Please check my budget (£2,823pm) or share yours so I can get some ideas where I'm going wrong.

Zandoni

The only probably with living too frugally is that it becomes hard to stop, you can end up in your old age living on bread and water with thousands in the bank.

My mum died with a house and just enough money to cover her funeral, I'd say she got it right.

enthusiasticsaver

Retired_Minky said:

enthusiasticsaver said:

Everyone's spending habits are different and yes some people live on £600 to £800 but I don't know how either. They probably no longer have a mortgage.  Our income as  a retired (early) couple is £2950 a month.   Our usual budget is as follows:
Essential bills (no mortgage) so just council tax, utilities  £500
Average supermarket spends                                            £300
Entertainment (sky, annual subs for clubs, leisure club)    £100
Eating out, days out etc                                                      £200
Diesel for two cars (less during lockdown)                          £100
Personal spending money (£200 each) covers clothes       £400
hair, hobbies, etc etc 
Savings for gifts, car maintenance, insurances,                    £250
Savings for holidays, new cars, house projects                  £1100   

Considering you have a fairly high mortgage and four adults I don't think your budget is too over the top but probably if you needed to cut it I would look at all the odd bits and pieces like lottery, britbox, books, clothes etc etc and the groceries which could definitely come down from £800.    
We probably could live on £1000 a month but would sacrifice on the holidays, lose one of the cars and do without the leisure club sub and eat out less and cut our personal spends.  We have no need to do this though. 

Thanks for sharing. Is that £1,100 per month saved for holidays, cars, and house projects? Quite impressive.

Yes, it is the spare money we have after accounting for our lifestyle so it is divided up into replacement cars savings(we have one each) , holiday savings which we are or were using quite a lot before this year and house projects. We put in a new kitchen and new bathrooms when we retired as we decided not to move and the rest is there for garden work (which is this years project) and replacement windows/doors, new  boiler etc whenever it is needed.  So essentially around £13k a year which we can top up from investments if needed.  We don't always spend it but it is nice to know it is there if we do.  

penners324

I'd question the life insurance elements and share dealing elements. Are they necessary, are there cheaper alternatives?
And look at those energy tariffs you're on. Switch to a different supplier etc...

Retired_Minky

Eco_Miser said:

Retired_Minky said:

I've noticed a few posts on MSE where people spend £600 to £800 per month in outgoings.
I'm amazed by this.

So am I. I spend less than £400 a month.
BUT

• No spouse, or other dependents
  
• no mortgage
• no rent
  
• Band A council Tax
• no car - travel for free on bus with pensioner's bus pass
• no investment platform fee - I paid Iweb £25 to open the account years ago, and £5 to buy or sell - but that's infrequent.
• basic cable/landline/broadband deal (mainly for the broadband, but I used to get £8 off for taking TV as well)
• frequent supermarket visits - just when they're reducing the fresh food
• no heating, except when it's too cold even when wearing a thick jumper
  

That's preCovid spending - no traveling now, and food is delivered, full price.
This post is to demonstrate that just looking at the headline figure can be highly misleading, you need to know details for valid comparisons.

No heating. That's pretty hardcore. 

Retired_Minky

getmore4less said:

What rate is that mortgage?

offsets are not the no brainer they used to be, unless it is one of the very low rate lifetime offsets.
It is often better to manage the situation with a regular mortgage and putting the "saving/cashflow buffer" elsewhere.
The calculations are quite easy.
Mortgage size, LTV, interest rate(and time if fixed), full term, regular payment, interest only or repayment.
 

The rate changes but is currently 2.35%. I have quite a bit in the offset account. Not sure I could achieve 2.35% return if I moved that to a saving account.

Retired_Minky

getmore4less said:

Retired_Minky said:

enthusiasticsaver said:

Everyone's spending habits are different and yes some people live on £600 to £800 but I don't know how either. They probably no longer have a mortgage.  Our income as  a retired (early) couple is £2950 a month.   Our usual budget is as follows:
Essential bills (no mortgage) so just council tax, utilities  £500
Average supermarket spends                                            £300
Entertainment (sky, annual subs for clubs, leisure club)    £100
Eating out, days out etc                                                      £200
Diesel for two cars (less during lockdown)                          £100
Personal spending money (£200 each) covers clothes       £400
hair, hobbies, etc etc 
Savings for gifts, car maintenance, insurances,                    £250
Savings for holidays, new cars, house projects                  £1100   

Considering you have a fairly high mortgage and four adults I don't think your budget is too over the top but probably if you needed to cut it I would look at all the odd bits and pieces like lottery, britbox, books, clothes etc etc and the groceries which could definitely come down from £800.    
We probably could live on £1000 a month but would sacrifice on the holidays, lose one of the cars and do without the leisure club sub and eat out less and cut our personal spends.  We have no need to do this though. 

Thanks for sharing. Is that £1,100 per month saved for holidays, cars, and house projects? Quite impressive.

When is a saving really not a saving.

That depends on your time scales and how well you budget.
Money put aside for a planed spend like a holiday is not savings it is just part of the budget.
I work on a 12 month look ahead anything that is going to get spent from income within that 12 months is not saving.
Money put aside for specific task that take longer to accumulate than those 12months are also not savings they will be, new car money, big holiday money, bigger house money.

Savings is the money left,  not allocated to a task(yet) in the budget and the money set aside to supplement reduced income be planned like retirement or unplanned like a job loss. 
  
Budgeting is all about the forward looking plan. many thisnk they budget but just track.
Look ahead 12 months and think about where you want your income to go, use the current spending as a guide as that is the reality you are trying to change

Work on annual totals for each category as that normalises the spending (eg. Something that is £2 a work day is £520 a year)

if you think about it you have in your initial list you have around £10k on the mortgage and £10k on the groceries that's close to 60% of everything you have coming out of your spends on 2 things.

Do total income for the next 12 months and allocate it out as annual numbers and have the list in priority order
All the things you have to pay come first and the second 1/2 is all the things that are discretionary.

Some items will have both must and discretionary elements, clothes is  one example, you can work out what essentials will need buying in the year in the first part of the list and in the second put a discretionary amount that is competing against all the other discretionary demands for money.

Thing is with changes they need to be realistic if you want to get buy in from everyone and hit a trarget or you can tend to give up if you are always overspending because the amount in the budget is just not realistic, take the groceries.

Groceries

800

400

That is a massive change you have to cut out 1/2 your groceries or get everything 1/2 price or a combination.
Even if you get everything 25% cheaper(£600pm) you would still need to cut back 1/3 of what you buy now. 

You need a plan, look a breakdown of where that £800 goes now and targeting where you can reduce costs  and cutback with everyones agreement, it is going to need a number of coordinated changes and you need to track them,  like try a shop at Aldi and see what that saved, reduce waste what can that save, £5 wine not £10(don't like the £5 wine 1/2 the numbers of bottles) etc.

Another thing you must not do is take off things that have to happen unless you have a plan for not needing that thing.

this caught my eye

Car finance

59

59

New Car deposit saving

28

0

You only pay a bit and borrow the rest, why not put into the plan(budget) enough that you can purchase outright next time or have a smaller debt next time round to get out of the debt cycle.
By reducing the deposit to £0 you are just increasing your potential debt requirement next time round unless you have a plan to not replace or get cheaper cars.
You took £28 out of the plan what is that reduction getting allocated to?
It is ok to go into the "spare" pot at the bottom of the list.

Every penny of income needs allocating to a task, the catch all at the bottom is "spare" as that tells you what there is to juggle in the discretionary spending and longer term plans like retirement funds
It can help to work backwards for retirement eg. if I want to retire at 50 how much do I need to be saving(not spending now).

You may find the SOA format helpful to get the bigger picture used a lot by those that have runout of money but the same principles apply to everyone to get best use of the money.(it also covers a lot of the things that help people help you, like size of household no of cars and assets
https://www.lemonfool.co.uk/financecalculators/soa.php

 

Thanks for the advice. Really appreciated.
In terms of the car my thoughts were I would just keep the current one longer rather than replace it if my income dropped. Therefore I could move my budget for a new car deposit to the general savings account.
You're correct that the drop in groceries is big. I think it's sensible to drop slowly but my income may drop quickly due to Covid. I want to try to adjust to a "potential new world" as soon as possible. I've cut groceries to £500 for this month which is still a big drop and to £400 for next month.

Retired_Minky

getmore4less said:

Retired_Minky said:

maxximus75 said:

You also mention your SO in several statements?  It doesn't seem that they are too flexible with change?  Maybe that's something to work on?

Yes. It's a partnership so I have to get them on board. They'll have their red lines that they're not willing to cross. Likewise I'll have mine. We've both made some compromises hence budget v2. I think we work together well. We don't argue over money. Just negotiate and make it clear what can and can't be changed.

Sometimes the way to manage that is to have 3 budgets(maybe 5 with 4 of you).
That also need the income splitting into 3/5.

You have on the shared list everything that is part of the family budget where you make shared priorities on where the money allocated to that pot goes, anything that is over the red line gets taken off the list as that goes in one of the personal budgets.
This list also included the shared longer term goals like bigger house.

Once this joint list is planned if the big No.(income allocated)at the top  is not enough then the negotiation on how to make it bigger starts.
Then all the over red line stuff get lumped together for each person to make thier own priorities with their allocation.

Just a though  what is the interest rate on that car finance and any other debts where you pay interest?
How does that compare to the mortgage rate?

Thanks for the advice. The car is on 0% finance. Mortgage is 2.35% which might be a little high but it's an offset mortgage and I hold most of my easy access cash buffer in there.

Retired_Minky

Zandoni said:

The only probably with living too frugally is that it becomes hard to stop, you can end up in your old age living on bread and water with thousands in the bank.

My mum died with a house and just enough money to cover her funeral, I'd say she got it right.

I'm trying to be prudent in case my income drops due to Covid. If it doesn't I'll increase the budgets. Maybe not to what they were before but I'd look to increase anything I felt made sense.
I'm still toying with creating a v3 of the budget and cutting expenditure to £2,000 a month i.e. £24,000 per annum.

Retired_Minky

penners324 said:

I'd question the life insurance elements and share dealing elements. Are they necessary, are there cheaper alternatives?
And look at those energy tariffs you're on. Switch to a different supplier etc...

As my dependants aren't working they wouldn't be able to get a mortgage if I died. The life insurance would enable them to stay in the current house or split and buy something smaller each. Without this their only option would be to go rented and they may struggle to get on the property ladder. It is an expense but I think it's worth the peace of mind it gives me.

Eco_Miser

Retired_Minky said:

Eco_Miser said:

Retired_Minky said:

I've noticed a few posts on MSE where people spend £600 to £800 per month in outgoings.
I'm amazed by this.

So am I. I spend less than £400 a month.
BUT

• No spouse, or other dependents
  
• no mortgage
• no rent
  
• Band A council Tax
• no car - travel for free on bus with pensioner's bus pass
• no investment platform fee - I paid Iweb £25 to open the account years ago, and £5 to buy or sell - but that's infrequent.
• basic cable/landline/broadband deal (mainly for the broadband, but I used to get £8 off for taking TV as well)
• frequent supermarket visits - just when they're reducing the fresh food
• no heating, except when it's too cold even when wearing a thick jumper
  

That's preCovid spending - no traveling now, and food is delivered, full price.
This post is to demonstrate that just looking at the headline figure can be highly misleading, you need to know details for valid comparisons.

No heating. That's pretty hardcore. 

No heating, except when it's too cold.  Most of the year it's not too cold, but when it is, the central heating goes on, and I don't mean huddling round a candle.