How much should we be saving a month?

[Cheesypizzaa]

We bring home about 6k in total between us. 1k mortgage, 1.5k childcare fees, 1.5k other essential bills, petrol, food. So 2k left for discretionary spending/saving. My partner and I can't agree on how much of this we should be saving!

We have a 35 year mortgage that runs until we're 70, so I'd like to overpay to bring the term down. And just general saving for potential baby number 2/another maternity leave.

Want to be able to enjoy ourselves and go on the occasional holiday, but not just fritter the money away (I work full time at the moment and want to go part time in future, so income likely to go down rather than up).

Everyone I know (I'm in the 'first time buyer' ) bracket at 30ish, has a 35 year mortgage - our repayments would have been 300 a month more with a 30 year mortgage and that's 2 years ago when we got ours.... incredibly common (midlands)

This is super helpful, thank you. It just helps having someone objectively look at the numbers sometimes!

Because of so many upfront moving costs it's been difficult to notice much of a pattern with our spending until now. But now most of the big ticket items have been purchased we have no excuse not to sit down and create a proper budget.

Because the potential second mat leave/second baby is all theoretical at this point, I don't think my partner has factored in that we need to save for it.

To answer your last question, compare the rates.

If the mortgage rate is higher, overpay.

If you can get a higher rate for savings, do that instead. Look at regular savers as well as fixed or instant/limited access accounts. But don't forget about tax, but consider ISAs too.

We have about £1400 left every month. After Moetgage, bills and childcare fees. That includes saving £400 a month. But in that £1400 that has to pay for petrol, food clothes and days out etc. it feels quite tight at times. I always would rather put more into savings and then have to take some out rather than save what's left

I know, why would strangers on the internet know. Go on the money saving expert website for advice about overpaying vs saving. Sit down with partner and make a plan.

My wife and I were just discussing this. You have two options:

Underpay now and invest. If you know what you're doing and the markets are favourable, you can make a lot of cumulative money, into the many hundreds of thousands if you know what you're doing. This is risky as markets collapse, but also because you get used to having 'more' money, so if rates go up as they have, cutting back can be a real challenge as you're used to more disposable income.

Or overpay now and get the mortgage out the way. This is more difficult as you won't really have rainy day emergency money. But once it's all paid off, woo!

We have a financial advisor and asked this question a few years after we moved and did up the house. The advice FOR US was to refill our savings pot (the ready cash, available if one of us was made redundant for 6 months), top up pensions and then look at the mortgage. We started with a direct debit overpaying by 10% a month and then after 6 months when we realised we hadn't noticed that, we increased it. We are past the nursery fees stage (but looking at supporting kids through college) but have just upped our overpayment a little bit more - trying to get it paid off before we come off our currently low fixed rate.

How much do you spend on holidays annually?

You are potentially in a great position OP. I agree with lots of others, and you I think, that you need to sit down and make a list of everything that you need to spend on in the course of a year. Replacement clothes and shoes for your daughter, clothes as needed for the grown ups, life insurance costs, what about critical illness and income protection cover, MOT and car servicing costs, savings to replace vehicle if you buy outright etc? It is likely that these things mean you don’t actually have £2k spare anyway.
Have a search for “UK financial planning flowchart” which looks at the very basics. Another really good source of information is the meaningful money podcasts/videos which are UK focussed.
Good luck with planning

Pre-baby, quite a bit! But I imagine that will change. We haven't been away since before I was pregnant and my daughter is now 14 months old (bar a few days in the Cotswolds). Ideally would like to get abroad before she turns 2 and we have to pay for her!

Thank you. Yes, all of those costs need to come out of the 2k we have a month. Most of my daughter's clothes are off Vinted, but I have bought a few bits for myself recently (mainly because none of my pre pregnancy clothes fit). We've also had a few car repairs the last few months which has hindered our savings efforts.

You’ll be surprised then how much holidays have increased

were you the more the cheap and cheerful or liked a hotel?

Either of you attend a gym or have any hobbies?

Recently seen financial advice advising to divide salary on 50% needs, 30% wants and save remaining 20%.

No gym and no expensive hobbies.

We've done all kinds of holidays in the past. Usually more of the backpacking kind rather than fancy hotels, but I think for our first trip as a family we'd be looking at a fly and flop in Spain or somewhere. But yes you're probably right about the cost!

Do you ever go out? Babysitter? Date night?!
No nights away with friends or on stag / hen?

Don’t know about you - but I spend a fair bit on my hair!

We have similar income as you but DH is self employed so not guaranteed... Can be a fair bit more, can be nothing. I also get a generous bonus so that helps.

Our mortgage is £1300 a month, we took out 35 years (though we were 29 at the time) to give us the flexibility when we bought as DHs income was considerably less at the time, so we needed flexibility. Childcare similar to yours (though for more children but fewer days). We likely have similar disposable.

I decided the other day that my goal is to be mortgage free by the time all my children are 18. There is currently very little point in overpaying my mortgage as we secured 5 years at 2.54% just before everything went nuts. So my savings can earn more than debt costs.

I used a mortgage overpayment calculator to work out that to reduce 10 years from my mortgage I would need to pay a £50k lump sum at the end of the 5 year fixed term, so that is now my saving goal. (Better to have a stretch goal).

I am currently paying 15% (gross) into my pension as I had years without a pension and DH doesn't have anything yet.

If I were you I would look at what your income will be when/if you go part-time and try and save anything over and above that... A win win in that it starts the saving but also tests whether you can really afford to be part time before you commit.

Do you have health insurance and life assurance? And mortgage protection?

We are mid late 30s with a 30 mortgage term OP. Also have 3 children under 5 so high nursery fees etc and being on Mat leave. Hopefully we'll be able to over pay and decrease the term again at some point once the expensive nursery years are over and all are at school. I try not to worry too much about it OP, just save/overpay what you can for now.

I'd just put some in savings as you have more babies, Mat leave etc to go through first. £500-£1000.

We got a long mortgage but it doesn't worry me as we won't live in this house until then. We'll make lots of money on it and downsize way before retirement and we'll be mortgage free.

Dentist? Opticians? Birthday gifts for family and friends? Holidays? Christmas?

I would add all items that others have listed here into your bills and essentials to get a truer picture of how much is left over. £2k a month sounds like a lot of fun money. I suspect you will have a lot less leftover when you fully work out the essentials of life.

If you have spent all the savings on moving and setting up the house you need to replenish your rainy day fund before throwing money at mortgage overpayments. If one of you gets made redundant the mortgage company won't refund those overpayments so you can live.

Overpay the mortgage so you pay it off quicker.

First repay any other loans or credit cards though.

Save towards a pension.

Save towards a rainy day/holiday/university help for children/repairs for home.

2K fun money every month.

Are you serious?

You do realise that's what many families live on, if not less.

If you and your DH can't work out between you an amount to save out of 2K when all your financial obligations have been met, you have serious financial skills awareness issues.

Ideally you would want about 3 months worth of savings to cover your regular bills in case of accident or illness so £12000 in reasonably easy access. I would prioritise this before paying down mortgage. Can you get a linked savings/mortgage account? I forget what these are called but they allow you to move money from one to another and back and might work for you to cover both the need to save and the need to pay down m'gage