How much is enough to have leftover?

[LemonsMakelimes]

My DH currently works full time and I work 4 days. I am fortunate enough to have the option to change my hours each year and still retain the option to go back up to my previous hours e.g. from January each year I could drop down to 3 or even 2 days and that arrangement would be in place for 12 months, and after that I could request the same again or to go back up to 4 days. I can make these requests every year and over the past few years I have done everything from 2.5 days up to full time.

We have young DC and I am feeling run ragged, with work, the house, everything for the kids etc. DH does pull his weight but he is working full time and he still does 2 drop offs and 2 pick ups on the days that I am in the office. We have no local family help and 1 (possibly 2) of our kids has SEN. I am considering asking work if I can do 3 days next year, as my youngest only has 2 years left before they start school so I'd like more time with them as well as being able to spend a bit more time at home in general. However I'm unsure how much we should have leftover each month to save after all bills, food etc are paid? I save throughout the year for Christmas, holidays, car insurance etc so when I say 'leftover' I literally mean the amount I can put in long term savings each month. I know the amounts people have will vary wildly but I'm interested to know what everyone would be comfortable with saving each month. For context, we currently don't have a lot in savings because we just moved house - around £4k. Our DC do have some savings in their names but obviously that is theirs and not ours! I would like to keep building up savings for the future but also want to be at home with DC as much as possible. Thank you

You need to work backwards.

What savings should you have now (3 months salary), how much do you want to have in 1 year, 5 years, 20 years (3 months salary, pension, uni fund, house deposits for the kids).

How will working 1 day less impact your pension (presumably it already has as you have been P/T for years)? You are currently paying debts (student loan, mortgage), paying day-to-day expenses and bills and saving for the future. You need to understand how much you need to earn to pay debts, bills and to fund your future needs (university, house deposits, pension).
Only you know the lifestyle you want now, the things you want to fund in the future and the age you want to retire (and how comfortable you expect to be). You need to also look at saving vehicles. Will you invest your savings in an ISA, in cash or shares, manage your own pension via a SIPP? You need to understand compound interest but also the effects of inflation. How much you can save is only half the story, the other is where you will invest it.
Staying home an extra day would be lovely if you can afford it, but don't blow your future on doing it. It sounds like you are a great parent either way.

If you can drop time to spend more time with them do it - they are young for such a short time and by the sounds of you role you can then increase your hours

I do not regret the time I took off when my son arrived - slightly different in that he came aged 4 but that time was precious and I'm glad I did it

In your shoes, I would be aiming for the equivalent of six months worth of essential expenses to be saved asap. I disagree that £4k savings is enough these days. The unemployment rate is the highest it’s been for almost a decade and AI is increasingly impacting in this, so I too would be nervous about having a huge mortgage. Look into overpaying and building up equity. The loss of pension contributions due to dropping a day would also worry me.

In answer to your question, I think £500 - £1K a month not including overpaying on your mortgage.

We're hoping to move house soon and will also have a massive mortgage and about 1k/month savings (after all spending, including holidays, leisure etc). That amount leftover feels comfortable to me as it's a good buffer in case interest rates go up etc, but if we weren't going to have such big outgoings I'd be comfortable with less of a buffer. In practice we'll probably use it for mortgage overpayments/house improvements.

Time vs money is always a difficult one. My DC are past nursery age now and I feel good about working FT and driving towards something, rather than working PT and staying in the smaller house as that feels more like just waiting for retirement. Of course it would be entirely different if DC were smaller.

The only thing I'd say for your situation is that your emergency fund seems quite small. I'd prioritise building that up Vs kids savings.

Minimum of 7200. That’s with no overtime.

I agree with working backwards. The two main long term saving needs in addition to an emergency fund are your pensions and parental costs for university if your salary means they don't qualify for full loans. Anything else is "nice to have" IMHO. I worked mine all out on a spreadsheet - I find it helped with my anxiety to know that if I was saving x amount, it was enough to meet our savings goals (whatever they were).

Looking at your current savings, I would want more in emergency savings, I wouldn't save in my children's own names (I saved for mine but in my own name) and I would want to look at pension details. That said you can't plan everything and not everyone gets to spend their pension or you may have other options if things don't go to plan (eg downsizing) so you have to prioritise the present as well as the future.

Agree with this.

We have reasonable pensions but yes our plan would probably be to downsize and/or relocate as we don’t want to still be paying this mortgage in 30 years (I think it’s actually a 35 year term 😫). Having said that we do have some money in trusts from parents who passed away that will come to us when other parents also pass away so that would also help to give us options although it wouldn’t clear the mortgage, it’s about half the total amount.

So I guess my priority is university which is 10 years away for my eldest - she will only get minimum loan - and being able to help kids with car/housing costs potentially. I don’t think we earn the sort of money to be able to give all three kids house deposits though.

Longer term I think my plan would be just to do one or maybe two years of 3 days a week and then go back up to 4 so hopefully pension wouldn’t suffer too much.

I'd put long term savingson the backburner for now and spend this couple of years with your DC and not "running ragged."

You need a £1k emergency fund and 3 months worth of household expenses i.e. the minimum you could manage on if you or your DH were out of work for a while.

And unless your DC want to go into professions that require a degree, I'd steer them away from uni.

You need at least 6 months full expenses covered worth of savings, so 4k does not sound like enough.

I'd aim to increase that ASAP. Mine are a lot younger with one in nursery full time. Once that ends we will split that expense up. Half to go into savings(mix of kids, personal, stocks and shares ISAs, SIPP), other half to go into overpaying mortgage. But our take-home is very high.

We save for their uni costs and we save a lot for future retirement - aiming for a 50k per year income each.

I agree. And the workforce will be looking very differently in ten years’ or more because of AI.

Yeah I think the working backwards approach sounds good. Where do you want to be in x amount of years etc and then work back from that.

@Statsquestion1 what a ridiculous amount of money to hoard all to yourselves! I’ve seen your posts and the amount of money you say you have is ridiculous! I hope you donate to charity! It’s quite ridiculous really!

@PunnyOliveTurtle are you having a laugh?

I think it’s a bit much to come on here and tell me that I’m hoarding money. It’s money I have earned…money I can do whatever I want with imo!but yes I donate to causes when I see fit!

You've obviously got a very responsible attitude to savings and finance which will stand you in good stead for the future. But for now, absolutely spend more time with your little ones - it is so fleeting and you don't want to have regrets later on. You'll be able to earn plenty more money to save when they're older, so I wouldn't stress about it at the moment.

I had to do a lot of juggling when my only child was small, due to being a single parent for a while and later on still working full time. I remember all those compromises and it's hard and while I had no choice in the matter, I do have regrets. Now we're extremely comfortable, good pensions, savings, mortgage free house and several legacies from family. (I wish I could have told my younger self that!!!). For this reason I'm helping my daughter financially to enable her to step back and spend those early years with her children. They've both been ill for the last couple of weeks, one after the other, and she said how thankful she is that she is able to be at home with them.

Drop your hours, you won't regret it.

I don’t think £4k is enough savings - 3 months is the suggested minimum if you have the option. In your situation I’d want to be able to pay for six months before I considered reducing my hours. Depends on your attitude to risk - I’d want to be able to pay my mortgage if one of us lost our jobs - financial distress does not create a fun atmosphere for kids.
And maybe it’s my age but pension savings don’t go far - the more you pay now the better off you’ll be. You need to make a fully considered decision.

So actually I had forgotten that our savings for our DC are split between accounts in their own names and one in ours, because I was worried about them turning 18 and ending up with loads of money that they’d then blow on a holiday or something. So they each have some in their own names and then I’ve got 5k in an account which I call theirs but is actually legally ours. So I suppose that plus my 4K is 9k which I could access in an emergency. So I think I will continue saving my £300 a month “for the children” but actually only about £120 is in their names and the rest is in my name so can also count as emergency fund.

My parents weren’t very well off but I’m fortunate to have two siblings who are very high earners and if the SHTF then both of them would lend us money if needed. I shouldn’t rely on it but if DH became very unwell or something then I’m confident they would help us out. We do also have pretty good insurances for DH and we both have excellent work sickness benefits (6 months full pay, 6 months at 50%).

However I would ideally like to have 3-6 months of essential expenses in emergency savings which for us would be £10-20k. I might see if I can drop hours part way through the year, perhaps from July, and see if I can do 6 months of squirrelling away as much as possible before that. After I drop the hours I won’t be able to save as much but if it’s just for 1-2 years then that may be ok.

I really wouldn't rely on siblings for when the shit hits the fan - families get very fragile as parents age,

OP
If you want a comfortable life without financial worries in the future, it’s smart to save as much as possible and increase your income within your means and needs. It can be fun to use AI platforms to explore worst-case scenarios so you’ll know what steps to take. But always remember to make time to enjoy life and share great experiences with loved ones.

@Statsquestion1 You aren't doing anything wrong. What you're doing isn't hoarding wealth like a few jealous people claim; you're securing money for your future, and that is extremely important.

@Volumeindrive What you said about not counting on siblings for help and families becoming fragile as parents age, in my experience and knowledge, tends to happen in families lacking partnership, respect, trust, strong bonds, and clear communication.

@ThisTicklishFatball
well I'd say there must be a lot of families lacking partnership, respect, trust, strong bonds, and clear communication because the majority of people I know have very fractured relationships with their siblings when faced with the care of elderly parents - which is often exceptionally stressful. It's truly heartbreaking.