I just hope I find a nursery that is willing to accept 30hrs in London once little one turns 3. Most only take 15hrs. However this is better than nothing.

I do think that 28% to do as you please with is quite good? It sounds like the 72% includes Everything - childcare, house, bills, food, petrol, car... you could even include leisure in that if you’re including your gym subscription! Even if you’re only bringing home a grand between you, £280 as fun money for cinema trips and coffees seems decadent to me!! (Currently a very low earner )

dchange - DS attends a school nursery attached to a primary school for 30hrs (9 - 3.30. School nurseries are generally straightforward re the free 30 hours but I'm not sure how it works with private nurseries. The downsides with the school nursery are the shorter hours which are not ideal if you work. We were very lucky as our old childminder agree to pick up both from DC from nursery/school.

@Eastie77 school nurseries around my area normally only offer 15hr 9-11:45. Infact the school nursery attached to my first daughters school operates the same time above. To be honest I am still grateful for the 15hrs when it kicks in. Plus I use the government childcare tax account (I.e. for every £8 I put in I get £2 from government, up to a maximum of £2,000 per child/annum). So will manage the huge childcare h cost for another 3 yrs and 3 months 😢

One day I started calculating what we had paid in childcare over the last 5 years for both DC and then stopped as it became too depressing. One way of thinking positively about it is "would I swap the ££££ for my DC" although the answer to that question depends on the behaviour of mine on any given day

Council tax - you can ask for 12 payments instead of 10
Water - if you have more bedrooms than people in household it maybe cheaper with a meter, but you may already have a meter
Gas & electric, give meter reading monthly to get DD based on usage not estimate- that’s if you don’t have or want smart meter.SSE you can do this easily online
Buildings & household insurance, make sure you’re not over insured & therefore paying to much - get sensible amount without skimping but don’t get to much.
Mobile Phones, but your own handset and get sim only deals as cheaper
Internet - live in a semi see if you can share with neighbours and split the cost
Gym membership - I save by having joint membership with another member, not family and then I get 10% off for cooperate membership so save 20% which makes a big saving(I go 4/5 times a week and cycle outside) I can’t give up my membership it’s my life saver
Car insurance I use aviva and get discount on yearly holiday insurance. Pay by lump sum as this saves monthly premiums being higher
Netflix - share membership with another to reduce cost

I'm virtually 50/50 but I have no debt. Single mum to three Very frugal but I think I need to save a bit more really.