How to manage our new financial situation

[griffinz]

Evening all,

Firstly, this is NOT a stealth boast. I lived for year just above the poverty line, however due to our jobs etc, dh and I have managed to get into a decent situation.

We both work in senior roles in education. I have just got a new job from September which is a decent promotion for me. dh has also got a new job as a Head Teacher, also from September. This coincides with the end of us having to pay nursery fees - currently just over £1000 per month.

For years we struggled to get by, expecially when we were in Greater London. We moved to the midlands 6 years ago and that made things a bit easier.

I am determined for us to use our new income sensibly and to not go crazy and get used to it. We have worked out that from September our joint take home pay will be around £7800. We do have a biggish mortgage at £1350 per month.

All of our bills, mortgage and regular monthly outgoings come to just under £2500. We usually spend about £120 per week on food. We spend quite a bit on kids activities etc - swimming, music lessons etc etc at around £300 per month.

I lease a car which costs just over £300 per month and dh has a car loan that costs £188 per month

Fuel for the cars and doscretionary spending comes to about £250 per month

So based on how we live now, we should have about £3800 per month that we can save/invest/spend on non-essentials

How would you divide this money? I want to get the balance right so that we are making the money work for us, whilst also having some fun/holidays etc

I wouldn't make many decisions just now. Put a decent percentage of the extra into savings for a while, to give yourself time to get used to the new circumstances.

With these new jobs will come additional pressure, this may mean you end up spending more on life.

Review it in six months' time, when you have got your head around things.

Cleaner
Ironing
Meal boxes / eating out
Gardener

Then I'd start using YNAB to track expenses and build up pots so every penny is working for you. It will also help you see clearly what you spend on what and then you can review to cut back if you decide on a goal.

Emergency savings
Long term savings
Uni / driving lessons fund
Home improvements
Summer holiday
School holiday days out
Christmas activities

Not sure when you bought your house, but if you haven't already, get a full survey done, not just one for valuation purposes, but a full survey for you and your DH, so the state of the roof, electrics, age of boiler etc.

We've just had a few domestic disasters, which we've covered, but wish we had a bit more prediction.

Savings, pensions first to give you the ability to help your kids as young adults and to allow you to retire at a reasonable age or if you have health issues.

Spend on exercise and good quality food and experiences.

Get any debt cleared including car loans and then save and over pay the mortgage by a set amount.

Personally I would clear the non house debt asap. I would also be thinking about what your long term goals are.

Do you want a bigger house, do you want to retire early, how much do you want to support the DC later in lifer?

I would increase your regular mortgage payment, look at pension arrangements and build up a good savings pot. Potentially look at some financial websites or podcasts like Meaningful Money by Pete Mathews

The future can be so variable that I would try and make best use of that money so it wasn’t frittered away, so whilst I would probably put £800 of it to holidays or lifestyle creep, I would try and use the other £3000 on future proofing things. We sacrificed to get our mortgage cleared and to get savings and investments and I am so glad that we did.

Anything you can do to make home life easier I would do - cleaner, ironer?!, gardener, window cleaner

then when at home you can focus less on chores and more on family and relaxing.

It concerns me that 2 people who are ‘high up’ in education need to ask mumsnetters how to spend their very high income.
If it looks like a stealth boast, it IS a stealth boast.

@griffinz my advice, enjoy the first month of extra money but from the second month be sensible. If you don’t plan you will start thinking where does it all go.

Do a financial audit and work out long term, medium and short term goals.

• consider over paying on mortgage
• pay off any debts
• maximise ISA allowances - remember you pay tax on savings interest but not ISA interest
• have 6 months in savings for emergencies.
• Do you want to retire early? Look at FIRE forums (Financial Independence Retire Early)
• Do you want to move home/extend/buy a holiday home etc.?
• How risk adverse are you? Do you want to invest in the stock market?
• Look at sensible websites such as Money Saving Expert, Money Helper (gmt organisation). Understand the risk of different types of investment.
• Consider an IFA to help explain investments and the risks.

What is your level of contentment - this is really important question as it will be different for each of you. I worked out that my level of contentment day to day means my spending patterns are very similar to 20 years ago which meant I could retire early. My one area of extravagance is travel so I have a large pot of savings set aside to travel.

I know people who will never be content as they will always want more money. For example when you look at your cars would you like a slightly higher spec of what you have or do you want a Ferrari etc? Then think how long would you get the buzz from driving a Ferrari? Do you crave designer handbags, clothes etc. or just the ability to buy clothes that are suitable for the occasion without worrying if you can afford them.

• Split money:
• Emergency 6 months
• long term savings & Investments
• medium term savings & investments
• short term fun money e.g holidays, Christmas.
• have fun - I have premium bonds, they do not offer the best return, but the regular wins make it fun. I bought 100 shares in one cruise company, I get On Board Credit (OBC) each time I sail and this has already exceeded my initial outlay. I have other investments some are in the stock market, watching the value go down is not fun but long term they always come back. It’s a balance about risk vs having a contented life.

@Soontobe60 funnily enough most people don’t know a lot about finances, it’s not a subject that is taught, although it should be. If you have always lived just getting by it can suddenly be a shock to get a big boost in income.

That’s a really kind post.

it helps to post on a huge forum like MN because you get such a wide range of suggestions too (not just about money, anything, it’s a huge source to tap in to)

Pay off your mortgage as fast as you can

I thought this was going to be a "how are we going to manage" thread not a stealth boasting one

Our mortgage is £1100
We earn a combined income of £3000

And have childcare to pay

Just think about what your saying

That's unfair. I have been there... and worse. I spent 5 years living off about £30 a week after bills in a flat that should have been condemed.

I am SO grateful for what I have now and I know that I have been lucky... BUT... I have also worked bloody hard for all of it

It concerne me that someone would take the time to post that comment. Thank you for your feedback. Feedback is a gift.

I’d love to know what your high up role in education is that brings in such a high salary. No advice from a senior nurse with 33 years experience who’s salary is capped at 44k and grateful for that without needing to strike for more..

I am an assistant headteacher. My salary in September will be around 55K. I have never been on strike. although I support the teachers who do choose to strike. I also have massive respect for nurses and agree that you deserve so much more x

We have the same income and mortgage payments. We put £500 a month away to holidays / DIY / cars. We have a cleaner, gardener and two DCs who both take instruments lessons. We never seem to have anything spare at the end of the month - we're quite careful with money but it's amazing how quickly it goes.

I would let it run for a couple of months for your new income, then do a spend analysis and see where you are with it. Don't make any decisions now.

Seriously it's not a race to the bottom. I'm fed up of people on here who try and bring down those who earn high salaries. I've known what it's like to not be able to feed my children and now I earn a six figure salary. Funnily enough it was that experience that made me focus on being financially independent and successful. Not everyone's goals but was mine and probably lots of others.

FFS op please don't apologise for the fact that you and DH are financial successful. Some please can't control their envy and that is their problem not yours.

For the last year we have had approx £1500 pm "left over" in a normal month. We put £1000 in savings no matter what and then spend the rest between us on little treats. We are already overpaying the mortgage which is top priority.

I totally agree with things like cleaner, gardening, ironing etc to make your life easier.

So far we haven't felt able to spend wildly on anything as after years of just breaking even (albeit comfortably so) we just aren't used to having extra to spend. We like having savings building up as it gives us a sense of security which for now means more than a holiday!

By all means start and maintain a rainy day fund for unexpected life events. However, for most people, the most cost-effective way to deal with this money situation is to overpay the mortgage every month, and settle any loans. Once debt free or in that direction, you can think about the fun stuff in life like extra holidays, cars or a new sofa.

You could look at it in thirds, for the extra money.

A third to paying off debts including your mortgage.

A third in savings or investments. Maybe split between instant access, fixed savings and investment ISAs. Depending on whether you expect to make any big purchases, cap the cash savings to no more than about £20 to 50k, just the amount you need for any home improvements and replacement of cars without finance. If you find you save more than this, split the extra between your mortgage and investments.

Then a third to enhance your lifestyle, nicer holidays, help with cleaning, gardening etc, more eating out or leisure activities/hobbies.

As teachers, you'll have good pensions but also be aware of the risk of ill health or stress, burnout or simple disillusionment with the job affecting your ability to do the job well and enthusiasm for wanting to keep going so using your surplus to build wealth could put you in a position where, if you want to throw in the towel you can, and that sort of freedom is very comforting.

https://ukpersonal.finance/flowchart/ is good for getting your thoughts I order with where you are in life and where you could go next with money.

Standard advice from a financial manager would be: 1/2 for savings, 1/4 for something you need, (renovations to the house new furniture, etc), 1/4 discretionary.

I would find a decent financial adviser and get them to look at everything in the round - your mortgage, debt, pension provision etc.

Are you sure your take-home pay combined will be £7,800?

That sounds awfully high, if you are on £55k and your DH is a head teacher (do head teachers now earn £100k? I don't know).

I'm surprised by that take home. £55k meets about £3k, doesn't it?