new budget

[MaxxieA1]

Hi

From July our financial situation is going to change as dh has taken a slight demotion - all good and I understand the reasons why etc. This means that our budget has had to be tweaked

I am someone who stresses about money, so I wanted to plan ahead. Would you take a look at the budget below please, and tell me if you think it's going to be manageable

dh income 4133
my wage 1480
other income 915
total 6528

All house bills, mortgage direct debits and debt payment (inc overpayment) for both 3286
Food 400
disel 200
school expenses ( parent pay) 80
mum loan 100
Christmas/birthdays 100
Clothes/stuff/going out 300
laser eye repayment 180
total 464

I have the real fear of us running out of money. We both used to be terrible spender, but we have changed our ways over the last 5ish years

How much left on the debt and what %?

How many years left on your mortgage fix? %? How much? Years left currently?

Hi,

Don't want to post debt figures but it's got about 4 years left at variable rates. I have gotten the rates as low as I can and we are overpaying to clear things more quickly.

Mortgage has 7 years and is fixed at 2.2%

Then I think you are unnecessarily panicking.

You have an amazing mortgage rate. And in 7 years you are mortgage free? And in 4 years debt free?

Personally don’t see the issue.

Do you think out disposable is enough to cover emergencies/savings?

How many kids have you got and what ages?

Seems basically fine as your outgoings are within your income but you probably haven't quite captured everything. E.g. the diesel bill, is that just for one car, does the other person have any travel/commuting expenses? What about other car running costs, insurance/tax/MOT/servicing? I'd allocate a monthly amount towards this even if these are more annual expenses, similarly for other annual things like contents/building insurances, TV license, boiler service. Any holidays planned (or does this come out of your £300 per month 'going out' budget? Seems tight for a family of 3/4 if so). Christmas/birthday fund also seems a little light if you have a couple of teens, fine if it's just one baby. What about mobile phones, clothes/haircuts/beauty stuff. Any subscriptions, hobbies, gym memberships? Basically I think you're better off budgeting realistically for these kinds of things esp if you've tended towards the spendy side historically rather than live in denial, guessing that that you'll spend 0 on these things then when you inevitably need new pair of shoes or whatever thinking oh well fuck it and going wild on a spending spree...

Also £400 per month food, is this based on your actual current spending or a guess? Again if that's to include cleaning stuff, toiletries and pet food too, and you have hungry teens to feed that's quite tight, for 2 adults and a small child probably fine...

Hi

Our other car is a company car and is electic and charged at work, so no cost there.

All of the subscriptions, phones etc are included in the big number at the top. I agree that we might need to look at the fun money again. 300 sounds a lot, but I guess it isn't really

I think that my brain might just be overthinking

We had years of very poor, messy finances and have worked hard to get things under control. I worry that we will get to week 3 of the month with no money

Ah, I see, that's good then. I try and live by the 50 30 20 rule, so around 50% of your income on essentials, 30% on savings/long term planning and 20% on 'wants'. If your list of outgoings is correct you have £2778 'spare' month, if you save all of this then that's well over 30% so I reckon you're fine (are your income figures net of workplace pension contributions? You're doing even better if so).

Everyone raves about money saving expert budget, which you could use to see how you fare

but I really like this budget planner from Citizens advice Here

get your bank statements direct debits etc ready to input

one of the main reasons I like it, you can change each individual spend to monthly, weekly or yearly.You don’t have to do them all uniform the same - this makes life easier for calculations as MOT is yearly, so you swap from monthly ( which is default, to yearly)

Maybe have £300 fun money and put it in a saving account like chase bank and only use what you need, but get 3% interest on the money

Yes, our pension is taken at source as a salary sacrifice.

I’d build up £10k savings. Put half in a fix for 1 year. Keep the other in easy access Chip at 3.55%. If you really need all of it you can get it, you’ll just lose the interest accrued before maturation.

Anything you save on top of that goes into Chip or pays off debt/mortgage.

Honestly, you’ve had an easy ride of it. Your spare cash at the moment is more than the take home of the average family in this country.

Easy ride in terms of interest rates/equity generation. (Guessing you aren’t planning on upsizing).

definitely no plans to upsize!

Yeah, so I imagine you’ve what? Had half the value of your current property through house prices increases in the last 15-20 years?

That’s your money now until you cash out. There isn’t even going to be a house price crash because people in their late 20s and early 30s are taking out 30+ year mortgage terms. They will generate little equity in the coming years, which is great if they plan to upsize eventually but terrible if they don’t. They are paying 4%+ interest on their mortgages. They are paying grim amounts on childcare.

Compare your journey to theirs. If that doesn’t calm you down, then I don’t know what will.

Do you have children? £400 for a food shop seems low.

If your mortgage rate is 2.2% don't overpay, that's silly, especially as you have debts, if the interest on them is higher, clear those first. Or save if the debts are on 0% deals.

Have you reviewed the cost of your bills? Eg phones, broadband, TV subscription? You should always be on a deal for these. If you're out of contract and paying full price, you're throwing money away.

But you need to analyse your spending. Many people who have plenty of money on paper find that it doesn't last as long as they'd hope and they're not saving as much as they should be able to because they're leaking money away on everyday spending (food and drink out of the house, subscriptions they don't really use etc) so go through your statements to see if anything jumps out at you. Are you really spending £400 pm on groceries or is that what you would like to spend?

But you have a good income, and your disposable income will increase when you're out of debt, so you'll be fine as long as you maintain your new better spending habits.

I’d have “saving” as a line item on your budget each month.

Aim to save up an emergency fund of 3-6 months worth of essential expenses. As someone who also stresses about money, having an emergency fund is the thing that has given me the most peace of mind. I’ve got it stashed away in Premium bonds so I’m not tempted to touch it, but it’s easily accessible if I need it.

Some people like to do a “zero based” budget, where every penny from their income is allocated to something (expense, debt, sinking fund, or savings). This reduces the chance of money just “disappearing” by overspending on bits and pieces here and there, and makes sure you can save enough.

I’d be shocked if you only spend £400 on groceries, and £300 on ‘fun stuff’ (including takeaway, eating out etc)?
£400 a month = £92 a week shopping. Is that realistic?

I'm guessing you have 2 older primary school age children so your food bill may be ok but I would think that's for food alone, no cleaning products or anything like that.

Your birthday/Christmas budget is low for your income too. If you spend £100 on each DC at Christmas and birthdays, £100 each on each other and even just £25 on each of your parents that's £1000 without considering siblings, neices & nephews etc, Mothers/Father's day and with you sticking very closely to budget

I spend on average £30 a month per child on clothes, we get a lot of 2nd hand stuff and new clothes usually come from H&M. Their school uniform is mostly supermarket stuff but new shoes are expensive and blow that months budget. Then there's some clothes for us on top

I'd also say £300 a month for fun, including holidays is too low. I think you really need to think about everything you spend in a year and down load a budget app so you can track your spending.

You're in a good place. You can easily make your money last all month but I think it requires a little more planning. I hope your dh's new job brings a better lifestyle for you all

£6500 a month is your reduced amount, and you’ve stopped your over spending 5 years ago, yet you’re still in debt with £100 a month to your mum?

I think you’re potentially going to struggle with £400 budget for food as prices continue to rise. It’s do-able but only with careful planning.

This bit stood out:

All house bills, mortgage direct debits and debt payment (inc overpayment) for both 3286

You’re asking people to comment on a budget where a lot of the detail is missing.

I don’t see anything for house and car maintenance, car tax, car and house insurance etc - and you said all your subscriptions and phones are lumped into “the big number”.

If that’s all genuinely needed things at the best price, then your budget is tight.

If it’s full of things that are want not need, or not best price, then you can easily improve this.

But £6500 and what looks like no childcare? You should be able to manage that easily.

Look at YNAB (you need a budget) it's amazing and will help with all the little things that you've probably forgotten. You have to pay for it about £6 a month but totally worth it and it and you'll easily recoup that money.

I use the Money Helper Budget Tool, and find it really useful. It has made a huge difference to how i manage my money.

I'd be focusing on paying off as much debt as possible.

https://www.moneyhelper.org.uk/en/everyday-money/budgeting/use-our-budget-planner.html