How do you spend your income and are we doing everything wrong with our money?

[PennyLany]

I don't openly talk about this in RL so was hoping to share here in MN and understand how others manage their income. We are not financially savvy so we are just aiming for a 10% deposit to buy our first home (we live in London so very £££) whilst managing two full time jobs and a little toddler in daycare.
I understand circumstances are very different for everyone and it will also depend on whether you have additional assets, savings, properties etc. This is where we currently are, are we being silly with our money? We are not depriving ourselves of anything and we lean into the occasional treats as we like eating out and want to enjoy life but I also feel constantly guilty to spend extra money on clothes, stuff for the home etc as non essentials.

Take home pay is £6600 between the two of us

£1750 rent
£1400 nursery
£300 commute costs for the two of us (I take the drain, DH drives)
£100 2 gym memberships (we are thinking we might cancel this and workout at home instead)
£60ish phone bills
£450ish bills every month including council tax, although these vary a lot
£450 food
£200 buying lunches when at work (yes this we could cut massively)
£250 food and coffee treats for the month (meals out and takeaways etc)
£200 or so is usually spent on monthly extras that change all the time, these could be things like bday gifts, dentist appointment and a haircut, extras needed for the home or DD etc

Holidays are paid for with our yearly bonus. Nothing too fancy, just a couple of European trips a year in nice but modest hotels.

We manage to save about £1400 per month which we are putting towards a house deposit. We don't have extra savings or investments on top of that growing savings pot for the house.

Are we doing this all wrong?

Thanks all for the input. Lots of comments I wanted to reply to so I will just regroup all my answers below in random order as it's difficult to keep track:

• Age: I am 37 and DH is 41
• Phone bills: we are still under a contract but aiming to cut down on that as soon as it ends in a few months
• Gym: I didn't think it was that expensive? It is £96 for both of us (so £48 per person) in the least fancy gym in our area. It's actually really scruffy but works for us and they have nice classes. But as I said, I could probably cut on that and workout at home more as with work and DD I struggle to make the most out of my membership
• Lunches out/take aways: I am aware these are luxuries but eating out during the weekend gives us a massive amount of joy and I think life is also for living. We don't have any treats during the week, just work, DD and sleep so we like to be able to indulge a bit in a nice brunch or coffee and cake in our days out.
• Lunches at work: this is where we can definitely be more organised and save a bit extra, just need to get into the habit of doing it and cooking extra portions, not difficult but a mindset switch.
• Holidays: we are not from the UK and being able to go away for a little but of sun (not in a fancy hotel but just a simple holiday) is very important to us. That said, as we are getting closer to buy a place, we have decided to use pretty much most of our holiday budget towards the house this year and postpone our trips.

I wasn't necessarily asking how I can save more to buy a house sooner but just whether we were being a bit too silly with our money or not

I don't think you're doing so badly OP! Take heart!

Some thoughts

• I'd probably spend a little more on the supermarket shop
• Don't give up your holidays, they sound reasonably modest and like they give you a lot of joy.
• Ditto meals out on the weekend
• Cut your phone bill once you're out of contract - £8-10 might cover your needs once you aren't paying back a handset
• Lunches at work - do it once a week as a treat and try to bring something the rest of the time
• Gym sounds cheap for London and if you are using it I think it's a good way to spend money
• Are you getting tax free childcare? If not, look into it
• Do you not each have any personal spending money or is that out of that final £200 you mention? I'm surprised there's no line item for bits and bobs you might each buy yourself (hobbies, entertainment, skincare, clothes for fun etc)
• The idea that your bills vary a lot makes sense to me, not sure why that is being questioned. Electricity and gas are obviously much higher in the winter months when it's cold, dark and you're at home a lot.

You can obviously save more, but you know that. Overall you're not doing too bad to save what you are saving whilst living in London and paying for childcare. You're not being silly and you're not doing it all wrong. You could probably cut some stuff, but I don't think you should cut the stuff that really brings you joy and is reasonable.

You'd ideally budget your "monthly extras" properly. Birthdays are not a surprise. You know roughly how often you get your hair cut. So budget for it annually.

Say you get your hair cut 4 times a year and it's £60 a time - that's £240 so you need to allocate £20 a month. I suspect you're dipping into savings more on these than you realise, most people are.

Also, I'd agree with you that a 10% deposit isn't considered particularly low. We bought in London with a 5% deposit (which I wouldn't particularly recommend!) but if we'd had 10% at the time I think we would have had a pretty decent choice of lenders!

@TomatoSoup69 thank you! Re the personal stuff: this kind of falls into the £200 per month which varies, some months it's for boring stuff like dentist and a haircut, some months we might spend that on new clothes. We also spend a little amount of the bonus on new stuff we might need, like a nice (not luxury though) coat, new pair of shoes etc. But I buy a lot of clothes on vinted and am generally very careful spending money on other stuff (even though I actually love clothes and beauty) so these are occasional purchases that don't necessarily come off the monthly budget regularly.

Yes we do use tax free childcare.

£900 of food is crazy. I spend £220 for two adults.
£60 on phones is costly too, any reason why not payg?
You could cut out the gym and scrap the holidays for a couple of years, and easily save an extra £600 a month plus your bonuses.

I guess a house isn't much of a priority for you.

It's not just about saving the money, it's where you're saving it as well. Is it in a high interest % savings account, a Cash ISA, a Lifetime ISA, Stocks and Savings? Even just putting 4k a year (or 8k if you opened one each) into a Lifetime ISA, you get an extra 1k per financial year towards your deposit. If you put 4k in now and 4k in April, that's 2k just like that.

@Meadowfinch house is a priority which is why we are regularly putting money aside for it and we are finally getting close to being able to get a mortgage with a 10% deposit. But whilst saving for a house is indeed important, we also want to be able to enjoy our lives a bit so a holiday in a sunny country once a year plus a long weekend away isn't something I am willing to give up for years and years in order to buy a house sooner. We are still young and nobody is going to give us this time back as a young family with DD and we want to try and make the most of it within limits.
£900 on food is a big amount but as I said half of this is actually meals out, coffees and cakes, enjoying eating out between ourselves and with friends. Yes we could definitely cut this much more but we want to keep a bit of extras for our days out.
We also both work in London so sometimes it's inevitable to have the odd meal out with colleagues etc, it's part of our lifestyle.

OP, I'm just aware that you need to get on with it if you want to get a 25 year mortgage in before you retire.

I think you’re answering your own OP here. There are some things which you just aren’t willing to sacrifice - and there’s nothing wrong with that at all, you just need to make your peace with it.

Defending your gym memberships (maintaining long term health and fitness should absolutely be a priority for everyone, not seen as some sort of silly luxury that sensible people who want a house don’t bother with) and meals out which you view as couple bonding and family time is completely understandable. The bought coffees and lunches I’d see as less so: they’re pretty fleeting and it sounds more out of laziness than enjoyment. We buy top quality beans and bought a milk frother and good quality travel cups - and can now make our own coffees better than the ones we used to buy.

@ComtesseDeSpair I agree that's definitely where I will try to make a bigger effort on and it is 100% being lazy and disorganised, it's true!

Yes you are definitely not being clever with your money, bearing in mind that you want to buy a house. You need a rethink in your current lifestyle so that you can eventually have a more relaxed time, mortgage free. No one ever spent their way to financial security.

@Tel12 but how so exactly? the only thing we are spending extra money on is a few meals out as a family and some lunches at work (which I agree we need to cut on). Everything else we have leftover goes in the savings and we use our bonus for modest holidays which in this day and age I don't see as a massive luxury (we are also not from the UK so frankly escaping this horrible weather is a massive priority for us, I get it if you don't understand that).

How should I be rethinking our lives and manage our income instead (whilst still enjoying our life and not be miserable) can you give me a practical example, I mean it.

OP this could litterally be my own post. Very similar expenditure here, we also cook from scratch eat out a lot and just love good food, and also splash on a good gym.

I check our finances in detail every month and food/gym is the one place we could save an extra 500 or so a month but we just struggle to give it up. I figure we are still managing to save, it just might take us a few more years to get enough together for the house deposit but we just really enjoy food based activities as a family (farmers market every weekend, Sunday lunch out with friends, a nice lunch when I'm in the city for work...) and the gym means everyone's mental and physical health stays good 🤷‍♀️

I have resolved to batch cook a lot of meals from next month (to save me some time on an evening) so maybe that'll save me a few pennies as well 🤞🏻

Would cycling to work be an option? Had you told me several years ago that one day I’d cycle 8.5 miles each way from zone 3 to Fenchurch Street several times a week I’d have laughed in your face - but it is so. Started in lockdown out of necessity, never looked back. It saves me around £150 a month (which essentially pays for a decent chunk of a holiday) and brings me a lot of esoteric joy.

@ComtesseDeSpair no, that wouldn't be an option unfortunately

The thing that really jumped out at me here was 'lunches at work'. Gigantic waste of money. Like you, I am a foodie, so would never be willing to cut down too much on nice treats like eating out. But a mediocre sandwich from Pret or the like is not, IMO, nicer than something you can bring yourself from home, and it's massively more expensive.

@cathyj77 I agree, will make an effort to tackle this!

I'm a recent convert to YNAB and it might suit you really well.

You can put a set amount into a 'pot' for eating out. It's important to you, and you can afford it - so nothing wrong with doing it, but if you set an amount, which you can allocate spending to, it may surprise you how much (or may be less than you think) is going towards this.

It's not about stopping spending completely, but will help you understand exactly where every penny is going and put ever extra bit towards a deposit.

They run a completely free trial (you don't even need to put in card details unless you want to sign up).

You say that you're saving but want to enjoy life.

Yes it's grim having to make sacrifices but you need to think about your goals.

The larger the deposit, the less you'll need to borrow and the quicker your mortgage ends.

A lot of your food spending is utterly frivolous but if you feel that £450 pm is necessary for coffees and deli treats then that's up to you.
Similarly, your gym memberships.
You can exercise for free but it's your choice.

I'd prefer to rein that spending in and put it towards our end goal of paying as big a deposit as possible, reducing the amount you need to borrow and , ultimately, retiring earlier.

It's a lifestyle choice, and you know that.

While you are working out your budget, please consider the stamp duty, legal fees and other costs associated with your house purchase. A lot of first time buyers don’t take these into consideration. So it’s not just the deposit that you need to save for.

If you want to keep the eating out, have a look at Tastecard or going to cheaper alternatives. With better weather coming can you change a meal out into a picnic?

There is a balance between frugality and fun. Bear in mind that the lenders can look at your spending habits differently from you in the affordability tests so you might want to research that when putting your budget together.

You are essentially eating your house away.

@Rainbowshine I didn’t think my spending habits were so lavish that it could be an issue when applying for a mortgage. It’s just a couple of brunches in a cafe and a couple of take aways we are talking about, plus the odd bought sandwich from pret or m&s when in the office. Is this really seen as a bad habit from lenders if we are still saving £1400 with our income?
I am pretty sure there are people who spend a similar amount on alcohol at the pub but we don’t drink, or maybe get their nails done every 2 weeks and other regular stuff we don’t do. Surely we are not particularly extravagant with our spending?

Do people here never eat out? It’s very common here in London within my circle of friends and colleagues, we are definitely not the weird ones!

@ penny lane I eat out every weekend.
But I also take my lunch and coffee to work so I save money there.
I don't have a gym membership
I'm sim only on my phone
I have saving pots for
Birthdays
Christmas
Dentist
Hairdresser