Please rate my budget - is this workable?

bigolsausage

Hello! We have just bought a house and I want to see if my budget is workable and if there's anything we can do to improve our finances. 

We are DINKS. 

Total income per month (take home): £4336 (roughly, tax changes due to BIK) 
Bills: 
Mortgage: £1220 
Insurance (life): £23.88
Income protection x2: £70.63 
Home insurance: £23.25
Gas & Electric: £132 
Council tax: £203 
Broadband £35 (contract ends in July) 

Total house bills: £1707.76 

Other bills: 
Credit card: £40 (this is car repayment on 0%) 
Phones: £25 (for 2, sim only) 
Car insurance: £112 (2 cars) 
Road tax: £45 (2 cars) 
Fuel: £150 (will be decreasing as moving closer to work, also x1 car has fuel card paid for by work) 

Other subscriptions:
Vision express contact lenses: £23
Audible: £8.99

Total current bills: £2111.75 

Plan: 
Savings: £600 per month (for home renovations, holidays)

Current savings: 
£10,000 easy access account (emergency fund) 

Spending: 
Food/groceries: £400 
Other spending, including but not limited to: gifts, eating out, days out, clothes, etc: £1224.24 

Questions:
- Are the life insurances/income protection worth it? We are a couple with no kids, no plan for kids, no pets. 
- Is there anything that looks wildly expensive here? 
- Is there anything I've missed that I should consider? 


 

CliveOfIndia

bigolsausage said:

Questions:
- Are the life insurances/income protection worth it? We are a couple with no kids, no plan for kids, no pets.

 

That's debatable.  It's generally reckoned to be a very good idea if you have kids, arguably less so with no kids or plans for any.  Then again, it may be comforting if the unthinkable should happen to one of you.

For the income protection, it's worth checking what it actually covers.  I remember looking into it a long time ago, and there were so many exclusions and periods of time where it wouldn't pay out, I decided it was worth the gamble of not having it.  It's also worth thinking about how long it would realistically take you to get another job if you were to lose yours.  If you're fairly confident you'd find work again within a couple of months, then it may not be worth having the income protection (many of them won't pay out for the first couple of months anyway).

bigolsausage said:

- Is there anything that looks wildly expensive here?

 

Depends entirely on how much you want to cut back on "nice" things in order to save money.  £400 on food is not wildly excessive, but could be cut slightly if you really wanted to.  £1200 on "other spending" does seem a lot to me, but it depends on your priorities.

bigolsausage said:

- Is there anything I've missed that I should consider? 


 

You've mentioned savings for home renovations/holidays.  It's wise to also have an emergency fund.  When you own a house, things inevitably wear out or break at some point.  You need something to cover for when the washing machine needs replacing, when the boiler goes wrong, when you get roof tiles blown off in high winds but it's not bad enough to warrant claiming on the insurance, that kind of thing. <edit: sorry, I see you have already accounted for that>

If (as it would seem) you're not struggling to meet any of your obligations, then you have a lot more flexibility over what you're prepared to sacrifice.  And it depends to a large extent on what your priorities are.

Some people may choose to have modest savings but drive a flashy car and go on expensive holidays.  Others may choose to live more frugally whilst maxing out their pension contributions, savings, investments, etc., with a view to retiring early and being able to enjoy every minute of it.

It may be worth filling out an SOA ( https://www.lemonfool.co.uk/financecalculators/soa.php ).  This is often recommended over on the Debt-Free Wannabe board, but it can be a useful tool just for your own information, even if you don't want to share it.  It does help to focus your thoughts, and helps to make sure you don't miss out anything important.

Anyhow, hope my points provide some food for thought.

Brie

It's possible that the life insurance and a certain amount of income protection is covered through work so you might want to look into that.  

And does all that £600 need to go into savings?  Either of you in a high tax bracket that might warrant slinging some into a pension or something?  (might not be normally but maybe with bonuses??)

p00hsticks

bigolsausage said:

Hello! We have just bought a house and I want to see if my budget is workable 

Total income per month (take home): £4336 (roughly, tax changes due to BIK) 

Total house bills: £1707.76 
Total current bills: £2111.75 
Savings: £600 per month (for home renovations, holidays)
Food/groceries: £400 
Other spending, including but not limited to: gifts, eating out, days out, clothes, etc: £1224.24 

Unless I've read it wrong or my adding up is incorrect, that expenditure comes to £6,043.75 which is around £1707 more than your income, so no, as it stands your budget isn't workable. 

It would just about balance if you lost the savings and all of the 'other spending' - you need to break down that latter figure further and decide what can og and what you want to stay. 

Barkin

p00hsticks said:

bigolsausage said:

Hello! We have just bought a house and I want to see if my budget is workable 

Total income per month (take home): £4336 (roughly, tax changes due to BIK) 

Total house bills: £1707.76 
Total current bills: £2111.75 
Savings: £600 per month (for home renovations, holidays)
Food/groceries: £400 
Other spending, including but not limited to: gifts, eating out, days out, clothes, etc: £1224.24 

Unless I've read it wrong or my adding up is incorrect, that expenditure comes to £6,043.75 which is around £1707 more than your income, so no, as it stands your budget isn't workable. 

Yeah, it doesn't make sense to me either, but I figured I'd maybe misunderstood... 

eskbanker

p00hsticks said:

bigolsausage said:

Hello! We have just bought a house and I want to see if my budget is workable 

Total income per month (take home): £4336 (roughly, tax changes due to BIK) 

Total house bills: £1707.76 
Total current bills: £2111.75 
Savings: £600 per month (for home renovations, holidays)
Food/groceries: £400 
Other spending, including but not limited to: gifts, eating out, days out, clothes, etc: £1224.24 

Unless I've read it wrong or my adding up is incorrect, that expenditure comes to £6,043.75 which is around £1707 more than your income, so no, as it stands your budget isn't workable. 

The £1707 house bills is just a subtotal within the £2111 total bills, so it won't be a coincidence that your apparent anomaly was £1707....

bigolsausage

Brie said:

It's possible that the life insurance and a certain amount of income protection is covered through work so you might want to look into that.  

And does all that £600 need to go into savings?  Either of you in a high tax bracket that might warrant slinging some into a pension or something?  (might not be normally but maybe with bonuses??)

We're saving for a new kitchen and boiler and would like that as soon as possible so yeah but probably after that I could look at salary sacrificing some more. I'm entering into the 42% + 8% NI bracket in Scotland so may be worth doing that. 

I feel like there's always a need to have more savings though! 

bigolsausage

p00hsticks said:

bigolsausage said:

Hello! We have just bought a house and I want to see if my budget is workable 

Total income per month (take home): £4336 (roughly, tax changes due to BIK) 

Total house bills: £1707.76 
Total current bills: £2111.75 
Savings: £600 per month (for home renovations, holidays)
Food/groceries: £400 
Other spending, including but not limited to: gifts, eating out, days out, clothes, etc: £1224.24 

Unless I've read it wrong or my adding up is incorrect, that expenditure comes to £6,043.75 which is around £1707 more than your income, so no, as it stands your budget isn't workable. 

It would just about balance if you lost the savings and all of the 'other spending' - you need to break down that latter figure further and decide what can og and what you want to stay. 

Barkin said:

p00hsticks said:

bigolsausage said:

Hello! We have just bought a house and I want to see if my budget is workable 

Total income per month (take home): £4336 (roughly, tax changes due to BIK) 

Total house bills: £1707.76 
Total current bills: £2111.75 
Savings: £600 per month (for home renovations, holidays)
Food/groceries: £400 
Other spending, including but not limited to: gifts, eating out, days out, clothes, etc: £1224.24 

Unless I've read it wrong or my adding up is incorrect, that expenditure comes to £6,043.75 which is around £1707 more than your income, so no, as it stands your budget isn't workable. 

Yeah, it doesn't make sense to me either, but I figured I'd maybe misunderstood... 

Total current bills includes all house bills. I separated out house bills (not sure why, just how I have it on my spreadsheet). 

So: 
Bills: £2111.75 
Savings: £600 
Food: £400 (usually less but we budget £400 to account for things like cleaning products etc) 
Rest is fun money. (Again, usually not all spent and we're trying to be better at spending money on experiences and worthwhile things and not takeaways and coffees etc!) It's a work in progress. 

bigolsausage

CliveOfIndia said:

bigolsausage said:

Questions:
- Are the life insurances/income protection worth it? We are a couple with no kids, no plan for kids, no pets.

 

That's debatable.  It's generally reckoned to be a very good idea if you have kids, arguably less so with no kids or plans for any.  Then again, it may be comforting if the unthinkable should happen to one of you.

For the income protection, it's worth checking what it actually covers.  I remember looking into it a long time ago, and there were so many exclusions and periods of time where it wouldn't pay out, I decided it was worth the gamble of not having it.  It's also worth thinking about how long it would realistically take you to get another job if you were to lose yours.  If you're fairly confident you'd find work again within a couple of months, then it may not be worth having the income protection (many of them won't pay out for the first couple of months anyway).

bigolsausage said:

- Is there anything that looks wildly expensive here?

 

Depends entirely on how much you want to cut back on "nice" things in order to save money.  £400 on food is not wildly excessive, but could be cut slightly if you really wanted to.  £1200 on "other spending" does seem a lot to me, but it depends on your priorities.

bigolsausage said:

- Is there anything I've missed that I should consider? 


 

You've mentioned savings for home renovations/holidays.  It's wise to also have an emergency fund.  When you own a house, things inevitably wear out or break at some point.  You need something to cover for when the washing machine needs replacing, when the boiler goes wrong, when you get roof tiles blown off in high winds but it's not bad enough to warrant claiming on the insurance, that kind of thing. <edit: sorry, I see you have already accounted for that>

If (as it would seem) you're not struggling to meet any of your obligations, then you have a lot more flexibility over what you're prepared to sacrifice.  And it depends to a large extent on what your priorities are.

Some people may choose to have modest savings but drive a flashy car and go on expensive holidays.  Others may choose to live more frugally whilst maxing out their pension contributions, savings, investments, etc., with a view to retiring early and being able to enjoy every minute of it.

It may be worth filling out an SOA ( https://www.lemonfool.co.uk/financecalculators/soa.php ).  This is often recommended over on the Debt-Free Wannabe board, but it can be a useful tool just for your own information, even if you don't want to share it.  It does help to focus your thoughts, and helps to make sure you don't miss out anything important.

Anyhow, hope my points provide some food for thought.

Thanks. We have about £10,000 aside for emergency fund, that's about 4 months worth of bills. We're not big spenders and have cheap hobbies. We're homebodies so it may be that we don't really need income protection since we don't have large outgoings and we could probably find a job within the 4 month period before our savings runs out. I'm contemplating cancelling it. I will have a read through the policy to see what the exclusions are. 

I've never wanted (or thought I could) retire early. I grew up very poor and have always just wanted to be comfortable. Not rich, not poor, just comfortable. We're not big on flashy things but we have realised that it may be time one of us has a reliable car since we both travel for work occasionally and have had some problems with our two old ones. We will hold out until one of them dies though but we may need to splurge on that in the future. I'd rather build up savings to cover most of it than have a huge monthly payment. I don't want to commit to too many things on finance just in case. 

I'm very cautious in my spending and my finances so I'm not worried. Just hoping that my budget actually does work out. Although, I'm sure I'll find out in time. 

DiamondLil

I don't see water bill among your house bills / expenses OP ?

kimwp

Check if your work or pension scheme gives you any income or life protection. If you could each afford the subsequent bills on your own, then life cover may not be that needed, but income protection may still be a good idea.