What to do with disposable income?

[BicepTricep]

Let me start by saying I genuinely don't mean this to be goady and that I'm fully aware that my husband and I are in a fortunate position at the moment. I think the country/government is an absolute shitshow and am appalled at how much many people are struggling.

I've just received a pay rise (I'm private sector) and after updating our budgeting spreadsheet we're going to have just over £2k a month disposable income. That takes into account all of our bills, food, and saving £100 per month for our DD.

We bought our house a couple of years ago and would like to do some work to it eventually (I.e. converting the loft and landscaping the garden - it's a newbuild and big enough for our current needs so nothing is urgent, but would like the garden done next year if possible).

I only started taking my pension seriously a couple of years ago and pay in 7% of my salary. My employer contributes 5%. DH is public sector and has a decent pension.

We have savings of around £3k (used to be a bit more but maternity leave took a toll).

I'm wondering if anyone has any advice on the best thing(s) to do with the money? We saved for our house deposit with no help from family and used to save £1k most months, but I'm starting to think we should be doing more than just sticking it in a general savings account with crappy interest (and should maybe invest? And/or overpay the mortgage? Private pension?). In all likelihood we'll stay in our current home for at least the next 5-10 years. Our mortgage was taken out a couple of years ago over a 30 year term and is fixed for the next 2 years. I'm mid 30s and DH is 40.

To reiterate, I don't want to come across as goady and the above is totally dependent on my job being secure over the next few years. Both our families aren't well off so being relatively comfortable is quite alien to us, and we don't have anyone irl we can ask.

We are planning to see a financial advisor but would really appreciate any advice!

<Prepares for flaming>

The best thing DH and I did was to pay off our mortgage with every extra money we had.

We were mortgage free by our late 30's and it made every other financial planning decision easier.

We put off work on the house until the mortgage was paid but then had the money to really do what we wanted without debt.

After that there is a great feeling about really owning your own home and know if things turn south you can cut back but not lose your home.

I would save £1000 for a month for just in case savings and then I would save £1000 a month in stocks and shares long-term using a company like Vanguard. Once my short-term fund hit the equivalent of six months' pay, I would plough that money into the mortgage.

I'd build your savings first of all. Rule of thumb is to have 6 months worth of your monthly costs in savings.
Then I'd put more into your pension.
I'd be upping the money you save for your DD.
And I'd build up a pot to spend on the renovations you're planning rather than extending the mortgage when the time comes.
Maybe think about whether you're planning more DC - save to cover mat leave, bigger car, etc. And savings for subsequent DC.
What about life insurance/critical illness cover?
Holiday fund?
And then maybe consider investing.

While £2k per month is a lot of disposable income, there are many ways you can use it to cushion your future.

What rate are you paying on the mortgage? Makes a big difference if you’re paying 1.5 or 3.5%. Also would you be able to build up equity to improve your LTV bracket when your fixed rate runs out?

I don't know what the answer is, OP, but don't worry about being goady, you seem lovely. Hope you get the advice you need.

Invest it on your property OP and get shot of the mortgage. Then make improvements while you go and hopefully increase the value whilst enjoying living there as a family.

We took a policy of having the maximum amount we'd need at short notice split across an account each and then bunging the rest in various stocks and shares ISAs. Unfortunately they're currently really low but that's generally a good time to invest. Just be prepared for them to go down in the short term. I also use vanguard and pick based on the management fees for each holding.

I’d increase your pension contributions, you get 20% on everything you contribute from the government which is far more than anything else you’d do with it.

I’d also cost up what the stuff you want on the house and save towards that.

TBH I’d blow it all on holidays because that’s what I do with any ‘spare’ money but you sound far more sensible than me.