How much to live on

blue.peter

Mickey666 said:

I'd suggest it's pretty important to split all expenditure into at least two categories - essential and non-essential.

I see your point, but it rather depends on the exact objective. Your method is clearly appropriate if there's an intention (or a willingness) to achieve economies in retirement, perhaps with the objective of retiring earlier. I'm thinking in terms of the income needed to maintain exactly the same pre-retirement standard of living post-retirement, including the non-essential stuff. That was what I did for myself. (Of course, there will still be minor differences because work-related expenditure falls away in retirement, but some other expenses might increase. These should be relatively simple adjustments to make for most people.)

blue.peter

Langtang said:

I fear that we do have, or will have, too much money but that is another story....

Easily rectified if you do - there are plenty of charities that'd be happy to take some of it!

Time4T_Accounts

My approach for many years has been to put money each month into ‘pots’ (spreadsheets, not physical!), covering things like insurance, car maintenance and repairs, white goods replacement, house maintenance, boiler replacement - and even down to a new mattress! (A good mattress ain’t cheap to replace, and these ageing bones very much appreciate a few extra discretionary quid spent every 10 years or so!). And, has been said, erring on the side of caution can result occasionally in an extra holiday.  I find this discipline very helpful in budgeting, and was key in the decision to pack in work.

blue.peter

Steve_PL_too said:

A good mattress ain’t cheap to replace, and these ageing bones very much appreciate a few extra discretionary quid spent every 10 years or so!.

Funny you should say that. My old mattress lasted me 30 years. When I came to replace it, I splashed out and bought a relatively expensive one. After a while, I realised that I hated it, and went back to the shop. I ended up buying a second one. It cost me under £200 (for king size). That was about 18 months ago. I've no regrets: for me, the cheaper one turned out to be better. I reckon that it'll see me out.

(Apologies for the digression.)

Dansmam

blue.peter said:

Steve_PL_too said:

A good mattress ain’t cheap to replace, and these ageing bones very much appreciate a few extra discretionary quid spent every 10 years or so!.

Funny you should say that. My old mattress lasted me 30 years. When I came to replace it, I splashed out and bought a relatively expensive one. After a while, I realised that I hated it, and went back to the shop. I ended up buying a second one. It cost me under £200 (for king size). That was about 18 months ago. I've no regrets: for me, the cheaper one turned out to be better. I reckon that it'll see me out.

(Apologies for the digression.)

Digression is the heart and soul of these boards. Well, I think so anyway 😉

[Deleted User]

I thought I was organised until I read some of the more recent posts. I now seem almost reckless! 

My budgeting is more simple but seems to work for me. 

Each month I put aside £300 to cover all my annual bills. The list includes car tax, car maintenance, car insurance, dentist , some annual subscriptions, routine house maintenance, voluntary NI contributions (when not earning enough from my casual contract). This tends to run at a healthy surplus. 

I have a back up current account with another bank. This is topped up £150 a month and is used as a back up should there be a technical hitch at my main bank as well as being used for Christmas spending, birthdays and clothes purchases. Over the year the balance of this account never falls below £600. 

I have a joint household account with another relative into which I pay £550 a month. This covers my share of the council tax, all food and household goods, homeserve insurance, gas, electricity and water, fuel for the cars as well as charitable donations. I pay in more as I have more income. This account also runs at a monthly surplus. I pay for my mobile phone, home phone and broadband services out of my own current account which is about £75 a month.

Each month another £200 goes to longer term savings as cash savings and to a S&S ISA. 

I then gives myself about £200 to £250 a month for personal spends. This covers things such as meals out and other miscellaneous things. 

At the moment any extra I earn from my casual  interact work goes straight into savings,

All this works for me without too much fuss. I don’t keep track of individual day to day things. I just know what I can spend in total. 

If anything unexpected comes up I have my emergency fund which is there for that very reason.

Travel and home improvements are what my savings are there for in retirement.

I do have a spreadsheet that’s allocates amounts to my annual bills so that I can be certain I am putting enough by for each of them every month.

MovingForwards

@[Deleted User] we all run our budgets differently.

I've got various pots:
- three accounts for communal repairs,
- emergency leaks / damage in my flat,
- upgrades / general maintenance in my flat:
- ERC / remortgage costs
- mortgage emergency fund

- food and bills emergency fund
- everything to do with my car and home insurance
- two accounts for early retirement cash

- float to keep a bit of money in

Each gets added to payday, aside from emergency leak pot as that's full. Plus I pay into my SIPP and make mortgage overpayments each month, sub-prime lender.

I did have a pot for gardening, but was just buying as and when so closed that one off.

Any underspending eg food shopping goes into savings each week, I also round my normal account and move everything 99p and under to savings. As I've been WAH for a year, the commute costs go into savings each week I don't go in.

I don't earn lots, but stretch and allocate it well.

scottish_lassy

Thank you everyone for the varied discussions.  As it turns out my employer has decided they will not save any money if they let me go so I'm not getting offered a package.  This period has definately changed my way of thinking as in the past, I was convinced I had to save, save, save for retirement BUT actually, all that is needed is enough to live on with a little bit extra for contigencies!

I have used a monthly spreadsheet for years detailing bills, savings, income etc so I have just reduced the savings amounts (surely saving must come to an end) and nearly doubled some of the household bills due to maybe being at home more eg gas, electric.

In the meantime, I may look at a phased retirement in a couple of years and get as much as possible done in the house which may make my life easier in the future.

blue.peter

Mickey666 said:

But you're right that it depends on the exact objectives and different people will have different needs, ideas and approaches.

And that's the issue in a nutshell: it's all individual.

Langtang

MovingForwards said:

@Langtang I pay my insurances in full annually and will continue to do so when retired, it's one less bill to pay each month.

I have a savings pot and each month I put £100 in, that £1200 per year covers car and home insurance, car repair bills, MOT and tax. The figure is based on how much it cost me last year. If I don't spend all of it this year I will continue to add £100pm next year and each one after that, at some point I will replace my car with another little runabout.

That was my thinking, although I'd not thought of a separate savings account, just paying it outright from our account. I'd have to work it out so that they weren't all due at the same time!

On the subject of accounts, have you found that you have opened extra bank accounts during retirement to cope with insurance/car tax and savings. A savings account and an insurance account, a holiday account if you will?

I am assuming that the likes of house insurance etc is cheaper after you retire, seeing as you're probably in the house a lot more than if you were working? Similar with car insurance, since there'd be no commuting miles clocked up?