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?

I would instantly hack the £550 in lunches and coffees. That's ridiculous. Take away coffees have almost become as essential as childcare costs to this generation!

My mortgage lender did check my spending - so to prepare for that I cut back hard on anything frivolous in the 12 months prior.

They enquired about all of the various insurances - so they do like that in place.

I think if you look to reduce your food and eating out spending, it will pad your savings nicely. I'm not saying stop everything, as you need to enjoy life but do it half as often.

I would start savings pots for all the various known and planned expenditures over the year as that will make it easier to save and budget.

As soon as I moved into my house, the dishwasher needed to be replaced, I replaced the locks, I paid for removal costs and annual insurances. So there can be a lot on top of settling on the house itself.

I think it’s important to save and also enjoy life, so I would recommend trying to achieve a balance and avoiding the all or nothing approach. So rather than having a take out/brunch/meal out every weekend, could you reduce it to once every other weekend? And on the weekends when you’re not eating out, do a special home cooked meal/brunch instead? And rather than bought lunches every weekday, could you reduce it to every Friday instead? Good luck with it all. x

We eat out quite a lot. We could choose to save the money instead, but we don't feel bad about it. As you say, life is for living. The key is managing your finances well so you have enough for whatever you need/ want in life.

OP - do you actually go to the gym? If so, this isn't something I'd cut. Exercise is so important on so many levels - this is something you do for yourself, your health (both mental and physical).

I'd look at food and work lunches and takeaway coffee.

I think if you're planning to buy in the next year, then you should forgo one holiday and cut your eating out budget at least by half for six months.

I know you're hoping to pay down the mortgage quickly, but have you considered that moving costs might run up to £5000? Even if you don't use all of your savings for your deposit, from experience you will be grateful if you still have a decent pot for the unexpected as well - for instance, the dodgy electrics, the leaking roof, repairs on an ancient boiler.

(PS I don't think you're doing badly but you could easily compromise on the eating/drinking and holidays, and for a short period of time it will be worth it).

The most obvious place to start seems to be office lunches, since they're more about organisation and convenience. You're not getting value for money in terms of enjoyment, unlike your brunches out.

When I was office based, I found it helpful to get some nice stuff in specifically for work lunches. It's useful if you know you've no willpower and will be at Pret otherwise. So it may be best to invest in stuff you like, rather than trying to go really cheap and cheerful.

When I have been saving

I set up monthly regular savings, so that money went out of my account on every pay day.
These mature after a year with interest
So I never missed spending the money

I made packed lunch every day, so that it was ready to take into work. Sandwiches, left overs, fruit, snacks, flask & drinks.
You could save lots on food

Your phone bill is high
I buy my phones out right & change infrequently (not the most expensive model)
My monthly bill is less than £10

Find a cheaper gym or no gym & walk or run for free

Move your existing savings into higher interest accounts. Some are paying 5%+
If you are under 40 investigate LISA where the Government adds free money, towards buying your first property

For meals out, find offers & money off

Look at Money Saving Expert website

Potentially, you could save lots more per month

Once your nursery fees are gone you’ll be doing great. Wrap-around and holiday club can still be sizeable but no-where near nursery. eg for one child for us wrap around for 3-6 would be £16 a day (3120 annually) plus around 6 weeks of holiday camp at £50 a day (£1500). So it’s not insignificant but it’s not £16k a year.

also your rent is going to be similar to a mortgage- trying to save up while paying a chunk in rent will always be tricky as it’s basically double running. I probably would try and tighten belts for a year or so to accelerate deposit savings as once you’ve managed to buy you’ll be in a really good position financially.