Help me budget!

[itwasnevermine]

I'm aware how this thread will sound. Please don't come for me too hard.

For background, my parents are very well off. They had their own business and they own multiple rental properties. The attitude towards money when I was younger was "spend it because it comes back to you", there was never any discussion of a budget - food shops would regularly be £300+ a month.

I'm now 25, and I want to sort my life out. I'm still living at home, because I'm studying and training, but I do obviously want to move out before I'm 30.

My parents refuse to accept money off me. In any capacity. I have argued this with them for the last 7 years since I started at university and their attitude is very much against taking any money from us.

I'm aware that I have done thing wrong - I finish university in 2022 and starting working full time about two years ago. My attitude was very much the same "spend it, it'll come back".

Obviously I'm now realising that's not acceptable and I need to change my attitude to money.

My monthly income is £1,390.01 (the penny makes all the difference) - I'm on a four day week to study, this is non negotiable.

My outgoings are as follows:

£150 medication - non negotiable. Private prescription and I won't be giving this up.
£65 university fees - to top up what isn't covered by my student loan
£65 phone contract - was £50 last year when I took it out, its increased and increased. Got a year left on this.
£27 gym - non negotiable for my mental health
£25 contact lenses
£25 into my stocks and shares ISA
£25 to my 0% interest credit card - this doesn't have a massive amount on it and is just set up to clear it.

Minus the medication my outgoings come to around £250, with the medication it's £400

My thinking for the rest of my budget is as follows, working on £900 left (just to leave a small buffer)

£150 transport - train to and from work
£250 into my LISA
Increasing S&S contribution to £100 a month
Contribution to my private pension - £75 a month? I already do the employer contribution which comes to £100 ish per month

That leaves around £300 a month for things like food, spending, etc etc.

I'm also going to challenge myself to a "no buy" rest of the year to top up my current account balance.

Is this okay? I don’t know what I'm doing, my parents never discuss this type of thing with me

My weekends are very busy - if I go away it's either a trip with friends (and that's cheap, £20-£30 train fare and staying at their places) or a big trip I book a year or so out - so I have time to save

When?

With my friends we're content to just do cheap things, if I'm going away it's to go to the football (we don't live near my team) or to the formula one - I'm planning a trip to Hungary next year for example

Oh in April of next year I'll be going back to full time work - my salary should then be just under £1600 a month

At the weekends I'm usually at home studying, I'll do my food shop etc but that's it

After my transport to work is paid for, yes

I'm quite happy with my weekends at the moment, studying obviously comes first, and then my friends live all over the country so we can't meet up super regularly!

This is no life for a 25 year old!
Why aren’t you doing stuff at the weekend?

I'm studying for exams and my masters, that has to come first (but I should be all done with that by April of next year, fingers crossed)

Just to add I know my life seems sad, but I'm really content at the moment because I know it's temporary- I'm working 4 days a week and out of the house 7:30-7:30, study on my non working day and weekends, my time is limited and I'm happy with spending my own time reading and relaxing at the moment

i think it's good that you are trying to put a handle on your finances at a young age. however, could you please clarify what your goals and current issues are? do you just want to save more? taking 300 out of 900 for spending money and saving the rest sounds perfectly reasonable to me. it's a bit early at 25 to be contributing more than the employer match into a pension in my opinion -- you need that money for other things at that age. you could put that into your ISA instead or alternatively use it to save for necessities such as car, furniture etc in future.

I'd like a car but running one seems so expensive! I've been a bit terrified by people suggesting I'm not putting enough into my pension, I see people on other forums putting £500 a month in!

I think you’re budgeting the wrong way round. You need to work out out much you need for essentials - food, travel to work, medicines etc, and anything left over you put into savings.

www.moneysavingexpert.com/banking/budget-planning/ www.moneysavingexpert.com/banking/budget-planning/]]]]

Moveysavingexpert has a superb budget planner. Put all your income in this, and work out how much you can afford to save etc. set up separate banking accounts to save for holidays, Christmas, clothes etc.

Do you need to buy all your own food? I only ask as that doesn't seem like much left. At your age I wouldn't be pitting anything more into your pension and would instead focus on accumulating savings. When your masters is complete will you get a better paid job?

cars can be expensive, but they can be necessary too, especially if it facilitates your transport to a better paid job for example. however, if it's too early to think of that, then you could put that into your emergency fund instead.

it's true that pension contributions are important. but you have many, many years to make pension contributions. you are already getting the employer match, which means you're getting all the "free money" you can at the moment, so that's a no-brainer. as you finish your education and move on in your career, your salary will naturally go up. this will give you more wiggle room to increase pension contributions say to 15% and will be more relevant anyway as your pension age won't be donkeys years away (private pension age is soon increasing to 57).

as for the other money -- well, the value of money deflates as time goes by (inflation). this means that you can actually lose buying power on your money: if you don't have it available to spend, you'll need to wait longer before you can afford something, and that means you end up spending more. at your age there are a lot of expenses that may come up, and spending earlier is advantageous.

example: you need to buy a sofa
sofa costs £500
because you put money in your pension, you only have 100 available to spend on sofas. you need to wait a few more months to afford it.
a few months go by, and sofa now costs £600 (inflation). you essentially "lost" £100 by not having that money available to spend earlier.

VERY simplified example, but perhaps it illustrates what i mean.
anyway, hopefully that gives you enough information to make an informed decision on it.

My parents are happy for me to shop on their food shop but I feel like I should be moving away from that and reliance on them

When I finish my masters and qualify yes my pay will go up

by the way, i hope you dont get too caught up on making the "perfect" financial decisions. nobody has a crystal ball to know exactly what will happen. and everyone makes mistakes. ive been very into personal finance since around your age and god knows ive made some awful ones! but your financial position and attitude seems very good. im sure you will do well striking out on your own and moving out.

I'm glad you realised that your parents mantra of "if you spend it comes bank to you" is meaningless! I don't even understand it.

How about replacing that with "if you save, it's still there"!?

Don't beat yourself up about what others at different life stages do, almost no 20 something masters students will be putting £500 a month into a pension. You're doing great and your finances will improve when you qualify and your pay goes up.

You're saving money and having a life - it's good that you can enjoy yourself cheaply with friends - a lot of people think they're only having a good time if they're spending lots of money, and it doesn't have to be like that at all. Making the most of your money is a good life skill, that will serve you well at all stages of life.

I won't comment on the medication, you know its expensive, if you had to, you could cut it down/out. Other people will spend that sort of money in Costa/Pret/naice MN approved independent lunch places in a month, so if you took packed lunches and a flask, you're no worse off than them.

However, you'll do well to get out of the high end mobile phone contract trap when you can. Keep your existing phone and go sim only. When you need a new phone, keep an eye out for a Black Friday deal or buy a second hand/refurbished on. You'll also be able to sell your existing phone even it's apparently useless and trashed.

This is what I've done approximately every three years for ages now - pay around £150 for a phone on a deal that is normally £200-250. Sell my old phone for at least £50 on eBay. Pay £7 a month for a SIM only deal, meaning my mobile costs about £10 a month instead of the £50/65 that you're paying.

You'll probably be able to feed yourself for around £150-200 pm if you're sensible so the rest will be your spending money.

I know you want to be independent, but as a low earner you're always going to struggle with housing. But aren't your wealthy parents planning to help you? Many people who buy under about 40 now, especially in more expensive areas, unless they're in relatively high paying careers, will have had a lot of help from the 'Bank of Mum and Dad'. After all it sounds like they have more money than they know what to do with, and certainly most Mumsnetters in this position talk a lot about 'helping their DC onto the ladder' or at least letting them live in one of the rental properties for little/no rent. After all, won't they want you to move out at some stage? What if you see a great job opportunity somewhere, but you'd only be able to afford to live in a crappy houseshare somewhere not very nice and the cost of rent would delay your deposit saving plans?

Sounds like you're accounting to every penny earned, which is what budgeting is all about. It is harder for someone to budget if you've never had to do it or never been taught to do so. But your budget looks fine to me for a single person.