Assess my finances

[ByGreenBiscuit]

Am feeling incredibly stressed about money and like I am doing a terrible job managing it. Please help with a realistic assessment of how I am doing / any useful tips.

I would LOVE to retire at 57 but I think that is probably out of reach. Would love your opinions tho.

Background: 40 year old female, from a very working class background where parents didn’t have any money or know how to deal with it. I ended up doing v well at school / went to a top uni etc and am in a job paying £91k in London now but I didn’t really save a penny till I was 30.

I then went freelance, doubled my earnings and saved £60k for a house deposit. In meantime my contributions to pension were small.

at the same time my much older sister and my mother are really suffering from not thinking about money or knowing how to handle it and it’s really making me sad. Sister still has loads left on her mortgage at 55 but has a chronic health condition and I don’t know if she will pay it off before she dies. My mum lives on a pittance, not putting on the heating etc but still wasting money on tat from temu etc. She still lives in a council house. My dad died with nothing to his name. I want to feel financially secure when I am older.

Situation now:
Live in London, I have £320k left on a house worth about £465k currently.

I put a varying amount into my pension, it’s been 40% the past six months or so but have taken it down to 12% (plus employer cont of 10%) the past couple of months as I’ve needed to save more for maternity leave.

I now have £160k in pensions. I plan on putting minimum of 12% into this for foreseeable but when I go back to work after mat leave hoping to increase to at least 20k.

I have 50k in premium bonds that I keep in there because it’s mostly ‘company money’ from my limited company, which still brings in about 10k a year. I treat the winnings as little top ups.

I had given up on the idea of getting pregnant last year and went on several holidays (midlife crisis!) plus invested in improving my loft. Then bang I get pregnant and I’ve got about £8k on a 0% interest credit card / loan for loft etc.

I am trying my best to save for maternity leave, I get six months paid but would like to take a whole year. I’ve calculated I need about 18k saved to be comfy for the year, currently only saved about £6k as I’ve spent thousands on baby stuff (and that’s going second hand for most things). I will continue to save circa 500-1000 a month until DEcember. I’m also likely to bring in around £8k in the limited company on Mat leave which will help but don’t want to rely on it.

My bills including mortgage, insurances, etc etc come to about £2300 a month. Then pay off debt of about £325 a month. Then with maternity savings and prepping for baby, I am feeling REALLY squeezed and stressed. Instead of relaxing and enjoying the baby prep, I’m obsessing over how much I have left for the month every day.

I also think I do have bad spending habits I need to curb. Eg I spent £500 on maternity clothes when I probs could have spent £200. I have a habit of ordering stuff then regretting it and sending it back. This leads to a lot of self blame and rumination. I think my mother had quite a bad shopping habit - just small cheap things, but she had to buy stuff almost every day. I notice I am the same - I obsess about being stressed with money but then I often think ‘just this one more thing and then I won’t need to spend any more’. This is particularly tricky with baby stuff as I’m a first time mum and it’s hard to tell what’s essential or not.

I also got used to a really high take home when I was running my little company. Still adjusting to a salary and big mortgage contributions.

I should also say - my partner gives me around £800 a month as his contribution. He is on a much lower salary than me. He will look after our child two days a week so that with government funded hours we are only paying for one day a week max which makes nursery manageable. He is also likely to inherit £100k+ when his parents pass away, but obvs we can’t rely on that. If he does I’m pretty sure he would be open to / like to be on the mortgage so we’d need to weigh up the benefits of that vs investing. It would certainly be a weight off my mind to have it paid off earlier.

Sorry for the essay! Any helpful tips much appreciated.

It would be helpful if you could list your monthly income and then all of your outgoings as it will be easy to identify where your money is going that way.

First stop buying stuff unless it is essential. When you think of buying something leave it a day and then ask yourself if it really is something you need, not just want.

The return from premium bonds is generally less than you'd get from an ISA. Put 20k in one as soon as you can before the rules change.

Assuming your partner is baby's dad can he up his contribution? Babies are expensive. Is the debt just your 8k credit card or anything else? If there is other debt what interest rate are you paying as selling the premium bonds and paying it off might be sensible. What is the interest rate on your mortgage?

Are you familiar with this website https://www.moneysavingexpert.com/ Check what you are paying for utilities, phone, insurance etc.

£500 on maternity clothes is MAD. Im pregnant with DC3 and probs spent less than 80 in total

You are spending too much.

That is it in a nutshell. DH recently had a complete career change, resulting in a big drop in our income. Big. Like about £3.5k net a month less income.

We knew it was coming and had 6 months to prepare, so (for the first time, I am embarrassed to say) we did a line by line analysis of what we were spending our money on and whether it was really needed.

The first go through we were able to cut £1k a month without any issues, which I saved for the first month. Magazine subscriptions, multiple TV packages, getting someone in to trim the hedge cos we couldn't be arsed. Couldn't find the "insert tool/gadget here" buy a new one. Food £200-£250 a week

We then tightened our belts more and rethought the random spending. We cut out the once a week takeaway plus once a fortnight meal out. Reduced our monthly personal spends. Another £2k saved.

By "crunch" time I had saved 18K and we were in a position where £4K a month did us fine (no mortgage in that). In fact we do not do without anything. The £3.5K we no longer have...I just weep. We were spending that every month..and no happier for it. We pissed thousands up the wall.

Now, we enjoy a takeaway once a month - and properly enjoy it as it is a treat. I take pleasure in saving. Even in budgeting a bit, which may seem a little sad.

The only thing you need to start with is a full analysis of what you are spending your money on.

And then cut it. Take the money you are saving and put it in ISAs, your pension, your holiday fund, overpay your mortgage. May your money do something for you, rather than just buy crap you don't really need. Get obsessed with compound interest calculators rather than the lastest "must-have" purchase.

You need to google Dave Ramsey and Stork Mode.

Perhaps you'd feel less anxious if you tackle the pension/ retirement issue and cut yourself some slack on the rest particularly during your pregnancy and maternity break.

Have you thought about when you resume work stuffing all your income above the 40% tax threshold into a pension and benefit from the higher rate tax relief. It's the most effective way to build a sum of money for retirement.

You have plenty of time to build a sufficient pot, and in the meantime hopefully you'll be able to live on an ok salary - leave the premium bonds for emergencies if the £50k isn't enough.

To be blunt... You are obsessed with social class, and the financial situations of your relatives. Concentrate on your own finances, and stop buying stuff you don't need.