New Family - New budget / new savings approach?

jimmiep

Not sure if this is the best section of the forum to start this sort of rambling discussion, but thought I'd give it a go.

We are a new family with a one-year old baby, and it's time to get serious about our finances (the time to get serious was probably a few years ago...but here we are...)! Having bumbled through until now not really paying much attention to our finances so long as bills got paid and there was some money saved somewhere, it feels like we should be being more savvy now.

The current situation:

• No loans
• No credit cards
• Savings (ISAs): approx 15k
• Mortgage left to pay: 138k (house bought for 203k - Zoopla now estimates worth 240k)

Monthly combined take home income (me: full time, partner: part-time): £3000

Monthly Outgoings:

Mortgage repayment: £750 (fixed term approx 3% until Feb 2019)
Overpay on mortgage per month: £100
Other bills (energy, council tax, TV, insurance etc): £400
Estimate to keep our 2 cars on the road (exc. petrol): £100

Saving into ISAs: £300

total fixed bills (inc savings) a month: £1600

Leaving us about £1400 a month for everything else that isn't a fixed monthly cost: food etc for three, nappies etc, petrol, clothes, family days out, home repairs, etc etc.

What I think I'm asking is for advice around:

• is there something I could be doing with the relatively meagre savings that would make that money work harder for us?
• Should we consider doing something about our mortgage now that our house has apparently risen in value (remortgage, revalue?)?
• Should we consider seeing a financial adviser to answer these questions, or are we talking about small amounts of money that won't make much difference whatever we do.

saver861

jimmiep wrote: »

Monthly Outgoings:

Mortgage repayment: £750 (fixed term approx 3% until Feb 2019)
Overpay on mortgage per month: £100
Other bills (energy, council tax, TV, insurance etc): £400
Estimate to keep our 2 cars on the road (exc. petrol): £100

Saving into ISAs: £300

total fixed bills (inc savings) a month: £1600

Leaving us about £1400 a month for everything else that is a fixed monthly cost: food for three, nappies, petrol, clothes, family days out, home repairs, etc etc.

What I think I'm asking is for advice around:

• is there something I could be doing with my relatively meagre savings that would make that money work harder for us?
• Should we consider doing something about our mortgage now that our house has apparently risen in value?
• Should we consider seeing a financial adviser to answer these questions, or are we talking about small amounts of money that won't make much difference whatever we do.

The first thing that sticks out is you have £1,400 per month after paying most of the major costs. That sounds like an awful lot of money for food, petrol, days out etc. I'd be checking that out for sure. I'm guessing you could have a good deal of that £1,400 left over if you look into it deep enough.

The next question would be what are your pension arrangements.

xylophone

Do you and your wife have a pension?

Are you saving into a JISA for your child?

https://www.gov.uk/junior-individual-savings-accounts/overview

Do you have the best paying bills current account for your needs?

http://www.santander.co.uk/uk/current-accounts/123-current-account

Rather than keeping the savings in the cash ISA, had you considered a sole and joint account each with TSB ( can be internally funded), a sole each and a joint Flexdirect account ( fund by roundabout back and forth from an external account, move bulk of funds elsewhere after a year), a Tesco current account to which you can move the monthly interest?

Consider a stocks and shares ISA for each of you into which you save monthly?

http://monevator.com/category/investing/passive-investing-investing/

http://monevator.com/compare-uk-cheapest-online-brokers/

Consider remortgage if you can get a lower rate in future?

colsten

You do need a readily accessible cash emergency fund of about 6-12 months living expenses but whether keeping it in cash ISAs is highly questionable as you can earn so much more interest elsewhere. https://forums.moneysavingexpert.com/discussion/5374614

Over and beyond the emergency fund, you need to know what you are saving for - holidays, cars, larger house, child's education, early retirement, early mortgage repayment etc etc - and then split the money accordingly. Anything you don't need in the next 5-10 years should go into investments (e.g. S&S ISA, JISA, Sipp or other pension)

jimmiep

saver861 wrote: »

The first thing that sticks out is you have £1,400 per month after paying most of the major costs. That sounds like an awful lot of money for food, petrol, days out etc. I'd be checking that out for sure. I'm guessing you could have a good deal of that £1,400 left over if you look into it deep enough.

The next question would be what are your pension arrangements.

It does seem high at £1400, but we manage to spend it. probably £200 on petrol, £50 on pet care (elderly cat...), at least £500 a month on supermarket shops, food and nappies, etc. We've been doing up our house slowly so over the last couple of years there's a been at least one expense each month, new carpet, garden work, plastering...

I'm sure we could budget our shopping better, tighten our belts and perhaps pause some of the DIY for a while and perhaps save £300 more each month.

Pension: I have a university pension that I contribute to through salary, partner has NHS pension.

jimmiep

We have an ISA for our baby, with small regular payments going in from us and grandparents.
What are we saving for? For children's future so we can help with university if she (they..) want to go.
And potentially a slightly larger house in 3-4 years time - so is it better to save more to add to our equity for a larger deposit on a bigger house, or pay off our existing mortgage quicker? Would re-mortgaging help?

atush

I would do a spending diary, as you have a great big black whole of like 700 a month.

Second, try and save on your outgoing costs and get the lower ie utilities, tv, phones, insurance etc.

I would save in S&S isas for the longer term things like children etc, and you def need a pension and have not mentioned this. This is more important than a larger house or paying off your mtg at this point.

saver861

jimmiep wrote: »

It does seem high at £1400, but we manage to spend it. probably £200 on petrol, £50 on pet care (elderly cat...), at least £500 a month on supermarket shops, food and nappies, etc. We've been doing up our house slowly so over the last couple of years there's a been at least one expense each month, new carpet, garden work, plastering...

If you are doing diy each month then yes, it won't take long to go through £1,400 so that would explain that.

As a starting point I would be inclined to suggest pulling down the budget planner spreadsheet and getting all your incomings and outgoings on it.

http://www.moneysavingexpert.com/banking/Budget-planning

You will be surprised when you get down to the detail of what you might find.

A less obvious avenue but one where we saved considerable sums is playing the 0% credit cards. In the late 90's for about ten years, we, i.e. Mrs and I, had several credit cards with up to £100k on them at times. That money was put into our flexible mortgage account which meant we did not pay any interest on that amount for about ten years. We got our mortgage paid off way faster than we could otherwise have done, and all at no risk.

The 0% cards are making a comeback now and while you might not be able to get the same amount's as in the 90's, nonetheless, if you and your wife maximise the % availability its money for free. You do have to be on the ball though and have your dates down to precision etc. otherwise lapsing even for just one month would cost you.

However, I should note, playing the credit cards is just an additional option to all of the other things you need to do to take best advantage of your current position for future security.

Goldiegirl

A spending diary is a very good idea, when you record absolutely all spending, including that odd cup of coffee or magazine.


When you really know where the money is going, you can look at the areas where you can cut down.


It'd also be worth looking at all your utilities to see if you are on the best deals.


Your supermarket shopping looks ripe for review. Maybe you could consider more cooking from scratch, and meal planning so that you only buy what you need. There's lots of ideas about this on the old style area of the forum. There are lots of frugal people in on the old style board, and sometimes, to a newcomer it can be a bit extreme. But using the principles that they discuss, you could easily shave off a couple of hundred quid a month of your supermarket shopping