How would you spend differently?

[RandomUser987654321]

Wasn't sure on a title & not really sure what I want answering, I think I'm just looking for general money advice. I'm worried we're putting too much to one side for holidays, pensions, savings & not enjoying ourselves day to day but unsure. When I compare us to our friends they all have expensive things whereas we tend to buy experiences not material things but are always doing them cheaper and DIY which we do enjoy.

Prior warning... I want to try to give as much context as possible so sorry if I go off on some tangents...

These questions came about as today we decided to add up our combined savings, pensions & house equity. Combined I didn't expect to have as much as we have & I think its alot more than our friends who are in similar situations.

Now I'm questioning that we're not living for today enough, should we be going out for meals a few times each week etc & we're putting to much towards our retirement so just looking for some general advice.

Just a note too, none of this has come from our parents, its just from us working & saving, living well below our means. We've both had jobs since 16 and come from relatively poor families.

We're both 30 this year, no kids. As of this month, we both earn 65k.

Since 2018 we've saved to buy a house which we moved into in 2020, a week before the pandemic. In those 6 years pretty much, we've somehow accumulated £340k.

From the 340k a rough breakdown is:
~£100k pensions
~£155k house equity (around 50% equity - total house value is 315k)
~£50k ISA in S&P500
~£25k Cash in Easy Access account
~£5k Crypto (This was 20k invested in 2020, but lost it all is now back to around 5k)

My problem looking at this is we're too heavy on our pensions which we can't touch till 57 & also our house, though we're due to remortgage in a few months so cant take money out. I kind of took ownership of our money a few years back & didn't want to pay 40% tax so put our pensions up really high to put us under the tax bracket. A goal for me has always been to retire as early as possible as I ideally want to travel full time. But could I just be doing that now while we're 30? Thats one of my questions

From my salary each month, this is how I allocate it...
1k goes into my pension salary sacrifice (my pension pot is 30k)

Then from the money which reaches my account...
1k goes into Vanguard S&P500 ISA
£600 into our joint account. (Bills, food, joint spending)
£600 into my main account and just gets spent
£350 goes to the mortgage (this will soon be £500)
The remaining money (around £500) I try to save but sometimes gets spent, the past few months i've been spending heavily on a 'pay in 3' the first time i've ever been in some sort of debt so been using it to pay that off.

When I compare to our friends, we look poor compared to them from the outside. They mostly have BMW's, Mercedes or atleast brand new cars. Whereas we always have clapped out cars which are 10+ years old
They all have expensive clothes whereas mine have always been H&M & Uniqlo etc.

When we compare holidays & trips, I'd say we go on more trips than the average couple. In 2015, we went travelling for 3 years, In 2022 I took 2 months off between jobs & In Jan 2024 I spend 3 weeks backpacking while working, a weekend in Prague & a week together in lisbon.
Most years we'll go away atleast 3-4 times abroad. Last year we were ill quite abit throughout the year & I'd just changed jobs so we went on 2 cruises & 3 weeks in Devon. When we don't spend annual leave abroad, we spend it travelling the uk.

Our day to day lives aren't that exciting, we work from home & end up sitting in most evenings doing not much. When we do stuff, we tend to do it on the cheap such as camping.

What would your advice be? What would you do differently? Are we being too tight? Should we continue plowing £1k a month each into our pensions?
Another question is we're about to remortgage, what should we do there too? Should we take some money out while we can?

Why do you care what other people do?

Seriously - why?

Work out what you want to to do with your lives. Work out whether your finances cover that - and if not, how to make them do so.

Forget the rest. It doesn't matter.

Looking at this I think that you have done well. You may think that your friends have a better lifestyle but I can guarantee they 1 or 2 cars on finance or pcp or could have loans or credit card debit. Perhaps they have wealthy parents who are helping them fund their lifestyles.

In regards to your mortgage that could be coming out of a fixed rate I would work out your loan to value. If you look up rates you may see LTV with a more or less than sign.
If your house is worth say £300,000 and you looking for a remortgage of £150,000 you LTV is 50% you should be able to get a lower interest rate or move to a bank that offers better rates.
I would look at Martin Lewis website in regards to this. I think also you can put the post you put up here and get advice from other people about going forward.

I think in your situation I would go to an independent financial advisor where you will pay for their advice. They will look at your income, outgoings and discuss what you want to achieve long term and advise you from their how to achieving this.

For what you said you and your partner like to travel and prefer to have memories rather than having a fancy car with a large payment each month. Also saving now, paying into a pension and getting your mortgage paid off before time can give you more options later say like going PT in work or retiring before state pension age.
I knew several people in their 50's that would love to travel or say goodbye to their jobs but they are stuck. Financially they can't afford this because of lifestyle spending, no savings and very little if anything in a private pension.

Don't compare yourselves to others.

You have a decent income, no DC and your essential expenses are low. So you have a decent amount of disposable income but it does sound like you do spend quite a lot on day to day expenses - you say that £600 pm in addition to mortgage and bills just gets spent which isn't insignificant. Plus you're going on plenty of holidays which sounds like your particular passion.

You have the potential to put yourself in a really strong financial position so don't blow it on material things that you might not particularly care for.

Who knows what is around the corner? You might decide to have DC, want to go travelling, move somewhere more expensive, become ill and not be able to work, want to work part time, start a business or all manner of things that will be a lot more achievable with money behind you, not debt that's gone on flash cars and meals out.

If you want to do more with your life, do it. But don't feel obliged to do or buy things just because others do. You'll really regret it in 20 years time if you still have a mortgage, pensions look poor and you're still tied to working in a job you hate.

But avoiding 40% tax with high pension contributions is a fantastic thing to do, don't stop that. As is overpaying your mortgage and investing in ISAs.

I think you need a complete financial overhaul really. Your life sounds dreadful.

This is excellent advice 😊

Another question is we're about to remortgage, what should we do there too? Should we take some money out while we can

Why on earth would you do this? Your house equity isn't a savings account waiting to be spent.

Now that ultra low interest rates are a thing of the past, you need to focus on paying your mortgage down, not keeping it at a high level.

Fine to borrow additional money if you need to move home or extend your current home, providing it is affordable.

Not fine to 'take some money out when you remortgage' just because you can, especially as you don't need the money. If you want to spend some money, eg on a newer car, you have savings for that.

Forget the numbers, you are after feeling better aren’t you and right now you just see the money. Are you get enough out of everyday, every week? Mini trips, gym or yoga or running group or dog walking dates or reading group or bird watching group or cliff jumping group and so on. Decorate your house again and with excitement, redo your garden, go dancing, go to theatre, visit your friends who live away.

Clearly you have worked hard and sorted out the money side, now forget about it and use your energy to spending those pounds. Of course only the £600 + £500 month you have allocated to FUN x I think the way you invest and save is just fine, if you will have kids the savings will help in the short term and your house and pension is your long term plan.

Why on earth would you do this? Your house equity isn't a savings account waiting to be spent.

This.

I am more like you and spend on what is needed plus a few hobbies and the rest gets saved, then spent as required. We don't do holidays as tied to home location for various reasons. As someone in their 50s I promise you will not regret saving for retirement and not having to worry hugely about money.

You really should do what you are comfortable with financially.

You haven't accumulated £340k at all. Bulk of this is in house equity which unless you sell and don't buy another property, isn't for spending. The other £100k is pensions.
If I added together both our pension pots, house equity and savings I'd have about £500k plus but it means nothing. We need a house to live in.
So really you have accumulated £80k.
Really don't understand the comment about remortgaging to take money out. What for? Makes no sense

You need a house to live in so don’t count that!

Are you planning kids? Your costs will be vastly different if you do. But you have capacity to divert ££ from pension and savings during the childcare years (when you can off set childcare against taxable income as a salary sacrifice) (I think? Are they still allowing that?).

You have enough to live and to travel. No way would I ever pay thousands to have a car of a higher spec and function than I need. Cars are a big shiny money drain IMO.

Do keep enough in high interest Easy Access or ‘notice’ savings for new roof / car replacement/ boiler etc.

I am really impressed! It’s great to be investing in your pensions while you can reduce your 40% liability and you’re child free.
As long as you enjoy your trips then I wouldn’t care whether others prefer hotels or not; you could use them if you wanted.
I drive an old car and it’s hard to buy a new one because it’s so cheap to run but if I had money then I would buy one that gives you pleasure; it could be the colour, camping capacity, bike carrier, sporty - do it for you not for what would impress others.
I would overpay your mortgage whilst you have 2 good salaries - it would be really freeing to own your own house. You could travel again anytime.
Build fun into your week - if that’s coffee shops, meals out or sports clubs or a bike ride. You don’t have to worry about the cost and can be flexible.

Is that 340k between the two of you? If so I don't think you are over heavy on your pensions. You want to pile in early on your pensions so that it has longer to grow, so it works for you and currently you have 50k each. It could be that if you have restricted fund choices in your pension and you can't change them, it is from what I have read, recommended that you do max employer salary sacrifice matching and then put the rest into a SIPP but that is all I have gleaned from other forums etc, I am not an expert.
You can put the numbers into a pension calculator and play about with it to see when you want to retire and how much you want to live off the give an indication of how much they think you will need to put into your pension each month.

A £30k pension pot really isn’t 'heavy'. Especially if you're thinking of retiring early. You're paying in at a good rate, so let's say you increase it 10-fold by the time you stop work, to £300,000. That will give you an income of around £1000 a month.

www.thetimes.co.uk/money-mentor/pensions-retirement/private-pension/pension-pot-amount-average-uk-how-much

I'm in my 40s and the one piece of advice I would give my younger self is to put as much money into a pension as I could. I think you are doing very well.

A Mercedes and a fiesta are still going to get you from A to B in the same time in the same traffic, so I wouldn't waste my money on a flashy car if my current car was still getting me where I needed to go.

You are earning a good salary, but that may change in the future if you were made redundant, had children, had caring responsibilities for older family members, became sick or disabled etc. You can't predict the future, but by making those savings now you are putting yourself in a much more secure position in the future.

That said, I'm confused by your maths. I don't think you can count equity in your house as your savings (unless you intend to sell it). I guess you could take some out of you wanted to invest it in a buy-to-let or something to give you another asset/income stream in the future.

Wasn't sure what you meant by 'day to day' living. But a fancy car? Meh. Going out to nice restaurants regularly? Sure if that's important to you...
If I had your money I'd be buying nice cuts of meat, maybe upgrading a few household items (but maybe not). Getting a cleaner! That really would be a priority.

The sad reality is you could die before you reach pension age. That’s obviously not something people want to think about, obviously don’t get into any debt but definitely live for now. Go out to a fancy dinner once in a while, take that dream holiday, personally I wouldn’t bother living frugally now to save up a massive pension pot I may never get to use.

Far far more people live a good few years after retirement age than don’t, though!

And a potential 30 years scraping a frugal loving together will not be fun.

Make hay while the sun shines, you never know what the future holds.
It means different things to different people, some like to spend it while they can and some like to save it while they can.
Stop worrying about what your friends drive/wear/spend, none of that means anything.
Maybe they get help from parents, maybe they won the car in a raffle, maybe they are skint and one month away from getting their house repossessed. Live your life for what matters to you, choose your hay, but don’t make your choices based on what you ‘think’ other people’s circumstances are.

They go on 3-4 abroad holidays a year and their life sounds dreadful 😢.

We are lucky if we get one (we do ha e kids though) and not everyone is bothered about fancy cars, I need a decent car to get me from A-B, our current family car is over 12 years old and still drives well and yes we could aford to replace it but don't see the need.

Op everyone has different priorities in life and I think as long as you are happy enjoy. What are you spending £600 pounds a month on though as that is a lot of spending money assuming your DH has similar, we don't have this much and still mange to buy nice things for us and the kids.

Well yes and I very much hope to have a good retirement but that is out of my hands. So I'd rather have a good life now whilst I'm still here, and fit enough to do things!

I was in Aldi once and an old lady came up to me to look at my baby, she was quite emotional as she said she never had kids and focused on her career instead and then a year into their retirement her husband died and she never got to spend the money. She said it would go to her nieces and nephews when she died and she seemed quite upset. Never forgot that.

Don't worry about friends.

However, you could afford more disposable income or to travel more now.

Only you know if there's something that you really want to spend more money on. Food shop? Trades instead of DIY? Meals out? Gigs / day trips? Clothes?

If you're feeling short changed in an area then I'd say yes, you can dial down on the pensions and savings to free up more disposable income.

Are you planning on kids?

You sound very comfortable but are you planning to have children at any point? At the moment you have spare money to waste on cars etc should you want to, but your income will feel much more ordinary if you're intending to cover maternity leave, nursery, possible reduction in earnings for one partner if one of you takes a step back from their career.

If the plan is baby or babies in the next five years don't waste your money on crypto and status symbol vehicles

Your take home sounds very high for 65k