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?

@NoctuaAthene thanks for that great advice. I do compare our life to others on here, and of course with others in real life who seem to be holidaying twice a year, new cars etc. I used to be an overachiever, I excelled in my previous career and was promoted young. I feel the need to 'complete' everything which is why I feel like I have to do all those things. I was such a career person before kids (though I would have quit anyway as I was nearing burnout before I had children). I'd be on 60k now if I hadn't committed career suicide but I would have been extremely unhappy, or worse. But I can't stop thinking about what a better position we'd be in.
I think having nothing growing up has made me obsessed with money, which I think is chasing a form of security. I need to realise that we are pretty secure, especially once we build up the emergency fund.

We do camping. I would just love to not have to cook and clean and come home with 6 loads of laundry and a wet tent to sort out. We love it but I'd still bloody love a week in the sun!
I know we are extremely fortunate and I sound terribly ungrateful.

A stable happy home is worth more than uni fees.
Teach your children and building financial resilience. My parents had periods where money was tight. I learnt to keep a well stocked tin cupboard. When things were better I knew they had savings for the rainy days and eventually had a couple of holidays in the sun aged 11 and 14.
By the time I was in uni they were able to top up my maintenance loan so I only left uni with the standard student loans no additional debt.
I was given a strong work ethic and drive so I prioritised a course with industry experience. They were then in a position to give £5k to each of my siblings towards house deposits.

Take things step by step. Start by building in financial resilience and an emergency fund.
Look at special things that will bring you joy as a family.
Look at longer term goals.

Please don't spread misinformation @pumicepumy . All home students are entitled to take a loan to cover the full cost of fees. It is the maintenance loan is calculated on parents' income. It is then recommended that parents make a contribution to living costs equal to the amount the maintenance loan is reduced by.

No UK parent is required to pay tutition fees under normal circumstances.

However, since the maintenance loan (like the tutition fees) has not kept pace with CoL in some cases a parent with the means might contribute more.

Growing up poor does have an affect on the psyche. I’m still careful with money though I do not need to be.

My mindset was have an emergency fund of a year and teach my children how to be fiscally responsible. That’s as great a gift as actual cash.

I wouldn’t call camping being extremely fortunate unless it’s something you really love. Go out of term time, which I assume you still can unless your a teacher and book a last minute holiday.

The S&S ISA is a great idea but look around and do build up some emergency funds. Some banks and building societies offer special savings accounts for current customers only. It’s a reason to have multiple bank accounts. You also need to consider transferring money around far more than many do, depending on the deal, obviously check penalties. It’s so easy these days. I just shut accounts and move them when it isn’t such a good deal. Too many people stick with the bank that they open their first account with.

The idea of having a fund for your kids so they can buy houses and cars is definitely a new one! I really wouldn’t put all that kind of pressure on yourselves. Instead as others have said, get some savings tucked away, do your renovations and live in the ‘now’. Give your children a lovely childhood they’ll always treasure. They’ll value that more than being gifted a car when they’re 18.

We prioritized paying off our mortgage when we were younger by overpaying. This then meant that by the time the kids went to Uni we have enough to help them. We have two at Uni currently and need to give them around £350 per month each as student loans barely even cover rent. DD cannot get a job as she is doing a Nursing course and has a lot of placements. DS has really struggled to find any kind of work whilst at Uni. We won't be able to help them with house deposits unless we inherit money, we are realistic regarding that. OR ds who lives with us lives with us rent free, we have never charged him anything so that he can save for his own place. All my kids ( four of them ) know that if/ when they are savings for house deposits they can live with us rent free whilst saving. We never had an emergency fund when kids were little it wasn't something we really thought about to be honest although I can see it is a good idea.

Some people have said to always overpay mortgages and clear debts before saving. This is bad advice. If your savings are making more money than the interest you are paying on your debt, then saving makes far more financial sense. For instance, our mortgage rate is 1.7% but our saving are making 5-10% annually. We could clear our mortgage with our savings but that would leave us financially worse off.

OP there is a money saving expert calculator that lets you see whether or not you would be better off saving or paying off debt/mortgage.

And I agree with others - save for yourself before saving for your kids.

Omg OP this is me!
Literally everything you describe down to the salaries (although I’ve never taken a pay cut ☺️) to the children’s ages (although my oldest did start school this year) is virtually the same.
I don’t have much advice but just wanted to say I’m in the same boat. I haven’t been thinking much about the kids money tbh, I just know that I never really had much help, except for my parents letting me live rent free at home until I was 25 which allowed me to save money for a house deposit. Not all kids go to uni, I work in accounts and it’s actually more accepted to get a qualification alongside working, so you won’t necessarily be expected to pay for their living costs at uni.
Hang in there, as I am, when they’re both at school it’ll be much easier!!

Emergency savings are a must OP. If your boiler breaks down or you need a new roof, it won't matter much that your future kids have help with tuition.

If I were you, I would first clear your overdraft. And, after your nursery bills go down, ensure that you stay out of it. Having a clear limit helps curb discretionary spends.

Once OD is cleared start saving as much as you can towards your 3 month emergency fund. If that's a £100, great - it'll soon add up. If it's more, that's brilliant. It means you can move onto the next step sooner. It is so important to have a buffer for you and your family ASAP.

Once you have your 3 month fund you can relax a bit. Split your savings. So perhaps 1/3 into holiday fund, 1/3 into future kids Uni/Cars, 1/3 into extending your 3 month emergency fund to a 6 month emergency fund.

Thanks for all the great advice here. My overdraft is smallish at (£150) so I'm determined to not go back into it after this pay day. The last few months nursery fees have been crushing but the next bill will be the last one that's nearly 1k. Thankfully no nursery bill through the summer and from September it should be more like £300.
This has been a real eye opener and I've realised I need to start properly budgeting instead of being afraid to check my balance.
Without spending money I don't have, does anyone recommend a good app for budgeting that might help me get on track?

Here in Ireland we always say that crèche fees are like having another mortgage especially if you have two children in one full time!

You already have lots of equity, you could downsize later on and that’s your DC sorted.

No you don’t. I would get that week. Go cheap and have some fun. I used to feel the same and would drive to France and camp - could do a fortnight for a £1000 using our own tent or get a gite. For me that was perfection because of the food and the sun! We lost an income and didn’t even know if we would keep the house but I still went away that summer - it was already booked and mostly paid for so seemed daft to waste it. There days the financial issues are behind us and even when it was tight I haven’t ever regretted a holiday! Oh and the finances still won’t pay for the kids uni but that is fine. We have a great house and plenty of room - what a luxury. Make comparisons in all directions and you will soon feel lucky.

So you’ll have £1000 extra each month in summer and £700 from September. That’s a good position to be in. Don’t waste that extra money, build up an emergency fund with it first, then work out what you want to do with it once you’ve got that. I’d suggest putting £100 into the family spending pot to make life more comfortable, saving £400 of it and then £200 into a holiday pot. Do that every month and your money will build up plus you’ll get a holiday.