Food, Fuel and Fun budget

[Thecrimsonbutterfly]

Hi all, I was wondering what you would do with this budget and if you'd change anything - we're a family of 3 - late 20s couple and DD 7 months old, we live in the north (only mentioning as I know budgets differ across the UK).

Once all our priority bills are paid we have roughly £1923 left over (we only have this as we have low living costs, my car is 20 years old)

I was thinking of using £723 for fuel, food and fun so this would cover fuel for us both (we both work 10 minutes from home but I have the option to work from home at the minute if I need to), the food shop for us and then it'd cover days out, haircuts, eating out etc but these are also things we don't do every month so anything left would be carried over to the next month.

I was thinking of putting the £1200 into a savings account and that would be for holidays, birthdays, Christmases, emergencies etc.

Would you do anything different like put more in the everyday living costs or less or even it out ? I'm not too sure really I know costs will probably go up soon but I only work part time so could increase my work hours if need be but this is where we're at now but just wanted to make sure it seems reasonable and sustainable.

Thank you

On the face of it the £723 sounds OK to me as general day to day living costs (generous even, this being MN someone will surely be along in a minute to say how they have £7.23 to last them the month and feed 10 children or similar) but it does depend on things like how much fuel you need, if you drive gas guzzlers it will be more of a % of your budget obviously and also your general lifestyle, it will be silly to set that as your budget and try and stick to it if you're currently spending £2000 a month all on living costs, you need to be realistic. Have you done an honest audit going back through your bank/credit card statements and seen where your money currently goes on a monthly basis if you aren't saving anything at the moment?

Also, wrt to the £1200 for 'savings' I would def divide this up more (in your own mind/records if not in where the money actually lives) - £1200 a month/£14k a year just on holidays and presents etc sounds like quite a lot to me on your income and at the moment you are muddling those in with 'emergenices' so if there is no emergency will you spend the whole lot or will you always keep some back? What about longer term savings, a pension, paying off debts, savings for your DC etc?

I think you need to work out a reasonable annual bill for holidays, insurances, Christmas etc and divide that by 12, put that into one savings account or pot for those purposes and the rest should be for longer term savings. And if you don't currently have an emergency fund OR you have debt other than a mortgage atm I would prioritise sorting that out over days out or holidays for sure.

For comparison DH and I divide our money into 4 pots, 1 is a joint account that covers mortgage, bills, food, petrol and general living costs, 1 is our 'personal spends' that covers haircuts, clothes, 'treats', hobbies etc, 1 is for any annual bills such as insurances, road tax, car servicing and MOT costs, a 'sink fund' to replace any appliances that may break, and also holidays (we set an annual budget for these every year according to what else we have on and put money into the annual bills account each month accordingly) and 1 is long term savings. The long term savings are divided up into a 'rainy day fund' of 6 months expenses in case of job loss or other disaster, a 'house renovations' fund for work we know we need/want done on the house, a fund for a new car, and then everything else goes towards longer term goals including retirement fund, DC's future etc.

I think you need to look at your needs/goals for all of this plus any debt you have before saying whether or not your £723 for living costs is reasonable, if you have expensive debts accruing interest or you know the house will need a new roof in the next 6 months and you have nothing saved atm you may need to be much more frugal and cut back on treats/days out/holidays until that's paid for, on the other hand if you have gold-plated pensions and £500k in the bank then maybe live you can afford to live a little more?

id seriously look at putting money into a pension - for fun in your retirement.

if you can put extra into a work pension you will actually save tax, so for example if you both put in an extra £100 per month you'd save say 3
£25 in tax often its done in yearly blocks so you can stop - ask at work to see if you can buy additional payments through your wages