Budget help

[Sarabudgetly]

Created a new username for this.

I’m terrible at budgeting and have generally managed to get away with it by earning a high salary. But I’ve resolved to get a handle on my finances this year after getting stung with a few tax bills recently and my DD starting private school in September. I earn £160k and my income is £7,600 pcm after all deductions including pension, critical illness cover and PMI. I get bonuses but I haven’t factored these in as they are discretionary. This year’s bonus will be used to pay my tax bill.

I don’t have any savings and I don’t have much left over each month, sometimes I am in my overdraft. This is stressful and in the last year I’ve had to borrow money from parents on a short term basis to cover unexpected bills (such as my roof falling in). Everything else just gets paid from my salary when the bill lands.

This budget reflects my everyday life without making any dramatic changes. I appreciate that I earn a lot but, putting that aside, looking at my budget are there any areas for obvious savings? What aspect of my budget seems unrealistic or wasteful to you? I have friends who earn much less but seem to have bigger homes and a better quality of life. Admittedly, they do not send their children to a private school so probably just have more disposable income.

My mortgage (£1,700pm) is paid from my contribution to the joint account. My husband is on a much lower salary but also contributes towards our mortgage and pays for our car (a 3 year loan of £360pm we are repaying to parents), food shopping, fuel, utilities and other clubs for our DD. He also doesn’t have a lot left over each month.

On the cooking front, have you considered ‘cook’ meals? Frozen ready meals but made with proper ingredients and will cost a lot less than a takeaway (typically about £8 for 2 people). You can get them delivered and have a stash in the freezer and cook from frozen when needed.

Also I applaud your honesty and transparency here OP and it’s brave for a higher earner to put their budget down as it inevitably can attract some less than savoury responses sometimes.

I would suggest you get a spending app like Snoop / YnAB but also maybe share spreadsheets with your husband and make him do one too and put them together as at the end of the day you need to know all joint outgoings really if to do with the family, and you want to really get on top of all this and saving etc. also do you know how much is in husbands savings? Are these joint? If not that would also be information needed for you to work together on having back-up money when things go wrong like boiler etc

Also, your husband might like to give Simply Cook a go. For £9.99 you get x4 recipe cards of your choice, a list of a few basic ingredients and some spices etc to make nice meals. Feels like you are learning to cook and it’s cheap.
or there’s Gousto too but that’s a lot more pricey and I could never use the meals within the date range

We are all different, you need to look through that list and decide what you are willing to give up for more financial security. Something might seem unimportant to one of us, but very important to you.

A few things that spring out for me.

If your house is so small you can't invite friends over, do you really need a cleaner 3 hours a week? Can you reduce that to once a fortnight, and do some cleaning in between? If your DH can't cook, surely he's able to run a hoover around?

What's classes? Why are they with vits & sups? Do you really need that?

£125 for makeup and toiletries (Inc dermatica) - again, do you really need this much?

Farm membership??? Do you really get £38 worth out of it?

Cut takeaways down to once a week, there are lots of options between a takeaway and cooking from scratch. Supermarkets do a lot of pre-seasoned meat options that you just need to throw into a tray + flavoured rice pouch + some salad. You don't need superior culinary skills for that. Or ready meals. Not great health wise, but takeaway isn't either! Personally, I don't batch cook, but we do try to cook something over the weekend that will last at least another meal.

Your DH might not be able to cook, but he can help you in the kitchen still? Do some chopping/clearing up? Have some wine while you do that!

Don't ditch the theatre if you really enjoy it, but then don't go out that weekend to balance it out.

Get more organised with family days out, take a packed lunch and snacks from home, ditto work lunches, at least half a week.

If family is asking for present ideas, ask for things that you actually need, which you then won't have to pay for.

I agree, work backwards. You have the flex to do it. Take £1500 out on payday and save it. Try for £2000 the next month. Don't just let it sit in your account - if it is there, as you know, you spend it.

And trim, trim, trim. All those "little" "but it doesn’t seem like that much of a saving to bother." bit sooo add up. £9.99 here £3,99 there, £24.99 somewhere else...all add up. That lot ^ is £467 a year...that is something....

We had to do it. Change of career for DH meant over £100,000 drop in household income. We knew it was coming. Sat down with MSE budget and our statements and, like you, listed stuff. And then went through and trimmed stuff. And then trimmed some more. After trimming (we were still on £7k+ a month at that point) we saved 2-3K per month over the next few months. And it made us realise how much we were spending on stuff we just didn't need/didn't appreciate.

And pots so you can account for stuff. We now use our bank accounts wisely. Everything goes into one account where all the direct debits come from. Then any money left after the DD total is transfered into Monzo -and is split into pots. I have the following:
Instant Access Savings:

1. "Bills" £1000 a month to cover car tax/music and dance fees/insurance//servicing etc. This is instant access so I can read emails once/pay immediately. Interest slightly lower. (I also have a couple of other savings accounts with other banks I can get instant cash from in an real emergency but I tend not to need to.)

Monzo 24 hour withdrawal savings. The 24 hour bit is very handy at making you think. Pots include:
2) "Weekly" - our day to day grocery/incidental spends. We have £200 a week. I put £1200 in this pot each month and have a scheduled withdrawal hitting the account each Monday. This has been amazing at curbing the frivolous spends and the take out as this is also our "leisure" pot. I have to think 24 hours ahead of I want to spend over my 200 budget. The money is there, but a PITA to get to.
3) "Cleaners" - I know when they are coming and when the money will be needed. Until then it sits in a savings account until the scheduled withdrawal
4) "Savings Do Not Use" (yes it is actually called that) - exactly what it says.

I do miss the "fuck it, let's get a takeaway/go out for a meal" moments. As when you have to pull that money in from a pot somewhere it becomes more real. But it also means each takeaway, day out, spend it more meaningful. Do we really need xyz from amazon?

Do I miss the 2-3K we no longer have each month? Yes. But not as much as I thought I would.

Do I want to cry a bit at that 2-3K we used to spend on not very much each month...for years. Yes.....

You need to understand what your whole household budget is - not just what you can spend from your salary.

You need to understand how much your DH earns, what the joint account is paying for and then start making savings overall.

YNAB will 100% work but you need to do it as a team.

I'm not sure I understand how an adult without disabilities of some kind can be unable to cook some basic meals. Jacket potatoes, bolognese sauce, casseroles. Things which are hard to get wrong and burn. But I second the suggestion of Cook - convenience of a takeaway without the price tag.

I also second (or third) the warning that the budget doesn't contain anything for annual expenses like insurance, savings for an emergency fund (you must need one given you're carrying credit card debt despite your high income), did I see a category for clothing? Birthdays and Christmas I don't think were there. Any pets?

I will just say that I earn more than you and am the lower earner in my house and I don’t have half the number of luxuries that you have. Granted I have three kids and live in Zone 2 London with a fairly hefty mortgage but I’m just stating it for balance. You really need to decide between living for today at full throttle or looking after your medium and long term interests. What if you end up on sick leave? How long before the whole thing falls apart? I’m genuinely not saying this to kick you, just to offer a reality check and say that all these consumer options of cosmetic dermatology and fancy hair cuts and weekends away are nice to haves but are taking away the security you so desperately crave. Stop the hamster wheel and just cut it down.

You definitely need to set up sinking funds for birthdays, Christmas etc. Otherwise you’re always on the back foot. How about Hello Fresh or similar for dinners? Also, try cutting things in half rather than out completely. Like half the work lunches etc.

Do you and dh have 2 separate bank accounts?

We do the following:-
2x joint accounts. Dh wage goes into one, my wage goes into the other.

One of the joint accounts has everything that can be paid via dd then comes out of this, and the balance left day before payday is moved to a saving account. This way the account needs a light touch check once a month rather than any real "management"

Our second joint account is the "day to day" spends. Groceries, fuel, social life etc. Dh and I go through this on the 1st of the month for the previous month. We tally up what we spend in various areas, and see how that looks. We have a monthly "budget" for certain areas and any balance left on these is added (or deducted) to the next month.

From looking at your budget, I think you need to look at all money coming in from both of you, and all costs going out of both accounts.

we tend to go out to National Trust places using our membership but by the time we have paid for fuel, lunch and tea it’s generally cost us £50!

Fuel is the only expense required to visit these places. Pack sandwiches, crisps and fruit. Have a big breakfast before you go, lunch later than usual, to tide you over til dinner once home. Even better if you can put a chilli in the slow cooker before you leave in the morning.

I'd reduce the lunches and take aways temporarily until you pay off your credit card.

I'd consider dropping cleaning to fortnightly

I'd consider the farm membership
What's dermitica?

Agreed, or if you want a compromise and don’t have food in, stop off at the Sainsburys / mini Waitrose etc on the way and get a packet of sausage rolls, fruit salad, multipack crisps, sushi, cookies etc wherever you fancy (take a little cool bag and cool pack!) but will still be a fraction of the cost of an expensive National Trust cafe

Does your DH really only earn £35K (you mention London and so he must be an EO ?)
Civil Service pay has risen
He needs to apply for jobs at a higher grade and get promoted. He isnt earning enough to keep himself and his share of his child.
Can he work from home 1 day a week and use the saved commute time to do the cleaning?

OP my DH and I were like you for almost 30 years, we only had one month ever without an overdraft. My DH received a large annual bonus and that would pay any credit cards, our holidays and I’d put 1k of it away for Christmas.
Our income was 200k, what we sensibly did though was put a lot of money into pensions partly because we couldn’t get it out again until retirement.

Surely relationships with one earner on over 150k usually have a second earner on or around the 35k mark as they do more of the house/kid admin stuff?

Second the pensions advice- higher earner OH is caught in the 60% tax trap 100-125k and his bonus is at 45% tax, so we contribute anything past 100k to the pension via salary sacrifice and the money is worth 2.5x it’s value going into the pension tax free vs take home pay (and we don’t get a tax bill at the end of the year either which we’ve been having at 100k plus).

Only on Mumsnet
In the real world high earners have high earner partners (and the OPs partner is on a very low salary for an experienced civil servant- a role which is mostly massively family friendly even at double that salary)

Only on Mumsnet
In the real world high earners have high earner partners (and the OPs partner is on a very low salary for an experienced civil servant- a role which is mostly massively family friendly even at double that salary)

I don’t know one family where both partners are high earning.

Must move in different circles then which is the joy of Mumsnet getting different views!

Struggling to see how you spend £100 pcm on toiletries and make up then another £25 on skin care ?
Find out the active ingredients are in your dermatica and go to the ordinary or similar and spend a tenner a month.

Actually, looking at your numbers I think you only contribute 3% to your pension? That seems a very low amount and it’s not going to get you anywhere near your target income when retired (Although I don’t know what your employer contribution is, and you may have other income plans for retirement)
By only contributing 3% you obviously have huge tax and NI deductions which would be reduced if you paid into your pension via salary sacrifice. You could take out 25% tax free at 57 to pay off mortgages etc. but obviously it will reduce your take home pay by upping your % so you will need to revise your budget and cut things down etc to do this

50/30/20 method I find helpful- 50% needs, 30% towards wants and 20% towards savings/investment its usually a good starting point for budgeting

I'd maybe recategorise your spreadsheet to what is a need/want/savings and see what % you're giving your money to and maybe rebalance for there

It can be quite overwhelming doing it line by line and individually certain items or expenses don't seem that much but it all adds up

Budgeting is personal so by each line it's easy for us to all say 'well the child haircuts are wild, the school uniform cost is high' etc but it's all relative to your needs not ours

£100 on toiletries a month seems a lot, in addition to £200 on days out above and beyond NT, Farm & Theatre, especially if you’re working FT long days, that’s £50 a weekend - depends how old your kids are but we go to the farm every weekend (DD1 is almost 3), so that’s one “free outing” and then the other day could be a different NT/cinema/bowling etc. equally I accept that depending on the day out and how many of you, £200 could be just one big trip eg theme park!

What is YNAB?