Budget Advice

suziebear1985

Bluegreen143 said:

Oh you don’t need to share your income, totally understand it’s personal (we both have good salaries too and appreciate what you mean that not everyone does). But just think about it yourself.

If you take you salary and add back on the pension contributions which come off automatically (assuming you contribute to one - if not you should look into this). Eg imagine a fictional scenario where your salary is £2,000 and pension is £150 so total figure £2,150. 

Look at what 20% of that figure is - in our fictional example £430. £150 is your pension contribution so is our fictional person saving £280 a month (or paying it off debt). 

If you are saving (or debt repaying) to the tune of 20% of your income or more, and living on 80%, then I would personally class that as living well within your means. Some people like their savings rate to be even higher (25/30% or more) which is a personal choice but it doesn’t look to me as if there are many easy cuts in your budget. If you are needing more than 80% of your income to live I’d try to cut back (or earn more) using some of the suggestions given. 

But if you are saving/repaying debt with 20% or more of your income already I wouldn’t necessarily make huge sacrifices to reduce your budget. I think we all feel anxious because of the headlines etc but it may be that you’re doing totally fine and don’t need to be anxious or only need small changes. You can only tell that by looking at the whole picture including your income (again, you don’t need to share this). 

Once you have your CC paid off, I’d focus on building a decent emergency fund which will help you feel more secure. You could get a jump start on this by doing some decluttering and selling anything you don’t need.

Also worth considering if you have enough money aside for Christmas as that will be a problem if you don’t.

When you finish paying your car finance, I’d keep putting that money into a savings account to save for your next car. You may be able to buy one outright or at least reduce the finance needed depending how long your current car does you.

Thanks so much for your advice. I did the calculation and my debts (the car and credit card) are definitely less than the 20%. You make some good points though, I like to think of myself as someone who is careful with money (which is usually true) but I don't always make wise financial decisions in that I currently have no savings and no pension. I know I jeed to sort these things out ASAP and in relation to savings I have just opened a regular Savers account with 5% interest. I've put in the minimum payment and as soon as Christmas is over I'll try and put an amount away every month that is separate to the savings I need to spread things like birthday/christmas/MOT across the year so I have something to fall back on. I know I also need to start a pension but I really do just feel so anxious about committing to payments that are such a big chunk. I think I have some anxiety around money as around 5 years ago my ex husband left out of the blue one day whilst I was a full time student and there was a lot of panic around money for a long time. It means I've within my means and am always looking to save and reduce but I'm more of a day to day thinker than long term. The car will be paid come March so maybe I'll just use that towards a pension so it's not missed.

suziebear1985

PipneyJane said:

@suziebear1985.  Firstly big hug for so bravely putting your budget out there for people to criticise.

Second, I’d keep the TV licence and ditch Netflix and Amazon Music.  You can get so much more from the BBC than just broadcast television:  thousands of classic movies and TV programs free on iPlayer; free radio and podcasts on BBC Sounds.  Officially, you do need a TV licence to access content on iPlayer.  Plus, if you swap to Freeview TV, there are around 100 free-to-air television stations and several of them have their own free streaming services (e.g. All4, My5, UKTV Play).   If your son wants Netflix, then tell him he has to pay for it out of his own money.  He’s old enough to learn about budgeting and treats.

The “free” music streaming service is Spotify.  There is also a subscription version.

Other thoughts re saving money:  

1. Do you have an Emergency Fund?  I see that you used credit to purchase much needed furniture, so I suspect not.  Ideally it needs to cover 3-6 months of household expenses.
2. When you pay off the car, save the £153 each month into a “Car Fund” for repairs, the inevitable replacement, insurance, etc.  You are already spending that money so won’t miss it.  Also, it’s cheaper to pay your road tax annually rather than monthly.
3. Ditto, when you pay off the credit card, save the money and, when you have a large enough pot, maybe you could use it to pay the balance of the £8k you owe your family member?  Or put it to your Emergency Fund.
4. I have multiple small saving pots, some of which you might want to consider for yourself: IT/Phone Replacement Fund; “Running Away Fund” (for holidays); Christmas/Birthday Present money; Christmas Food Fund (also pays for the Christmas tree and Easter eggs); Clothing Fund; Football Season Ticket Fund; Choir Subscription Fund; Haircuts & Makeup Fund (I get my hair cut every 2 months, so save half the cost each month, rounded up to the nearest fiver).
5. Get the prepaid prescription certificate.  Martin talks about timing your repeats so that you can get two lots on the one certificate, then let it lapse for 3 months, rinse and repeat.  If you do this, it is definitely cheaper.
6. Your phone contract is due for renewal in 2024 - are you paying for the handset on it?  If so, then when it finishes, swap to SIM-only contract, save the difference towards your new handset and pay cash for it.  (On their current cycle, today’s iPhone 14 should last at least 5 years, before Apple stop providing updated software for it.).

More generally, something I learned a few years ago is that if you set little pots of money aside each month for treats/hobbies/life-events, once you get ahead, you will stay ahead and things will be easier.

HTH,

- Pip

Thankyou this is all really useful advice. I'll definately have some money to play with once the car is paid off and Christmas is over and as you pointed out I really do need to prioritise savings. Its a good idea about increasing the family member payment too when the CC is paid off although that will take another 6 months or so of not more. I'll look into Spotify and yes I'm pay9ng for the handset so once that's done I'll switch to SIM only. I also wasn't sure you could pay tax annually so I'll do that too. I pay my car insurance annually and find it much easier not having to worry about it each month.

suziebear1985

CJRyder said:

With regards to the TV Licence, politely point out to your OH that it's a luxury just for him. If he wants it, he pays for it out of his own personal funds. Either way, it's no longer coming out of joint household bills. Maybe point out that the cleaner is a luxury just for you and that you're axing that or paying for that outof your own pocket.

Most of the costs are quite reasonable. You may want to ask Three about the costs of exiting your contract and going sim only.

Thanks, we have a bit of a unique situation really which I won't go into too much as I've been ripped apart for it before on here but we don't have a joint income. He does work full time but I support us all and he contributes £250 a month but that only really covers food and maybe the extra council tax. I'll have a chat to him about the TV and maybe suggest he pays for that if he wants it.

PipneyJane

@suziebear1985 a word about contributing to a pension.  Am I correct in assuming you are an employee?  Then please investigate joining your employer’s pension scheme ASAP.  Two reasons for this:  

1. Free money.  By law, your employer must contribute at least 3% of your gross salary, but many pay more than that.
2. Time.  Investing early for your retirement means that your savings pot has longer to grow.  The same amount of money invested later will deliver a much smaller return.

Remember, your pension contributions come out of your salary before it is taxed, so the impact may not be that great on the money in your pocket.  For example, if you are in lucky situation of being over/around the 40% tax threshold, your take-home pay may not change noticeably.  (I was in that position at a previous employer.  When I joined their pension scheme, my take-home pay actually went up(!) because my pension contributions took my taxable salary below the 40% tax threshold.). 

A good website that will help you assess the impact on your take-home pay is www.listentotaxman.com.  Have a play with their calculator and you might be surprised at the result.

HTH

- Pip

Bluegreen143

Seconded on the pension. I’m not a higher rate taxpayer but £240 is put into my pension each month. This only costs me about £70-75 a month, the rest is from my employer or tax/NI. That’s a lot of free money I’d miss out of if I didn’t contribute and you don’t notice being £70 a month worse off really.

Floss

Bluegreen143 said:

Seconded on the pension. I’m not a higher rate taxpayer but £240 is put into my pension each month. This only costs me about £70-75 a month, the rest is from my employer or tax/NI. That’s a lot of free money I’d miss out of if I didn’t contribute and you don’t notice being £70 a month worse off really.

Actually, I and a lot of other folk would notice a drop of £70 - but I do agree with the comments about joining a pension scheme.