How much disposable income is comfortable?

browneyedbazzi

I'm currently looking at buying a new car and am trying to decide what I can comfortably afford. I've worked out that if I get the car I want after making the payments and all my usual regular spending (household bills, petrol, insurance, servicing, groceries, gym membership, additional pension contributions etc) I'll have around £7k per year left over.

That £7k would need to cover clothing, entertainment (usually a few concerts/shows a year and occasional meals out etc), gifts for family birthdays/christmas, my share of household repairs (we've just had all the major jobs done so fingers crossed there won't be any big outgoings in the near future) and holidays (usually one quite cheap uk break and a couple of weeks self-guided travel abroad per year).

I don't have any kids and my partner has an income as well so it's really 'my' spending money. (I haven't included my partner's income/spending because the car is for me and I will be paying for it).

What do you think? Would you find that level of 'disposable' income comfortable? I think it should be ok but am interested in what others think because it's a fairly big decision and I keep dithering!

valk_scot

Do you regularly put away money into savings? If not I think you should be taking that off the £7k, you should be looking at having a savings buffer of 3-6 months of wages.


Otherwise I think most folk would be quite happy with £7k disposable income after all regular expenses were taken off, especially as it's pretty well all for your use. I wish I had that much!

purpleshoes_2

I dont have anywhere near that level of disposable income after bills and I manage clothing, meals, gifts and a couple of cheap holidays a year. Im sure some people couldn't and wouldn't manage on the amount of leftover spends I have, but theres always ways to cut costs on entertainment if you need to.

lulu_92

I allow myself £150 per month after saving (so add £550 onto that. Most of the bills go out of OH's account as he bought the house before he met me) so £700 in all, £8.4k per year left over.

That money has to pay for my car insurance, tax, services, Christmas, birthdays, holidays and, as £550 of it is savings, my next house.

indesisiv

I think that if i had that much money left to spend on just entertaining myself I would be very comfortable. Its nearly £600 a month!

browneyedbazzi

Thank you for the replies - I do have savings, a good pension and make regular AVC contributions to top it up so I'm not hugely worried about that side of future planning...I just don't want to feel stretched on a day to day basis.

I feel reassured!

FBaby

The issue is more about whether your situation (and that of your partner) is likely to change during the term of the repayments.

mgdavid

so what happens if you/your partner get pregnant next month?

browneyedbazzi

mgdavid wrote: »

so what happens if you/your partner get pregnant next month?

If he gets pregnant I'd have a heck of a shock!

If I did, I (thankfully) have the benefit of excellent maternity benefits from my employer coupled with savings and my partner's income to see me through.

Also, if I was pregnant or had a baby I suspect my outgoings would change dramatically - including a number of the costs included in my 'regular outgoings' such as commuting costs and work lunches as well as things like concert tickets, holidays and nights out. People manage with babies and I think I'd be in a pretty good position to manage...I'd also be much happier to have a child in the new, safer, more reliable car than my current tin can!

InsideInsurance

Interesting to see the USA use a different definition of disposable income to us

browneyedbazzi wrote: »

That £7k would need to cover clothing, entertainment (usually a few concerts/shows a year and occasional meals out etc), gifts for family birthdays/christmas, my share of household repairs (we've just had all the major jobs done so fingers crossed there won't be any big outgoings in the near future) and holidays (usually one quite cheap uk break and a couple of weeks self-guided travel abroad per year).

To be honest, given Christmas happens every year etc I would look to remove more of these thing from your monies as they are fairly predictable and leave your spare income as more truly discretionary.

Whilst I understand that you say you arent factoring in your partners income because the cars just for you unless you really do just divide everything 50/50 then it does matter as if you have £7k spare to also include emergencies etc then if they've £1k spare to contribute or £25,000 spare makes a big difference.

Similarly what savings do you have? Are you going to be stuffed if you lose your job tomorrow or do you have savings to last you 6 months whilst you find more work?

Are you looking to buy the car outright or finance it? Do you want to end up owning the car?

FBaby

mmm, I think you are undermining the effect that having a child has on finances. Look beyond 18 months and maternity payment is over. You either go back full time and then have a massive childcare bill to add to your current disposable income. You can add £500 at least. Or you decide to go part-time and deduct this, or of course, stay home and your income is seriously compromised.

That doesn't mean that you can get a new car, but if you are seriously thinking of getting pregnant, then I would reconsider your finances for the next five years rather than the next 1 year, unless you intend to repay the car in full in 18 months or so.