Am I spending too much, or just about right?

theoretica

Also, are there future plans to become a 2 earner household?  Doing so, without increasing spending, could help your pension concerns.

kidmugsy

In your thirties, with one income and two nippers, try not to overdo pension contributions - you probably have more urgent needs. I'd aim to contribute enough to (a) get max employer contribution, and (b) avoid higher rate income tax.  With (b) achieved I'd aim to transfer part of my wife's Personal Allowance to me.  Thereafter I'd put spare cash into emergency fund + next house fund.  Be that as it may I'd think of my outgoings in three buckets.

(i)  Mortgage interest + Council Tax + Home Insurance + Boiler Cover + Grocery + Household Goods + Gas + Electricity + Water + Internet + Mobile and SIM plans + Car Insurance + MOT + Road Tax + Petrol +  Life Insurance  
That's here-and-now essential expenditure.

(ii) Capital repayments on mortgage + Savings + Investments + SIPP
That's for-our-futures expenditure.

(iii)  TV subscriptions + Hobbies + Tourism + Holiday + Eating Out
That's use of disposable income for pleasure.  And quite right too.

james_williamson_6544

Very good and valid points by everyone.
To get a bigger (and final) house, a quick back of envelope calculation says that we will have to pay an extra £315/month for extra 18 years. Current mortgage term remaining is 7 years and I have assumed new mortgage term as 25 years. I have assumed fixed rate interest rate will go from current 1.49% to 1.84%

james_williamson_6544

kidmugsy said:

I'd aim to transfer part of my wife's Personal Allowance to me.  

Thanks again! To get personal allowance transferred, it would require my gross income to be under £50270 and wife to be earning between £1 - 12570/year - correct? She can't be a non-earner (current situation) - correct?

bostonerimus

The sets of expenditures discussed here seem to have arbitrary members. The only thing that is really relevant hasn't been mentioned. The critical number is how much of your gross pay are you putting into pensions and ISAs. I think it should be at least 10% and 20% would be better. After you do that spend the rest on whatever you like.

kidmugsy

james_williamson_6544  ...To get personal allowance transferred, it would require my gross income to be under £50270 and wife to be earning between £1 - 12570/year - correct? She can't be a non-earner (current situation) - correct?

I'm no expert but as I read HMRC on the subject her income (not "earnings") must be less than £12570/year.  Because 0 is less than 12570 I don't think she needs any income.  Do phone them to check.  And note:-

"Backdating your claim

You can backdate your claim to include any tax year since 5 April 2017 that you were eligible for Marriage Allowance.

Your partner’s tax bill will be reduced depending on the Personal Allowance rate for the years you’re backdating."

Yippee!