Money worries for the future - what do I do?

[User415373]

Hi. I'm posting here as I'm too embarrassed (and can't afford) to see a financial advisor. I'd be interested in others' thoughts on my situation. Over the last year or so I've been increasingly worried about our financial future, particularly in regards to our children (currently 2 and 4). I've been worrying about their potential uni fees, cars, house deposits etc so today decided it was time to set up a S&S ISA to put in a monthly payment with the aim of putting £100 in for now then more as when any salary increase allows. But then I've reading that we should have a 6 months 'emergency fund' (10kish?) before looking at any savings, but realistically at £100pm to possibly £400 down the line this will still take years to achieve. By that point, there might not be enough time to save properly for what the children might need when they hit 18. Some context:

• I'm 34, DH is 40. We have 180k left on a mortgage with 20 years left (house worth 450k). I feel like this is quite a good position to be in but should we aim to overpay this instead and be mortgage free by the time eldest needs support?
• DH income 40k, mine 34k. His unlikely to increase much. I'm desperate to increase mine (took a huge paycut for a more flexible job) and doing all I can but will still only be 40-50k in the next 10 years.
• Have been paying 1k a month average nursery fees for 2 years and £800pm in the 2 years before that. This is going down with eldest starting school soon and youngest getting 30 hours but at the moment it's a struggle to pay the bill every month. I'm in my overdraft every month and we have 0 savings at all. We have no other debt or loans or anything but the last few years have been a struggle.
• We are slowly renovating our house and probably spend a couple of hundred a month on that on average (DH does all the work though).
• We'd also love a 'proper' holiday next year (haven't been for 8 years) but this would require £200 a month saved between now and then at least. Should we forgo a holiday until our emergency fund is built up in the next few years?

I was raised in a council house, my family were always on benefits and I received the full loan and maintenance etc for my degree. We never discussed money. I realise our situation will mean our children will likely have much less support and I feel sick at the thought of not being able to provide it but overwhelmed at where to start. Do I need to be worried now or not - WWYD in my situation?

Honestly I think it’s silly to save for the dc if you don’t have your own savings. Build up your own emergency fund first is the best thing. In my opinion…

Definitely have an emergency fund first. 6 months expenses saved (imo)

Then overpay your mortgage (if you're allowed to). Always pay debts off before saving - apart from your emergency fund

That should take you a few years hence! 🥰

Don't stress about uni fees etc. I didn't pay my children's uni fees. They are absolutely fine and well adjusted 🤣

I asked our financial advisor this a few years ago and his advice was to look after yourself first. Focus long term on paying down the mortgage, debts etc, building up emergency savings. When the time comes to support your DC you’ll be in a much stronger position.

for what it’s worth my parents didn’t save to give me house deposit! And I would never have expected them to.

Save for emergencies

unless you get a better rate saving , pay off mortgae as fast a you can

when the nursery fees drop you will be able to think about child’s savings and holiday funds , these years ard about getting by and preparing for a more secure future. That 1k a month is 12k a year ( realistically 8 if you get other expenses )

Your own savings are first priority, and pension, you don't mention that? Prioritise your pensions!

Giving large financial gifts to adult DC is a luxury, not a must, save excess cash only.

Emergency fund.

If you don't have to use the emergency fund, you can always use it for something else later.

You can't guarantee you or your OH won't lose your jobs at some point in the future, get ill and either have to give up work or work less hours, or need to change career with possible retraining costs.
Houses can turn out to need expensive repairs too.

Your emergency fund protects your children as well as you and your OH against emergencies, so it's for their benefit too.

I wouldn't put money into accounts for children that will become theirs when they turn 18.

However adorable your child seems now, doesn't mean they won't be wild as can be at 18 and decide to take that house deposit/uni fees money out to spend on a round the world trip.
Many kids have done exactly that.
I know one boy who spent the money his parents made a real effort to spend on taking his girlfriend on a very expensive holiday.
She dumped him after the money ran out and they bitterly regret saving when they could have used that money themselves.

Save the money as yours, then you can give it to them as/when needed but still have access if you need it, or not as the case may be.

Thanks all. I realise I didn't mention pension - I have 10 years worth of a teachers pension from aged 21 and now have a civil service pension so I don't give it much thought as I hear they're amazing?! I will look into it though.
To clarify I'm not considering saving into DCs own ISAs that they will gain access to - just a pot that we can dip in to assist when needed.
I've had no financial help from my parents either but we're extremely fortunate that my in-laws gifted us £5k for our first house deposit (a 90k falling down bungalow that we renovated ourselves over 7 years, with no kitchen at all for 3 of those!), so we only had to save 2k each which was easy while living with them. Later they gave us £6k towards our wedding (which basically paid for the whole wedding!). I would love to be able to help my kids like this. If I hadn't have met my husband there is no way I'd be on the housing ladder now. I couldn't live at home, rent would have eaten my salary and a house deposit would have been in the far horizon. That's what I'm worried about I guess.

I'm going to focus on the emergency fund - thanks for helping me get clarity. As nursery fees reduce I need to make sure that we don't just spend any excess. Tracking outgoings and talking about money is something we need to get better at.

As others have suggested, IMO..The best way to support your future children is to make sure you are financially educated and secure first.

Don't put money into stocks and shares before you have an emergency fund!

£100/month is a brilliant start. Get that into a cash savings account starting with this month's pay packets.
Then when the nursery fees drop put 3/4 of that into savings - and use the rest as extra money for you - house, holiday, whatever. Basically, improve your life a bit once fees drop.
Do that each time the fees drop, AND put half of every payrise into savings too. So, say you get a payrise that gives you £50 each month into your bank account. Use £25 for living and add £25 to the savings amount. It soon adds up over the years.

Totally agree with this, it’s such a practical approach. Starting with £100/month might not feel like much, but it really does add up, especially once nursery fees ease off. I like the idea of splitting pay rises, it keeps things balanced between saving and still enjoying the present a bit. It's so easy to let extra money disappear into daily spending if you're not intentional with it. This kind of slow and steady method feels a lot more realistic than trying to do everything at once.

I've always done the opposite of everyone else so I'll tell you what we did...
XH was always a saver and we were both in stable jobs for background, our household income was probably about the same as yours, increasing as the kids got older.
We did put £100 per month into ISA (child trust funds then) for each kid even when it was a struggle. We both have pensions, overpaid on mortgage when we could. Built up savings when could, but rarely had 6 months worth of savings.
DS 1 is now 18 and going to uni in September. He is very sensible with money, he knows his trust fund is for uni. XH through his own stupidity lost his job (and marriage) and now earns just above minimum wage, kids are with me full time and I work for myself, earn an okay salary but not much money to spare, and I can't afford to support DS1 through uni. So yes we did save for the kids, I never imagined I'd be in the situation I am, so I am glad I did. You don't know what life is going to throw at you.
I'd look at saving something for the kids, even if it's not £100 per month. Not every kid is going to run wild with the money once 18! Teens are expensive, even if they don't want to go to uni, they'll probably want driving lessons.

Give them a secure home, that's the best gift you can give to your children. Should they go to uni they can get a loan. There's lots of ways you can provide support other than financial.

I never worried about it and my dds have done and are doing just fine.
they have commuted from home for uni so have less debt and to be honest will need to sort their own housing deposits as far as possible

How can you be worried about savings if you're always in your overdraft?

Agree with the advice above. I'm not one of those MNetters that thinks anything below £200k household income means you're living in poverty, and I don't mean this as a dig, I'm sure you work very hard, but on your incomes I don't think it's realistic to think you're going to be able to fully fund uni for 2 DC, have house deposits and first car funds and be mortgage free. I know MN gives the impression anything less is tantamount to child abuse but I just don't think that's realistic on your earnings. There isn't some magic that you're missing as to how people on here claim are able to have hundreds of thousands of pounds in savings to fund all this for their DC, either they are very high earners or they've had an inheritance or other windfall or they have very low expenditure due to no childcare bills or free housing or something.

Like people say I'd start with the £100 pcm on the best interest rate savings account you can find as an emergency fund. There's no point angsting about future things that may never be an issue like uni fees if you couldn't afford to fix a leaky roof or broken car right now. When you're clear of nursery fees I'd then work on building up that emergency fund to 6 months expenses, then think about pensions or perhaps some ISAs for future savings for DC or similar, and I'd then look at improving your lives a little with holidays and so on too. I'm sure your DC would value a happy childhood more than being given a car when they're 18 or not having to get a student loan (within reason of course, I'm not advocating luxury trip to Disneyland over addressing the emergency fund situation). Your pension situation sounds OK, your DH should review what his employer pension is and look at a private one or additional contributions too. I wouldn't worry about the mortgage until you're in a much more secure position elsewhere first, MN is obsessed with getting mortgage free but ultimately again that's a rich person's luxury, in the real world mortgages are a very safe and low cost form of borrowing and only something to think about paying off once you have addressed other priority areas with liquid investments (liquidity means that once you've paid off the mortgage all your money/capital is tied up in the house, if you want to access it you either need to sell the house or take out another mortgage, fine for young working people but not so fine for older / maybe not in great health people). You can often achieve a much better capital return on investments anyway depending on your interest rate...

We weren't able to give anything to our 3 DCs for big items like houses,uni,cars etc. They are all managing fine and we help where we can with smaller things: a food shop, car repair, a bit of money here and there to help out. Agree with other posters, save a cushion for yourselves first. And well done on the Civil Service pension. Hang on to that!

Don't stress about uni fees etc. I didn't pay my children's uni fees.

The government expects you to now though.

Start on your own savings before dc. You have to house them until they’re 18 and therefore yours are more of a priority. I save £200 for myself a month and me and DH put 50 each in our son’s savings a month. If I come short one month I get the money in my savings not ds.

I have said this before that there are lots of ways to help your children financially that won’t actually cost you too much. Teach them to drive and do the test in your car. It still costs to insure them and petrol and cost of test but much cheaper overall.
Help with child care if you can. Ask around and help them get part time jobs when they are older. Get friends to let them to work experience with them. Build up their cvs.

loads of helpful options that don’t require actual cash.

I just wanted to say well done to you, OP for creating such a good and secure life for you and your family. I had all that modelled, taught and then help given to achieve what you’ve achieved - good secure jobs, mortgage and pensions. I’m always impressed when people manage it without any of that.

To answer your question, I genuinely think that one of the best things we can do for our children is ensure we have a financially secure old age ourselves, so focus on that and release your children from worrying about you in the future. If you mange to help them out (with monetary gifts or interest-free loans), then what a bonus!

Don’t worry at all about uni fees as they take out a loan for this. If there isn’t enough to top up the maintenance side of things they can look at other options like going to a local uni and living at home, going to a cheap uni and getting part time job or going a degree apprenticeship where they get paid.

Prioritise aiming for 6 months expenses (so 6 x mortgage payments plus essential bills) bearing in mind you can get a mortgage holiday for a couple of months if the worst were to happen. Once you have say £10k in savings you’ll feel a lot more secure and can then have the flexibility to save for other things.

Things will definitely improve once the nursery fees have gone annd you get pay rises and then you’ll be able to reach those targets more quickly.

Just save and don't give it a name as it's just savings for whatever isn't it? Your children may well do apprenticeships as it isn't necessary to go to uni unless entering a graduate profession.

Jeez. Relax. You have a ton of equity. You will get cash released as nursery ends.

Have some hols whether cheap camping or youth hostels. Make some memories and focus on living. Your pensions are good. Hurrah!

And yeah emergency savings too - then other things.

I agree with @MeanMrMustardSeed

1. Pension
2. Child ISAs start small; interest is better for under 18s and will grow.

Compound interest will be your friend. Never bothered with 3-6 in bank. You'll pay your mortgage off in due course. TBH we always use credit cards for emergencies. Make sure everything is properly maintained and you have adequate insurance.

Mostly I find Mnetters very financially conservative.