Disposable income

[Childwillnotlisten]

We are planning to buy a house in the next couple years and I’ve been working out finances and just trying to get a vision of what life may look like for us.

Can I ask, if both you and your partner work, what is your disposable income once everything is paid? Childcare, mortgage, other bills, petrol, cars and food shop etc.

What a pointless question. Some people will have diddly squat while others have 10k per month. How does this help you buy a house?

You can only work this out on your own unique salaries, lifestyles, outgoings etc.

Mine and my partners has fluctuated a lot over the years.
Salary has remained the same, but other things in life affect the disposable income.

We still managed to save, but that involved more cutbacks and effort at times.

Agree it’s pointless. Some will have a few quid and some will have 1000’s. You need to work out what you need and what you’re willing to sacrifice (if you need to)

I'm not sure how helpful this will be-we have a lot more disposable income now we have no mortgage or childcare to pay any more, than we did when our kids were little.

How much disposable income are YOU calculating you'll have left after buying a house, and can you afford to live on that?

I agree that it's pointless to ask for specific quantities. However, maybe having a percentage average can help you plan. There are different sources to consult that can break a salary in different percentages and give you recommendations about maximmum percentage to dedicate to your mortgage, for instance (I think they recommend it does not go over 30% of your income).
There's an american man (Dave Ramsey) that has percentage recommendations for different spending categories. You can start there, but you will need to eventually develop your own categories and methods based in your own reality.
I hope I've explained myself, I'm sleep deprived so it may well be the case that I've made no sense!

Work out what kind of lifestyle you want to have.

Do you want nights out in the pub? A cinema trip? New books, or video games? A holiday? How often do you want a takeaway? Concerts for bands you like? Weekend events? Days out? Equipment for hobbies and other related costs?

When you have a solid idea of the sorts of things you want/need for a happy life, work out how often you want to do those things, and price it all up. This will give you a figure to work with.

If that disposable income figure leaves you with enough to buy a house, then awesome! If not, figure out what you are willing to drop in order to get the house.

Using other people's figures won't help much as everyone has such different ideas about the minimum needed for a happy life, and such different hobbies and interests.

Where did I say it would help me buy a house?

I am curious and that’s why I asked!

Agree with the others, you need to list all the things you want to carry on doing and work out what you will be able to afford. Don’t forget holidays, nights out, presents, etc.

People have such varied lives, a monetary comparison would be a bit pointless.

We have £2k per month disposable money once all bills, mortgage, childcare, food etc. is paid. We’ve owned a house for a while though, when we first bought we had a lot less disposable income even though we didn’t have children at that point.

So many posts on this theme lately. There's another one at the moment saying we have £7596 every month joint income. Is that good?

Who the fuck knows? Do you live in a mansion or a squat? Do you have ten kids at private school or none?

It's all so subjective. I just don't know how any of the information provided in these threads actually help the OP.

So over to you OP, how will this information help you as no-one but you live in the circumstances that you live in?

It more useful to post what disposable income your figures are telling you that you'll have leftover. People will be able to tell you if they could/couldn't live on a given amount.

Do you get takeaways? Get your nails done, like new clothes, holidays? Have expensive cars (or ones that need maintenance!), do you spend a lot on presents, good food, drinks out etc Will you need a lot of new furniture/white goods/decoration done on a new house?

If you've accounted for everything and still have £2000 left a month on disposable income-that's 500 a week ish between two.

Work out what kind of lifestyle you want to have.
Do you want nights out in the pub? A cinema trip? New books, or video games? A holiday? How often do you want a takeaway? Concerts for bands you like? Weekend events? Days out? Equipment for hobbies and other related costs?
When you have a solid idea of the sorts of things you want/need for a happy life, work out how often you want to do those things, and price it all up. This will give you a figure to work with.
If that disposable income figure leaves you with enough to buy a house, then awesome! If not, figure out what you are willing to drop in order to get the house.

Backwards advice! Needs first, then wants.

Work out how much you need for a house first - that’s a need. Whether it’s rent, mortgage, saving for a deposit. And essential bills (energy, water, broadband, council tax).

Groceries and getting to work are needs - transport costs. MOT, parking, petrol, insurance, car tax, bus/train ticket etc. put enough aside for car maintenance each year.

House maintenance is a need - insurance, getting the gutters cleaned etc.

Childcare is a need to enable you to work.

Then you’ll have your disposable income - work out how much you’ve got left for the rest like savings, pension (first), then activities, eating out, clubs for the children, takeaways, holidays, birthday and Christmas gifts etc. This pot for me has fluctuated from maybe £200 a month to £1000 a month at different points through my adult life. The major bits impacting the fluctuation have been salary, nursery costs, car ownership and mortgage/rent costs particularly.

For a particularly unpleasant year, about -£500. We thought things were going to be tight but had the Truss experience whilst pregnant and bills went up massively. If you have decent savings you can hunker down as needed.

Essential outgoings not including food but including bills, household insurances, car tax & insurance, mobile & broadband are just under a third of my net salary. But I bought property years ago so my mortgage is a about 1/6th of my net and I'm over paying it.

Neither numbers or percentages are helpful - it will feel a lot different living off the remaining 50% of a £6k pm income than 75% of a £2k one.

Plus everyone defines disposable income and needs and wants differently so you end up with no more than a random list of numbers.

Also your disposable income could vary massively over time when childcare costs reduce for example.

If you're currently renting, you have an idea of bills etc and how you feel living on what's left, and how that feels to you, so that's the best to work from.

Adjust your current budget to take into account the effect of no longer needing to save for a deposit, difference between rent and a mortgage, differences in bills and other costs eg if your travel is higher/lower, addition of things like boiler servicing, buildings insurance and home maintenance that you don't pay if you rent. Use those numbers to determine what size mortgage you can afford.

Are you following what people are saying to you here?

i take the point on this being a fairly useless thread, but what were had last year has dropped massively but costs going up. If you are left very tight at the end of the month question if your income will step up in the next few years. As a couple we earn triple what we do when we got this mortgage a decade ago on my salary, then it was daunting, now I’m grateful it’s ‘so’ small.

Agreed with the others, my circumstances won't remotely be useful to you. I have no transport or childcare costs. My mortgage is low as I've been a homeowner for 22yrs.

What do you spend your disposable income on? I have £250/month set aside for ‘luxuries’, ie: not needs.
In order to do that, I did a one year no spend, saved £250/month and when the regular saver matured, I started going out again, buying clothes, going on holiday.

Okay, fair enough. I think I was looking to get an average in my demographic but won’t get that here.

For us, it looking to be anywhere between 700-1k. I didn’t include savings in our outgoings, so less with this.

Obviously needs come first, but it's advice for figuring out if the remaining disposable income is enough, not for a total budget.

This is about how much is left once all the other things are accounted for like bills, childcare etc.

We have a shit load of disposable income because we earn good salaries, have no kids, have a small mortgage, no other debts, and are in our 40s.

My advice to YOU would be to keep your mortgage to less than 30% of your post-tax income, if you possibly can. Even more so, and I know increasingly impossible for people these days, try to make sure you could pay your mortgage and outgoings on only one of your salaries, if you ever had to.

Get yourself a broker, they can probably explain how banks stress test your income to check your good for the mortgage. 1k doesn’t sound enough n disposable to me, but maybe you are buying a very affordable property (or have a giant deposit kicking about).

I think that’s ok when you buy your first house, but you should save a good proportion of that.

I have looked in to that so I’m familiar with the requirements and what not.

Just curious why you don’t think 700-1k would be enough once all outgoings were paid inc mortgage?