Advice needed

[GlassCaseOfEmotions]

As some background, DP and I both have reasonably paid jobs. We bring in about £75k between us a year.

I own my home (mortgaged) and DP lives with me. We want to buy somewhere bigger within the next year/ 18 months as DP has children from a previous relationship and we have 1 on the way.

DP and I are finding that money is constantly tight, even though we both bring home (what should be) more than enough to live on.

Majority of the deposit for our next home will come from equity from my house. However, I want us to get some of our own savings behind us (seperately) so that we won't be struggling. We are very fortune that I secured a mortgage before interest rates went crazy, but looking at future repayments it will go up x5 roughly (as it stands now).

How do people set, and stick to, tight budgets every month? What kind of things can we cut back on?

It's difficult to advise without knowing your expenses.

Car leases
Loans
Credit cards
Smoking, drinking, coffee, leisure expenses
How much you spend on clothes, grooming.
Gym membership
Tv packages
Mobile phone contracts
Groceries

Do you have high commute costs?
Student loans?
Child support commitments?

Do you socialise in pricey places? Can you switch to inviting friends to yours?

Holidays?

Firstly, not an answer to your question but i would be cautious in buying with someone you're not married to and especially when you're selling your own asset to fund it. Make sure you have safety net in place for yourself before anything else. Eg a trust / legal agreement of some sort to ensure that if the relationship does break down then you get the return of deposit contribution you've made and a split of what remains on selling the new home. Please seek legal advice for yourself before anything.

Secondly, i would do a simple spreadsheet of expenses with simple incomings/ outgoings, listing all direct debits / standing orders etc and see what you could do without.

then go over your bank statements to see what else exactly youre spending on. Eg going out, takeaways etc.

Cut out what you can. Set a spending limit on unplanned spending. Meal plan if you can. It all makes a difference and once you start, its quite fun seeing the savings building up.

all the best

You need to work out first what your currently spending your money on.

Thank you. I'll try to be as accurate as I can with the information:

2 cars on finance, total of about £550PM (1 is funded by a loan rather than through a dealership)
1 credit card, only about £700 on it which is slowly being paid off every month
No smokers, DP rarely drinks now and I don't at all. Coffee is just the jar stuff, nothing fancy here 🤣 leisure activities partner has the gym (about £25 a month) and I don't pay for hobbies/ activities
Clothes/ grooming about £100 a month between us
TV packages just Netflix (the basic option with adverts, think it's about £5 Pm)
Mobiles are about £40 a month for both (SIM only and 1 is with phone)
Groceries... Far too much 🙈 anywhere from £50-100 per week, more when DP DC are with us

Dogs that cost about £25 a month to feed

1 no commute costs, 1 pays about £300 a month to commute/ school runs etc
Student loan paid back via salary for me
No CM as 50/50 equal care

DP socialises at work, I socialise walking the dogs 🤣 we rarely go out and if we do it's just a meal for us. When we have the DC, we try and do cheap or free days locally.

Only UK staycations for holidays due to cost and childcare

Thank you, I appreciate you mentioning this and have thought about it. I will be sure to get some kind of legal agreement written up before we buy anywhere, although DP and I are hopeful to be married soon after moving (we don't want a big flashy wedding, just registrar and then maybe a weekend away!). It's partly why I want DP to save and contribute, as otherwise it will solely be based on my funds and I feel this is unfair. Whereas if DP shows that commitment to save and contribute (which he does fully intend to do, just not obviously as much as I'll be able to) then no one will be left with nothing if things do go south.

I will get a spreadsheet typed up this weekend. We can definitely do without takeaways and need to get on top of meal planning again. Part of the issue is not planning and then needing to go to the shop to buy things, which is costly for just 1 dinner!

It's definitely very rewarding to see the savings building up 😊

From a quick look at your breakdown, a few things stand out - student loan, unsecured debt for 2 cars, and travel costs.

It sounds like you're on the right track by trying to work out where your money is going now, and where you might be able to cut back.

Thank you. Not sure if I can do anything about the student loan, as it is deducted directly from my salary before it even reaches my bank?

The 2 cars is an issue, I agree. However, we do need 2 as DP works a lot and we currently live very rural (next nearest village is a 2 mile walk. Doable for either of us, not with the kids and a baby on the way as there are limited and dangerous footpaths). We do try and make additional payments on the cars when we can, but even selling the more expensive 1 wouldn't pay off the debt on it due to the way the motor industry is at the minute.

Travel costs will reduce when we eventually move, as we will move closer to DC and partners work. There's nothing we can do about that in the meantime though.

Hopefully when it's all written down, we can see where costs can be cut more or where we can save money on things.

Forgot to include, mortgage payment is less than £300 a month currently and will be for at least another 2.5 years. The house is just too small for us all!

I think there are a lot of things that you haven't included in your breakdown, and these can really add up - so, things like MOT, car service, different insurances, birthday and Christmas gifts etc. I always think the most important part of budgeting is understanding where your money currently goes.

I'd also pay off the credit card debt, there's not much pint paying interest on it when you have savings.

If that is all your spending you would be fine.

where are your health costs? Eye test, dentists, prescriptions

House maintenance and household (eg new door mat, fix washing machine)

costs for the kids - clothes, uniform, trip, random dress up days, swimming lessons and other clubs? Wrap around and holiday clubs. Days out.

insurances?

You really need to start with where you money is going now.

Thank you. Birthday and Christmas gifts are probably what hits us hardest, as we do overspend on these things. But it still doesn't help our month to month costs and savings. I really can't get my head around where our money goes sometimes!

Insurance wise my costs are about £150 a month (car, home and 2 dogs). I don't know my partners car insurance cost, but will ask him when I put the spreadsheet together. I imagine about £50 a month maximum, just based on mine and how long he's been driving in comparison.

Road tax is monthly, and about £40 for both I would estimate.

Thank you, it's all these little costs that add up!!

Health costs: DP and I get eye tests free via work, kids I'm not sure on. I get dentist and prescriptions free at the moment. Partner doesn't get any prescriptions (never unwell, luckily!!) and dentist is £30 every 6 months for a check up. Kids are under NHS.

Kids are probably costing DP the best part of £250, if not more, a month for all of those things now (shared costs with Ex). Can fluctuate for after school clubs depending on shifts.

Think we need to sit down and go through the last few months bank statements to see where our money has gone.

Think we need to sit down and go through the last few months bank statements to see where our money has gone.

That is a good plan. But I'd go back a year if you can - include things like holidays, birthdays, annual bills such as Disney+ and car tax, school uniform etc. A few months of bank statements won't give you the full picture.

Don't fuck about with spreadsheets - invest in YNAB app it will change your life!

Pulls in all your transactions and balances from as many accounts and credit cards as you want including joint card holders.

You put in your 'ready to assign' money every month then have categories to assign every penny to. I start with "shit hits the fan" savings, then direct debits, then a monthly amount towards all the essential annual bills inc Xmas, then essential monthly spends eg food / fuel then discretionary monthly eg cleaner / kids hobbies then fun money / holiday funds.

Then every time a transaction lands you take it out of the relevant pot.

It's AMAZING and there's loads of short tutorial videos

Agree with others that you need to go through a year's worth of bank statements and include everything. Yes it's dull and time consuming but it's the only way to truly understand where your money is going.

I'm not having a dig just trying to help, but in one of your posts you referred to over spending at Christmas but not sure how it effects month to month costs and savings - that's why you need to take a full year's costs. Your over spending at one point in the year is likely funded from other months.

All of the insurances, clothes for the kids, days out etc really add up. If you're considering increasing your mortgage payment by 5x you're going to have to understand your current spend and work out what you could cut down. Different energy provider, different mobile phone contract, packed lunch to work etc.

You sound motivated though which is half the battle. Good luck!

@FusionChefGeoff I've heard about YNAB but never used it but it sounds AMAZING!!!

It's as simple as choosing every penny that goes out as carefully as possible.

Start with essentials and fixed costs, can you make these cheaper? Broadband, cheaper deals? Water, would a meter be cheaper? Gas and Elec, are there cheaper fixed deals?

Then move onto non fixed essentials. Food is the big one. Stock take your fridge and freezer and use up everything, research cheaper nutritious meals, shop around. Obviously Aldi and Lidl are going to be cheaper but Iceland, Farmfoods, Heron and even the markets can be better priced. Meal plan and make shopping lists.

Have a couple of months spending freeze on everything else, it helps define your priorities, what you need vs what you want. You can browse and make lists of things you'd normally order / buy on a whim and decide to get it in 2 months time. Often you won't want it by then.

Thank you, I've never heard of this app!! Is it free? I only ask as you use the word invest, and it seems counterproductive to pay an extra cost when trying to save 🤣

I currently use Plum, which I have always found good, but it does make it too easy to withdraw the money!

Thank you. Our costs were quite different a year ago (DP still rented due to work, had CMS payments, seperate bills etc) and yet we had more money!! Granted I took out a loan and bought a new car in that time, but we should have more money than ever now we are in 1 household with joint bills 🤷🏻‍♀️

The overspending at Christmas; it tends to be DP who overspends and does take this from savings. I buy throughout the year, but often buy more than is needed. All our birthdays are the first half of the year, so from January until June we are still having to buy things! I've told DP I don't want any gifts this year, a card and a walk with the dogs or meal out somewhere nostalgic (luckily we never eat at expensive places 🤣) will be more than enough for me!

I'm only estimating the x5 increase based on current prices. I'm fortune to be paying less than £300 on a mortgage currently (5 year fix a month or 2 before prices went through the roof). I'm hoping mortgage rates come down by the time we come to buy, but know they'll never be as cheap as they were!

Thank you. We have no choice but to be motivated- it's a struggle to even turn around in the hallway at the minute with so many people and dogs crammed in to a 2 up 2 down 🤣

Thank you, lots to think about there and I will definitely have these discussions with DP.

Food is probably our biggest bill. When we were meal planning, it was so much easier. But a busy life, baby brain and general poor planning saw an end to that. Definitely need to get back on top of this. We only shop at Aldi at the minute, very rarely Tesco, but if we forget something or need something it's always Co Op (which is ridiculously priced!!). I think we may have to look at using only what is in the cupboards/ fridge/ freezer (minus veg and fruit) until we have used things up. We have plenty in, so we won't starve!!

The difficulty we are facing for the next few months is birthdays. All our birthdays fall between January and June. However, I think if we are strict and sat a budget for each person, we can save a lot. Both DC had about £300 spent on each of them last year for birthdays. It was excessive and unnecessary. DP and I spent about £150 maximum on each other. That definitely needs to stop!

It's £80 a year (£7.25 a month goes into my pot to pay for it!) but we have saved thousands as a result.

Plus - how much does your hourly rate calculate at work? That's a rudimentary figure to apply to how much your budget management time costs .

YNAB will save your HOURS every month so it's more than worth it.

It takes a while to keep tweaking your budget but when you finally know that everything is in there is such a huge relief to just keep things ticking over.

Moneysavingexpert spreadsheet is good, has things you've probably missed

Looking at your posts, I can see that there is lots of "about" suggesting that you're not really sure how much you are spending.

The ONLY reason why you are finding things tight is because you are spending money.

To get a handle on your finances does take time, but it is 100% worth doing to take back the control. You will find that you have much more money to spend in the long run. I have more money than I have ever had but spend more than I have ever had. It's so strange, but 100% recommend it!

The first thing I would do is concentrate on getting rid of the credit card debt and saving £1000 as an emergency fund. By doing this, it means that you will not be tempted to use the credit card for an emergency spend.

I have been budgeting for about eight years now, have no debt and a reasonable amount of savings I'm can buy pretty much whatever I need. For example, I want a new iPhone but I know it will take me 12 months before I can realistically afford it so I'm planning on getting an iPhone 16 promax in around a year, I will either buy it out right or I will put the money into a saving space and save it to be issued each month as a direct debit.)

This is what do:

I allocate money before it's spent and aim to have 0 balance budget.

I have about 5 accounts I run

Joint for food (spending)
Joint for bills (direct debits only)
Main account (salary and direct debits)
Spending account (for spending and saving smaller amount to be spent through out the year)
Saving account

ON payday feed each of these accounts.
£800 long term savings
£520 spending
£660 bills - my half

£250 food shop - my half

The rest is used in my personal HSBC account for direct debits - car, union, gym, phone, lottery. The remaining is sent to saving space in starling called general savings for decorating or washing machine etc.

In my spending account (starling) I have several savings pots where I allocate the £520 to
Christmas (100)
Holiday (100)
Gifts (25)
Dog 15
Wood 10
Clothes 100
Petrol 80
Car tyres service / insurance 100
Beauty 25

Leaving a small amount for spending

Now OP, what I would do is make three lists Make three
-Direct debits
-Monthly spending
-Annual/irregular spending

The Martin Lewis money saving website has a budget sheet. That is a really good place to start, but I find it didn't quite work for me and I had to tweak it, but it really is a good place to start.

You will find that you are spending much more on things like Car service, dentist, prescriptions haircuts beauty products days out gifts treats, things for the house, furniture, decorating, household, Repairs , maintenance, new fencing, garden, things plants, household essentials, and things like that that you are not really accounting for.

Cherrypickles' method is sound but my God that's a lot of faff. YNAB does all of that for you automatically!