What percentage of income is reasonable after bills etc?

maman

Gavin83 wrote: »

Think it depends on what you consider necessary and how much you earn. 20% of £200k a year is a lot more than minimum wage

Exactly. As OP is paying something off student loans then presumably they earn a reasonable salary.


It does seem a tight budget if children are being considered and then potentially down to one/reduced salary and/or childcare costs. Perhaps OK for now and then rethink when OP's salary has risen as anticipated.

FBaby

I don't think you can really compare because what people will put into the category of 'bills' and what will go into the left over, not even counting all the things that almost everyone forget, is very different for each person.

Ie. do you count cleaning products/toileteries/things like socks and underwear etc... into your bills or not? What about healthcare costs, eye sight, glasses/contacts, medicine? How about clothing? Costs of going to parties/weddings etc... And that's all before you take into account children related costs.

I think that the only way you can do a true budget is by going through 3 to 6 months of bank statements when nothing has changed during these months. I thought I was quite good at setting my budget until I did the exercise above and couldn't believe how many things I left out, mainly all the things that were a one off cost, yet still one that was essential.

GoldenShadow

Thanks for the responses everyone, really helpful. Certainly gives me something to strive for/benchmark to.

I certainly wouldn't be intending to have kids on the salaries we're on now. OH's earning potential is unlikely to change but I am lucky enough to be on a very good graduate scheme which funds a professional qualification. When qualified, salaries go upwards quite quickly. This is why we're buying a house that is a bit more than we'd like; commuting into London is still doable if I feel like its the path I need to take. And it gives us lots of options if anything dire does happen economy wise.

Some friends/relatives think we should stop paying into pensions but because it comes off before tax it wouldn't make as big a difference if we opted out anyway. I guess we all class different things as important, some of my friends have nothing left and would struggle to pay into their pensions, so we are lucky in that respect I suppose too.

Rambosmum

In addition to the above, I'm expecting a child. Partner and I are expecting our expenditure to go up £100 per month (split between us) initially, £200 once child is weaning/ no longer breast feeding and then £800 per month in child care fees once I go back to work.

That will increase my expenditure by £500 per month, to fit this in, I'll have to reduce my 'expenses', by at least £100 per month, and I won't be able to save anything.

pollypenny

GoldenShadow wrote: »

Thanks for the responses everyone, really helpful. Certainly gives me something to strive for/benchmark to.

I certainly wouldn't be intending to have kids on the salaries we're on now. OH's earning potential is unlikely to change but I am lucky enough to be on a very good graduate scheme which funds a professional qualification. When qualified, salaries go upwards quite quickly. This is why we're buying a house that is a bit more than we'd like; commuting into London is still doable if I feel like its the path I need to take. And it gives us lots of options if anything dire does happen economy wise.

Some friends/relatives think we should stop paying into pensions but because it comes off before tax it wouldn't make as big a difference if we opted out anyway. I guess we all class different things as important, some of my friends have nothing left and would struggle to pay into their pensions, so we are lucky in that respect I suppose too.

Do not stop paying into your pensions whatever you do!

On the other hand, we were very cautious when we moved for the kids to go a better school. We didn't go for our favourite four-bedroom new build, but a three-bedroom which needed some work.

We are so glad we did. Interest rates shot up under Thatcher and, at 15%, we might have lost everything. Have you allowed for rate rises, OP?

cats2012

GoldenShadow wrote: »

Some friends/relatives think we should stop paying into pensions but because it comes off before tax it wouldn't make as big a difference if we opted out anyway. I guess we all class different things as important, some of my friends have nothing left and would struggle to pay into their pensions, so we are lucky in that respect I suppose too.

That's terrible advice! Pensions is the one thing a lot of people don't do and should be doing!

I feel similar to you it sounds, we don't have loads "spare" but could definitely squeeze if needed.

HappyMJ

cats2012 wrote: »

That's terrible advice! Pensions is the one thing a lot of people don't do and should be doing!

I feel similar to you it sounds, we don't have loads "spare" but could definitely squeeze if needed.

It didn't sound like advice in the sense of DO NOT do it but think about not doing it. I also don't pay anything into a pension and I have my reasons. My pension is my house. I'll sell it have the tax free cash from the gains and get something smaller. One of my reasons to not have a pension is that I don't want to fight a pension provider to get my money. I also have debt to pay off, pension returns are far less than what I pay out in interest on my loans so is it better to save or pay off debt, I prefer to pay off debt and save later.

lulu_92

After my bills I have 52% left over, I save 27% of this so I'm left with 15% of my total net income to play with. This month I got a bonus so I get slightly more (and put some into savings)

OH saves what he can but his bills come to 81% of his net pay, but most of this (around 84%) is overpaying our mortgage so we still benefit.

FreddieFrugal

FBaby wrote: »

I think that the only way you can do a true budget is by going through 3 to 6 months of bank statements when nothing has changed during these months.

yes that's one of the best ways. See the 32% is after absolutely everything else has been paid.

My budget was completely wrong in places. I'd put on the spreadsheet that we paid £20 a month (tenner each) on our mobile phones.

On holiday a few weeks ago, we had no wifi, so I was tethering my ipad to my phone to use the mobile data off that to get online. This drained my credit much more quickly than normal. So I had to top up.

OH asked how much I was spending on this so I had a check at my top up confirmation texts to see how often I normally would have to top up.

To my surprise, it was only every 2 months or so. To my even greater surprise on checking OH's phone she tops up by £5 and that's been lasting her 6 months!

So I'd overestimated our mobile costs quite considerably!

LilElvis

HappyMJ wrote: »

It didn't sound like advice in the sense of DO NOT do it but think about not doing it. I also don't pay anything into a pension and I have my reasons. My pension is my house. I'll sell it have the tax free cash from the gains and get something smaller. One of my reasons to not have a pension is that I don't want to fight a pension provider to get my money. I also have debt to pay off, pension returns are far less than what I pay out in interest on my loans so is it better to save or pay off debt, I prefer to pay off debt and save later.

We've gone the other way as even our daughter has a pension scheme and she's only going to be 5 this week. Unless you live in a mansion how is the surplus cash after downsizing going to provide you with an adequate income in retirement?