Balancing future Childcare and other expenses on single-income

Shoxt3r

Hi all,

As I'm sure many people are finding, it's tough with the cost of living rising all the time vs their pay not going up.

We work on our accounts on a monthly basis using Microsoft Money to keep an eye on expenses, ensure that payments are being made correctly and to monitor cashflow. It's a very time-consuming task as we type in all of our amounts from each account manually (if there was a free alternative which would automate this that would be good?!).

The recent announcement of the energy price increase has prompted me to look into our finances in more depth and work out what our "essential" and regular payments are. We decided to put together a spreadsheet of our standard monthly payments, with estimates for those that don't have a strict Direct Debit amount - for example weekly household expenses aside from the food shopping, pet supplies and days out. We've also done the same for our annual expenses based on the payments we made last year.

What I'm finding tricky is keeping up to date with general cashflow when it comes to combining monthly and annual expenses versus my pay, particularly as some payments fluctuate such as general household expenses. After experimenting with Microsoft Money I've found how to run reports on categories which has helped to understand it a bit and was used to inform our regular payments which again we've now put into a spreadsheet.

Our situation is that we are a single-income family with a young child (2.5 years); my wife used to work but is now a full-time Mum and I work from home but will be starting to commute into London again at least once a week in the next few weeks. The COVID situation meant that like many others I began working from home full-time - before I was full-time and commuting on a daily basis into London at a cost of over £5,000 a year. We have a 2-bedroom house with a mortgage which we've had for 7 years - in 2020 we renegotiated our mortgage from a 5-year fixed to a 3-year fixed which brought down the re-payments by £120.00 a month (we have no current plans to move but this could change if we have another child).

After reviewing our "standard" expenses we have already highlighted areas where to save money such as budgeting days out and our food shopping (though we plan our meals as much as possible). In general it really doesn't feel like we splash out at all and it still feels like saving is a struggle. 

We do all of the usual things like cashback on online expenses where we can, spreading costs across the year and using credit card for rewards. At this point it would just be nice to work out a reserve. We own our car outright so there are no expensive finance deals and the credit cards (we have 2) are paid off in-full each month via a Direct Debit so no interest is ever paid on them.

As I said, our child is 2.5 years old so we're now thinking about looking into nurseries/pre-school using the free hours only at this time which will start from January. We've yet to weigh it up but my wife may return to work; she's conscious of leaving our child at nursery for long hours while she works, but also as she's trained to be a teacher she worries what the effect of COVID could have on us. Beyond that, going back into full-time doesn't feel like an option as we have the thought that any money my wife makes would simply go into childcare (thus defeating the point) and our other childcare options such as calling on grandparents are limited due to distance.

My work situation is that I'm full-time working from home for the time-being but there is a plan for us to return back to the office on a once-a-week (at least) basis in the next month or so which obviously has an impact on our expenses at around £200.00 a month. Like many companies we've had our fair share of redundancies across the business and general cashflow is very erratic. We are working towards getting a bonus this year but I haven't been paid one ever since I started at the company a few years ago so I'm not relying on it. I also haven't had a pay rise for 3+ years (not even to match inflation) which I feel guilty about talking about as I know there are many who are in a much more dire situation than I. I can't really complain since I'm working from home, so I'm saving a lot of money there (goodness knows how I afforded the commute to be honest but this was back when my wife was still working so I guess it evened out!), and I've also been given a decent chair to work on (some may say this is pretty much a given as the company has a duty of care)  due to back problems relating to a car accident I was involved in a few years ago so I take my chair as my "bonus" for last year. We were also given a single, small payment as a "thank you" but predictably quite a bit of this was swallowed up by tax.

My work situation has changed somewhat as my responsibilities have increased due to others leaving and I am managing an additional person since I had my last pay rise.

All in all we're not doing too badly and I can't really complain but that doesn't stop me worrying about even the small expenses and getting stressed every time the annual expenses (insurances, car servicing etc.) come around not to mention expenses that are unexpected on top of everything. We don't have any debts to speak of aside from my student loan - my wife also has a student loan but due to not working hasn't paid anything. We're doing what we can to save without trying to impact on our quality of life too much and claiming what we can such as Marriage Allowance and tax rebates for me working from home but I guess there are still some savings to be made with food expenses (though we do plan our meals as much as possible to spread across several days to save money) and days out.

I guess we would just really like some assurance and advice on what we can do as comparing with other people it feels like we're living from one pay cheque to another while other people appear to be able to splash out with cars, holidays and other luxuries and I can't work out how they do it - unless it's a ticking time-bomb of loans, re-mortgages and credit cards? I have no idea for example how my parents managed on a single-income (their response in short is "we just managed with help from our parents at times") but I have come to realise that when taking inflation into account, we're on a similar level with perhaps higher costs.

I also feel that I should count ourselves lucky and stop moaning as there are those that are in a much worse situation and that the additional expenses we do have are our own doing (days out, website/email hosting and pet costs) and for example I wouldn't have the commute cost if I just took a more local job but that in itself means a pay cut.

I was advised on another board to create an SOA which is listed below with some notes.

Statement of Affairs and Personal Balance Sheet

Household Information

Number of adults in household........... 2

Number of children in household......... 1

Number of cars owned.................... 1

Monthly Income Details

Monthly income after tax................ 2232.18

Partners monthly income after tax....... 0

Benefits................................ 84.6

Other income............................ 0

Total monthly income.................... 2316.78

Monthly Expense Details

Mortgage................................ 540.5

Secured/HP loan repayments.............. 0

Rent.................................... 0

Management charge (leasehold property).. 0

Council tax............................. 169

Electricity............................. 40

Gas..................................... 40

Oil..................................... 0

Water rates............................. 25

Telephone (land line)................... 0

Mobile phone............................ 14

TV Licence.............................. 13.25

Satellite/Cable TV...................... 0

Internet Services....................... 40.17

Groceries etc. ......................... 460

Clothing................................ 15

Petrol/diesel........................... 40

Road tax................................ 13.56

Car Insurance........................... 28.56

Car maintenance (including MOT)......... 58.33

Car parking............................. 10

Other travel............................ 243.6

Childcare/nursery....................... 0

Other child related expenses............ 54

Medical (prescriptions, dentist etc).... 9.24 (only regular prescription is Opticians every 2 years so amount divided by 24)

Pet insurance/vet bills................. 39.16

Buildings insurance..................... 10.2

Contents insurance...................... 10.21

Life assurance ......................... 56.4 (Mortgage-related Life Assurance)

Other insurance......................... 22 (Boiler Cover)

Presents (birthday, christmas etc)...... 69.16

Haircuts................................ 13.33

Entertainment........................... 80

Holiday................................. 41.66

Emergency fund.......................... 0

Total monthly expenses.................. 2156.33

Assets

Cash.................................... 4,500

House value (Gross)..................... 0

Shares and bonds........................ 0

Car(s).................................. 0

Other assets............................ 0

Total Assets............................ 4,500

Secured & HP Debts

Description....................Debt......Monthly...APR

Mortgage...................... 103777...(540.5)....1.69

Total secured & HP debts...... 103777....-.........- 

Unsecured Debts

Description....................Debt......Monthly...APR

Total unsecured debts..........0.........0.........-  

Monthly Budget Summary

Total monthly income.................... 2,316.78

Expenses (including HP & secured debts). 2156.33

Available for debt repayments........... 160.45

Monthly UNsecured debt repayments....... 0

Amount left after debt repayments....... 160.45

Personal Balance Sheet Summary

Total assets (things you own)........... 0

Total HP & Secured debt................. -103,777

Total Unsecured debt.................... -0

Net Assets.............................. -103,777

Created using the SOA calculator at www.stoozing.com. 

Reproduced on Moneysavingexpert with permission, using other browser.

Some notes to bear in mind:

• The travel expenses are not as high as-is stated in the SOA at the moment as I'm full-time Working From Home but this is unlikely to be the case in the next month when I will be expected to be in the office at least once a week.
  
• Internet Services takes into account a personal domain name, email services and website hosting as well as Fibre Broadband.
  
• We're looking to budget much more on our groceries - the above is based on £90.00 a week plus an average of £100.00 additional to cover high street shopping for essentials which aren't available in our online shopping.
  
• All insurances, vet bills and car maintenance costs are paid annually for the most part so I have divided these by 12 to fill in the monthly cost. We avoid monthly costs where possible to ensure we're not paying for interest (and also for peace of mind that we are covered no matter what)
  
• Electricity & Gas is based on £80.00 Direct Debit a month since we are on the Vari-Fair Tariff with Bulb. This reduces to £60.00 a month on average during the Summer months.
  
• As previously stated we will be looking to take our child to nursery from January 2023 but using the free hours available to us from that point
  
• We have some savings available to us but we're unclear on the house and car value (car was last valued when I looked into getting an alternative 2 years ago so is probably very inaccurate now).
  
• Unsecured Debts is blank as we use Credit Cards but pay them off in-full at the end of each month via Direct Debit to avoid interest being payable.

Please let me know if anything is unclear.

Any help or advice would be really appreciated - apologies for the long post.

Karonher

You seem to have noted the one that should be easiest to cut and that is groceries. I would think you could cut £200 from that at least and that could go into an emergency fund. Maybe put the money that is not used for other travel at present into an emergency fund.

AnnieB2018

A minor suggestion but I would cut out boiler insurance; instead you keep an emergency fund as a self-insurance. Or save up a £5-6pm for annual service perhaps.

warby68

Truthfully, living as a family on a single income is always likely to have some challenge unless you are on a particularly high salary. If you don't have the big salary then it can be a case of just getting by for a few years, with only modest spending possible on the luxuries. As you already have pets, a car and some holiday saving you are managing some nice to haves just not loads. 

You are in that position where just a couple of hundred £ extra would make a big difference. Yes, you can tweak a few categories especially food but unfortunately my bet for the foreseeable future is that any savings will be swallowed up by price rises elsewhere especially the looming domestic fuel increases.

That may mean looking to the income line even if only in a small way. Can your wife tutor for example? If you largely work from home and do M-F she should be free early evenings or weekends to do a few hours which is when a lot of tutoring takes place. I also think its important for the non working parent to keep one eye on the future when making their choices, much as its lovely to be at home. If you don't keep your hand in it can be difficult to get back in after several years' break. A small second income is good value too because it doesn't attract tax so only a few hours' work produces a meaningful amount. My son is paying his way through a Masters by tutoring. 6h a week gets him about £90 with no associated expenses so £360-£400pm. Nice for what he does.

We went through all this back in the day. When our eldest was on the way we were both on almost identical salaries so there wasn't an easy one to give up. Maternity pay was a lot less too. We saved up for me to be at home for the maximum leave (9m I think) and then I went back part time. We could have scraped by for a few years but I would have been too long out of my profession. By going back I have been able to stay part time on a professional salary (still not easy to get part time plus higher pay) so had a great balance in the later years although I will admit the early years, especially when number 2 arrived were tough in terms of juggling.

All the choices are tough and involve giving something up. Its much easier to manage mentally if you can see different phases ahead (career growth, mum returns to work, mortgage paid off etc) - harder if you can only imagine 20 years in the same position.

BTW I can't see a car payment - is the car fully paid for or is your salary net of one?

Clothing actually looks a little low for 3 with a growing toddler.

riotlady

I think at this season in your life, the major “luxury” is having a parent at home full time. You’re just not going to be able to have nice cars and holidays while supporting a family on a single income, unless that income is very high. 

I think an extra £400-500 a month would make a massive difference to how comfortable you feel. Once you’re getting 30 free hours (bear in mind your wife needs to be working 16 hours a week to qualify), that should be achievable with your wife working part time. Then everything should ease up again once your kid starts school. 

Seriously though, I think most families with small children are just about getting by, everyone I know is! Don’t stress yourself by comparing your situation to other people’s 

enthusiasticsaver

As I think others have said your most expensive luxury is to have only one salary coming in and whilst I totally understand why that is in reality most lifestyles require two working parents to pay for extras etc.  I know I had to go back to work part time when our youngest was 2 or money would be very tight and whilst initially childcare costs were high it got easier as they started school etc.  Your wife has a massive advantage in that she is a teacher so school holidays should not be an issue so that is the one area I would be looking at in trying to make a  plan for her to return to work.  

However you have a surplus each month, you have a really thorough soa with room to economise on groceries particularly, you have an emergency fund and no debt so I think you are doing really well.  Most people who live the sort of lifestyle you talk about with new cars, holidays etc undoubtedly use credit cards and personally I would rather do as you have done and turn your back on that and live within your means.  At some point your child will get free hours and maybe the small amount of childcare you have to pay will make it worthwhile your wife returning to work part time at least or doing supply if that is feasible and she can get some wraparound childcare. 

kimwp

My thoughts are that
- you could easily cut back on groceries - freeing up £2,000 a year would allow the purchase of a few luxuries

- Boiler cover is a personal choice but I prefer to save the money and pay for a new one if needed

- £41 for holidays seems quite low for a family of three, is this figure right?

Shoxt3r

Karonher said:

You seem to have noted the one that should be easiest to cut and that is groceries. I would think you could cut £200 from that at least and that could go into an emergency fund. Maybe put the money that is not used for other travel at present into an emergency fund.

Thanks for the tips - I should point out the the "Groceries etc." section includes Household expenses on top of our weekly food shopping (e.g. purchases made on the High Street).

We've done a bit of a review since and found we can cut the food shopping down to around £80.00 per week at the most (hopefully!) and then focus on reducing our household cost as well. Fingers crossed we can cut it down further - let's see if we can do it!

AnnieB2018 said:

A minor suggestion but I would cut out boiler insurance; instead you keep an emergency fund as a self-insurance. Or save up a £5-6pm for annual service perhaps.

Thanks - we've got a fixed price on our Boiler & Central Heating cover (unsure if we can cancel it at this point) which covers us until 2023 then we may re-evaluate. Our boiler is well over 15 years old now and we found it difficult finding cover as it was, but Your Repair were able to do it with no callout charge.

We may change this as *touch wood* we haven't had to use the cover yet aside from getting the boiler's annual service which is due next month. The scary part is if our boiler ever gave up as we're not covered for a replacement by the agreement. Good tip on saving up for the annual service rather than having the boiler cover though - the £264.00 saving should more than cover it.

warby68 said:

Truthfully, living as a family on a single income is always likely to have some challenge unless you are on a particularly high salary. If you don't have the big salary then it can be a case of just getting by for a few years, with only modest spending possible on the luxuries. As you already have pets, a car and some holiday saving you are managing some nice to haves just not loads. 

You are in that position where just a couple of hundred £ extra would make a big difference. Yes, you can tweak a few categories especially food but unfortunately my bet for the foreseeable future is that any savings will be swallowed up by price rises elsewhere especially the looming domestic fuel increases.

That may mean looking to the income line even if only in a small way. Can your wife tutor for example? If you largely work from home and do M-F she should be free early evenings or weekends to do a few hours which is when a lot of tutoring takes place. I also think its important for the non working parent to keep one eye on the future when making their choices, much as its lovely to be at home. If you don't keep your hand in it can be difficult to get back in after several years' break. A small second income is good value too because it doesn't attract tax so only a few hours' work produces a meaningful amount. My son is paying his way through a Masters by tutoring. 6h a week gets him about £90 with no associated expenses so £360-£400pm. Nice for what he does.

We went through all this back in the day. When our eldest was on the way we were both on almost identical salaries so there wasn't an easy one to give up. Maternity pay was a lot less too. We saved up for me to be at home for the maximum leave (9m I think) and then I went back part time. We could have scraped by for a few years but I would have been too long out of my profession. By going back I have been able to stay part time on a professional salary (still not easy to get part time plus higher pay) so had a great balance in the later years although I will admit the early years, especially when number 2 arrived were tough in terms of juggling.

All the choices are tough and involve giving something up. Its much easier to manage mentally if you can see different phases ahead (career growth, mum returns to work, mortgage paid off etc) - harder if you can only imagine 20 years in the same position.

BTW I can't see a car payment - is the car fully paid for or is your salary net of one?

Clothing actually looks a little low for 3 with a growing toddler.

Yes we're hopeful that my wife can get back into supply work in the near future and will look to reduce costs where possible in the meantime. Completely agree regarding not being out of work for too long so that it's easier to get back into it. My wife is considering going back as supply part-time for now and then see how things go.

I'm pleased to say that we have fully paid off the car (it's about 9 years old now so getting on a bit but is lasting us well). We initially took out a 4-year loan to get the car which was fully paid off last year and was originally taken out when my wife was still working so we could more than cover the repayments - glad to have the £145.00 a month loan repayment off the list now though! Unfortunately my line of work means we don't have a company car policy - I'm a desk worker .

Regarding clothing we try as much as possible to rely on charity shops to keep the costs down and thankfully our parents help out with clothing for our child when they can. We also keep an eye out for "safaris" (bit like a town-wide house car boot sale) whereby we can get decent clothing for a cheap price. During one particular trip we managed to get a huge amount of clothing for about £10.00, a new jacket/all-in-one for our child for about £5.00 and a pair of decent wellies for £6.00!

We rarely buy new clothing unless it's underwear as she is growing so quickly and it feels good to try and do a bit for the planet at the same time. Buying clothing for ourselves is mainly reserved for a treat for Christmas/Birthday presents and I work in Retail so I can sometimes get samples for next to nothing, though I rarely buy new clothes myself generally.

riotlady said:

I think at this season in your life, the major “luxury” is having a parent at home full time. You’re just not going to be able to have nice cars and holidays while supporting a family on a single income, unless that income is very high. 

I think an extra £400-500 a month would make a massive difference to how comfortable you feel. Once you’re getting 30 free hours (bear in mind your wife needs to be working 16 hours a week to qualify), that should be achievable with your wife working part time. Then everything should ease up again once your kid starts school. 

Seriously though, I think most families with small children are just about getting by, everyone I know is! Don’t stress yourself by comparing your situation to other people’s 

Yes 100% agree - it's quite a luxury being at home - I'm so glad to be able to save the annual train cost for one thing and of course to have the opportunity to see my daughter growing up on a daily basis (my commute meant I would rarely be home before 7:30pm each night). Thank you for the realisation - it's sometimes easy to forget that essentially (aside from Child Benefit), we are one income so things are bound to be tough. We'll make savings where we can I think and then look to have my wife at least in part-time work sometime in the near future all being well.

I think it's so easy to compare to others and we really shouldn't, especially as many we know have two incomes coming in, don't have children or are single so really aren't comparable. Some we know are also in higher-ranking jobs and come from more well-off backgrounds generally. It's hard to break the habit sometimes but it just isn't worth comparing.

enthusiasticsaver said:

As I think others have said your most expensive luxury is to have only one salary coming in and whilst I totally understand why that is in reality most lifestyles require two working parents to pay for extras etc.  I know I had to go back to work part time when our youngest was 2 or money would be very tight and whilst initially childcare costs were high it got easier as they started school etc.  Your wife has a massive advantage in that she is a teacher so school holidays should not be an issue so that is the one area I would be looking at in trying to make a  plan for her to return to work.  

However you have a surplus each month, you have a really thorough soa with room to economise on groceries particularly, you have an emergency fund and no debt so I think you are doing really well.  Most people who live the sort of lifestyle you talk about with new cars, holidays etc undoubtedly use credit cards and personally I would rather do as you have done and turn your back on that and live within your means.  At some point your child will get free hours and maybe the small amount of childcare you have to pay will make it worthwhile your wife returning to work part time at least or doing supply if that is feasible and she can get some wraparound childcare. 

Yes 100% agree - after talking through our finances, my wife is planning to go back to work when she can, at least part-time to start with.

I'm surprised we had a surplus really, especially considering the annual bills which I've calculated out as monthly payments for the SOA. We've worked really hard to avoid getting loans (we've had 1 since we moved into our house to cover a "new" car) and always pay our credit cards off in full so as not to incur expensive interest. We also pay what we can off fully in terms of insurance so that again we don't pay extra for the privilege and it's also peace of mind that we are covered.

As above we're already looking to reduce the monthly grocery shop by at least £140.00 (which includes any household items that we buy separately from the weekly food shop).

kimwp said:

My thoughts are that
- you could easily cut back on groceries - freeing up £2,000 a year would allow the purchase of a few luxuries

- Boiler cover is a personal choice but I prefer to save the money and pay for a new one if needed

- £41 for holidays seems quite low for a family of three, is this figure right?

Thanks for the tips! As above we're looking to save at least £140.00 a month on our grocery/household shop. We're reluctant to cut the boiler cover but we're in a fixed contract until 2023 now and then we'll look to review. As above we're not covered for a boiler replacement. Our boiler has *touch wood* been reasonably reliable though so we will look to cut this completely when it comes to renewal - we may even find that nobody is willing to cover us by that point anyway.

Sorry so I should have explained - as the SOA tool doesn't appear to cover annual costs (please correct me if I'm wrong!) so I've taken an amount and then divided it by 12 so that it's evenly spread across the year. So in actual fact, the £40ish a month is our annual holiday spend. However, we are very careful what we spend and haven't been aboard for a good few years, instead opting to use holiday time either to see my parents by visiting them or having them to stay and doing day trips - the main cost to speak of being fuel to travel and admission tickets. This is purely an estimate though based on our previous holiday time.

-----------

Thank you all so much for your replies - really helpful tips!

In addition to the above, we've also setup budgets for Groceries, Household and Leisure & Entertainment (which includes things like Parking, Days Out, Mobile Contracts etc.) within Microsoft Money and set limits accordingly to help us monitor the costs. If all goes well then we'll look to expand this out to other categories but we're just trying it out at the moment.

I've also started up the 1p Savings Challenge by topping us up from start of January to now in a savings pot. The difficulty will come when we don't quite have enough change between us to keep it topped up (we rarely pay cash, it's usually contactless) but we'll certainly try to keep it going as long as possible.

My wife is potentially looking to get back into teaching supply work and is going to make contact with friends who work/used to work in supply. The difficulty here is balancing it with looking after our child but hopefully we can trial one day a week and see how things go.

Thanks again all! Look forward to more replies

katsu

Cancel the boiler cover. You have to spend over £264 a year every year to be better off. 

Save that money for emergencies instead. 

Ensue the life cover is best value. Do you have it already through a work pension for eg? 

Well done on decent phone costs. 

Can you reduce the presents/Xmas spend? 

Wife getting some work seems ideal for a financial boost.