what do you live on?

JodyBPM

Can I just ask, those of you with a large amount of money "left over" (£1K or more) do you actually spend all that? Appreciate that those with a fairly small amount left over will most likely need to spend all of it on day to day living.

The purpose of me asking this was actually to work out how much was a comfortable amount for family spends per month for a family of 2 adults/2 children... We have a good couple of £K plus "left over" each month, but we currently set ourself a budget of £800 a month for family spends, and stick to that, putting the rest into various savings and mortgage overpayments. I know a lot of what we spend our money on is "non essential" (eg meals out/takeaways/days out/things we buy because we want them rather than need them etc), but I'm trying to work out what is reasonable ie the balance between not being frivilous, but also not being miserly. I think realistically, we could probably cut that £800 in half and survive, but there would be very little in the way of "fun" spends, and I think that it wouldn't be nice to live like that given that we don't *have* to. Still £400 more each month into savings would be £4800 per year - not an inconsiderable amount of additional savings.

Do some of you with larger supluses really not budget and simply spend everything that is left? Surely this would make it very hard to be motivated enough to save, and make it much harder to cope with a reduction in salary due to mat leave, redundancy etc?

saidan

of £2K spare each month we can spend between £250 - £1k

the rest is saved........

we may spend it on - takeaways, days out, broken washing machine or similar, childrens shoes, new computer games, bike repairs, vet bills etc......

we do not budget the £2k spare - if we need something we buy it, but i would look for the best buy. likewise if we don't need it but want it - then we would consider for a while before shelling out IYKWIM

if we know we have expenses coming up we cut down in other ways - eg kids need new shoes (£40 each) so we won't have a take-away that week. or we had an expensive day out last week so this week so go to the park and spend only on an ice-cream.

for us it all balances out - without making me feel 'what have i got to show for us working this hard?'

hth.

jackieb

It sounds like there's a lot of people who earn a lot or have very little outgoings here. I thought we had a pretty good income but we have nothing near £2000 spare after all the bills are paid. Even on £50k a year the take home pay before pension deductions is under £3k a month. But I have a son at college and a 16yo at school to keep - I think they make the money flow like water through our fingers! We rarely go out (occasionally to the cinema). Haven't had a holiday in 6 years. My only 2 pairs of shoes are over a year old (that's my own fault for not buying more, not that we're in desperate straits or anything - but just shows I don't spend much money on myself either.)

Our outgoings used to be £1200 a month but I have to put over an extra £400 by standing order into our bill paying account as we now have a bigger mortgage. Silly us took a 5yr fixed rate mortgage when we moved in 2008, not long before the interest rates plummeted and we pay about 6% interest on it! Knowing our luck, when the fixed mortgage ends next year, the interest rates will rise again lol

Lunar_Eclipse

JodyBPM wrote: »

Can I just ask, those of you with a large amount of money "left over" (£1K or more) do you actually spend all that?

No, and all income is accounted for in our household.

I think I probably budget slightly differently to you, because for example, I separate groceries (a necessity) from what you'd call fun spends (meals out fall into our family entertainment category and something like a coffee at Costa would fall into personal discretionary spending, aka pocket money.)

We currently spend in the region of £250-400/month on food for 2A & 2C; I'm working on getting it down to the lower end. We then budget £100/month for family entertainment (I could easily spend 5x this amount) and £100/month for personal pocket money. I don't track our spending (I did when we started) and as long as we don't overspend (regularly), then the categories are flexible.

It sounds to me like you've got the right balance. If you'd like to save more, why not reduce your budget to £600-650 (maybe £700 for the first month), instead of changing things radically by reducing it to £400.

Whilst savings are important, I think it's better to save consciously (ie specifically for mortgage overpayment, retirement, university, car replacement, emergency savings etc) than simply to save for savings sake. The goal is important in my opinion and changes your mindset/behaviour.

JodyBPM

saidan wrote: »

of £2K spare each month we can spend between £250 - £1k

the rest is saved........

we may spend it on - takeaways, days out, broken washing machine or similar, childrens shoes, new computer games, bike repairs, vet bills etc......

we do not budget the £2k spare - if we need something we buy it, but i would look for the best buy. likewise if we don't need it but want it - then we would consider for a while before shelling out IYKWIM

if we know we have expenses coming up we cut down in other ways - eg kids need new shoes (£40 each) so we won't have a take-away that week. or we had an expensive day out last week so this week so go to the park and spend only on an ice-cream.

for us it all balances out - without making me feel 'what have i got to show for us working this hard?'

hth.

Thank you, that helps. I think you probably have a not dissimilar amount left to us each month, but just have a different approach to budgetting it. I must say, that I think you are more disciplined than us - I know full well if we put £2k plus directly into our spends account, we would probably spend a lot more than the £800 we currently do!

I'm fairly sure we'd never get away with £250 a month spends either - food, petrol and afterschool activities adds up to more than that alone!

I suspect the £800 we budget ourselves is probably fairly fair all things considered. We'll have an additional £1k or so a month to play with from March as we will have paid off the mortgage due to the amount we've been sweeping across into overpayments, so I think I'll just DD that directly through to savings along with the current surplus. Means that bills and spends will amount to less than 33% of income, which seems a bit odd, but I don't think we *need* anymore spends on a day to day basis.

Lunar_Eclipse

jackieb wrote: »

It sounds like there's a lot of people who earn a lot or have very little outgoings here. I thought we had a pretty good income but we have nothing near £2000 spare after all the bills are paid. Even on £50k a year the take home pay before pension deductions is under £3k a month.

I thought the same, so have assumed income is substantially higher than c50k.

It will only be a small minority of people who would have thousands left over every month though. Firstly, because of the income level involved (probably top 1%) and secondly because of the human tendency to increase expenditure (big house, fancy car, expensive holidays, school fees) as income rises.

Lunar_Eclipse

JodyBPM wrote: »

Means that bills and spends will amount to less than 33% of income, which seems a bit odd, but I don't think we *need* anymore spends on a day to day basis.

That's quite incredible. I'm guessing you both work, probably full time, so have you considered working less hours, or (very) early retirement?

I forgot to mention petrol earlier. I spend about £75/week on that luxury!

JodyBPM

Lunar_Eclipse wrote: »

No, all income is accounted for in our household.

I think I probably budget slightly differently to you, because for example, I separate groceries (a necessity) from what you'd call fun spends (meals out fall into our family entertainment category and something like a coffee at Costa would fall into personal discretionary spending, aka pocket money.)

We currently spend in the region of £250-400/month on food for 2A & 2C; I'm working on getting it down to the lower end. We then budget £100/month for family entertainment (I could easily spend 5x this amount) and £100/month for personal pocket money. I don't track our spending (I did when we started) and as long as we don't overspend (regularly), then the categories are flexible.

It sounds to me like you've got the right balance. If you'd like to save more, why not reduce your budget to £600-650 (maybe £700 for the first month), instead of changing things radically by reducing it to £400.

Whilst savings are important, I think it's better to save consciously (ie specifically for mortgage overpayment, retirement, university, car replacement, emergency savings etc) than simply to save for savings sake. The goal is important in my opinion and changes your mindset/behaviour.

LOL, I'm thinking that we could reduce the family spends (although I'm not thinking we necessarily should), while DH thinks we should increase it!

Maybe the balance is to put more money in the instant access online savings (typically used for new washing machine/dishwasher/holidays etc) which we can access fairly freely if necessary, but keep the spends budget the same.

Got to be honest, I'm not sure what DH thinks we will spend more money on each month, we usually manage the £800 with a but of surplus anyway. But I guess he could access the online savings if we wanted to go a bit wilder with technology (new phone, laptop, telly etc).

I agree that saving for a goal is much better than generic savings, but now we're approaching being mortgage free, it is pretty much saving for savings sake. For security, I guess, and perhaps to buy a bigger house in the medium term.

JodyBPM

Lunar_Eclipse wrote: »

That's quite incredible. I'm guessing you both work, probably full time, so have you considered working less hours, or (very) early retirement?

I forgot to mention petrol earlier. I spend about £75/week on that luxury!

DH works full time, I work 2 days a week. Definitely not returning 5 days a week on my part is part of the plan, and was part of the original motivation to save hard and pay off the mortgage (although sometimes I feel guilty now that the children are at school all day!)

I'd love DH to work less hours, as he has a long commute into London on top of his working day, but it wouldn't really be possible in his current job. We do discuss him getting a local lower paid job, where he would have more leisure time, but the drop in wages would be collosal, and I don't think he really wants to when it comes down to it.

Our salaries are high nationally, but fairly average locally. We are just fortunate to have very low costs, with (now) no mortgage, no childcare costs (lovely parents/in laws who refuse to take a penny), and a fairly moderate lifestyle.

Lunar_Eclipse

JodyBPM wrote: »

I agree that saving for a goal is much better than generic savings, but now we're approaching being mortgage free, it is pretty much saving for savings sake. For security, I guess, and perhaps to buy a bigger house in the medium term.

How old are your children? That affects my life thoughts, plans, finances etc?

Also, forgot the most important thing earlier: savings, in whatever form they take,are an equal line item in our budget. They are not whatever is left over, because I tweak our spending to fit our savings goals. So in reality, savings are the most important element of our budget. When our savings were focused on mortgage over payments, we only had that takeaway (or whatever) if the £1000/month had gone to overpay the mortgage. We didn't overpay whatever we had leftover: huge difference in outcome.