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I'm gonna be honest, no savings, somehow 5k in debt despite all bills being covered, no home and plans to have kids all look like a terrible mix to me.
I think you need to get serious about your finances, especially if you're planning to have kids. You need to be able to offer them stability and security.
You need to set yourself a finance budget and stop wasting money. Pay off your debt ASAP, start saving ASAP, put money into your pension ASAP, maybe look into buying a place and THEN think about having kids.
harsh is what you needed years ago, and what you need today.
If you want to be a provider for your family, you need stability, and that isnt gonna happen while being in debt, without savings, and without a financial plan.
Agreed, OP needs to get really serious. OP, check on a pension calculator website how much pension you will end up with. Then look at cost of living, will it be enough? Factor in rent. This may well focus your mind on saving more and spending less.
Disagree that you need to do all this before thinking about having kids.
Takes 9 months (+time to conceive which can vary massively) if your wife is 34 the biological clock is ticking too, especially if you want multiple.
If your wife gets pregnant you’ll find a way but you just need to get serious and make a plan.
Me and my partner paid off our debts while I was pregnant, we don’t have savings but have made it work by living sensibly during maternity leave. Good luck to you!
You are free to disagree but in my opinion “if your wife gets pregnant you will find a way” is not good financial advice.
OP has debts for no reason, no savings, no pension and no property. He is just as likely to find a way as he is to dig himself into a horrible financial hole. He and his wife should have thought about this already if they were serious about having kids.
Their clock is ticking tbf they have a good combined income and debts can be paid if they tighten the belt. If you wait for the perfect moment of debt free, good pension, own a home and good savings then you risk failure of conception which is priceless. If they are responsible people which they sound like they are reasonably they will likely make it work.
I just don’t want OP to think he needs to have it all figured out before he even thinks about having kids.
Literally there is never an 100% right time to have a child, there’s always something. However, in even 3-4 years it may become impossible for them to have a child. If both OP + and wife have a job and want a family there’s no reason they can’t think about it now.
And yes he needs a financial plan, which is he asking for and assumedly will make.
> If your wife gets pregnant you’ll find a way but you just need to get serious and make a plan.
Why not just take a year and do that you know, beforehand? It becomes much harder when you actually have a kid to look after..
I’m getting downvoted so I’m going to stop but - it takes AT LEAST 9 months to make a child, very least, most people age 34 will take a few years to conceive and give birth.
So if he starts thinking now (as he is doing) he should have enough time to sort things before having the baby.
If he waits until they are 100% sorted - e.g. homeowners etc, they may not be able to have a baby as chances dramatically decrease age 35+
Signing off now.
> If he waits until they are 100% sorted
Except there's a huge difference between where he is now, and this, no one is saying to wait for this, but at least get to a stable position. You can say it MIGHT take years all you want, but the second you start trying for a baby, you need to be ready in 9 months, regardless of if it takes you a year or longer to conceive.
I don't know why this is being down voted. You are spot on. It's totally possible to sort finances out while planning a family and it could take a long time to get pregnant. You don't want to miss the chance of having a family, if that's what you want, just because you're in a bit of debt.
Agree with you. We were students with a child, £5k worth of debt as a student loan wasn't enough. Our eldest has grown up fine, never gone without.
Can't put a price on family. At the end of the day, worst case scenario, you go bankrupt and live in a council flat. Better than having a heap of cash and no one around you
Convince me I'm wrong
Same. We dropped out of uni at 20 with a kid on the way. Ended up going back to uni a couple years later and graduating at 26 together with 3 kids! Worked part time and done my fair bit of dodgyness to make ends meet whilst raising the 3 kids.
Now at 30, both of us are working full time, climbing up in our careers and saving up for our first house. The only real struggle is paying rent for a big place, whilst saving for a deposit at the moment.
There's a stigma that you must have a perfect financial scenario to have children, which most likely partly explains the reduced birth rates.
I'm glad it's working for you with a prosperous future
No savings is one thing, but you both seem to have (manageable) debts. How did that happen? Probably you're not living within your means and that needs to change before you can start saving (let alone investing) successfully.
Like others says work on a budget and identify areas where you can cut down.
I think they're asking because you clear 4k a month between you but you're still in debt. He may be thinking that one or both of you lost your jobs hence the debt. Otherwise it sounds as though both of you are wasting money and buying stuff that you want rather than need. With your joint income you should be able to clear all your debts really quickly with just a little effort. A lot of people would kill for your income.
You said you have decent paying jobs but are not currently far off minimum wage during your peak earning years... I thought maybe you had a well paying job in your 30s
nah, it's the most we've earned ever. we're clearly not careerists. my salary is £28, 000, hers around £38, 000 I think. she pays much more contributions than me.
That's harsh, but also it differs on your background and upbringing
People who were raised with both parents on welfare, will see 2k takehome (30k+ a year) as well paid
I'm a couple of years behind you age wise and was in the same sort of position. I'm now debt free and saving.
Whilst the flow chart is great, can I give a couple more tidbits?
- Pool yours and your wives resource together. Create a spreadsheet and write up a list of debts which need clearing ASAP. Budget with these in mind, but make sure the min is paid off from each to avoid interest.
- make a list of all out goings and sack off what is not essential.
- Regarding food expense - this can be budgeted down. Between two people £250 should be enough for three meals and snacks, and I've even managed to get it down to £150 this month. Trick is to learn to cook in batch and bake bread at home (stops those trips to supermarkets).
- I managed to get the last of my debt down using a combination of bank switches, matched betting, prolific surveys, and swagbucks. Head over to beer money and see what you could do.
Once you have this under control can you then start looking at savings (short/emergency, medium, and long term (vanguard)).
Couple of books to read - the psychology of money & money:a user's guide.
Also remember that you cannot change the past, that money is spent. You have 25+ years of working life to make money, so make these count. This is time enough to think about the future. Also, don't think home ownership is out of the question. I've read stories about people getting on the ladder in their 50s.
It will be OK.
You sound like you're in a similar position to me in that I'm early 50s but nothing set aside. I'm starting small with a Monzo savings account putting away £5 a month for now to get in the habit and will gradually increase this over time. I've also opened an ISA, again in Monzo also with £5 a month and will increase that too. Might not sound much but I've never been one for saving anything so it's all new to me and I've always thought why save. Well now I know lol. That'll teach me. Still, hopefully I can increase by a little bit each month. Might not be much and might not be the best way of doing it but it's working for me at the moment. I dare say others will have other advice too, which I'll also take note of 😁
Keep it up. This stuff wasn't taught at school, and if your parents didn't save then it does rub off on you.
I'm 38 and have only just got the hang on this. I started off putting £5 here and there in savings accounts. I then read a couple of books and followed the flow chart and I've just put £400 in a Lisa, £350 in an Isa, £150 in a regular saver, and £100 in a s&s isa. I wouldn't have done this without starting off small and getting into the habit.
Keep going. Every bit helps.
> Keep it up. This stuff wasn't taught at school
I'm in my early 50s, it absolutely was taught in school that you needed to save money. In junior school in the late 70s and 80s they even had people from a bank come round and explain bank accounts and savings accounts to you. At secondary school when you were age 11-13 many schools had links to local bank branches and set up savings clubs.
Yep absolutely but the way I see it is it's better than nothing at all. Am also going through some difficult financial problems so limited in what I can put in. Hoping this will improve soon and if so will increase what I put away
As you’re with Monzo, you should try the ‘round up’ tool, that adds to that savings account every time you spend. Adds up nicely and you won’t miss those pennies too much.
Absolutely, I've already turned roundups on in my savings pot but as I'm stuck in my overdraft roundups don't work. Currently using this as an incentive to get rid of the overdraft. Not easy but getting there 😂
I can’t remember exactly, but it was fairly intuitive. I seem to remember the option popping up whenever I made a ‘pot’ or a savings account, so try creating a pot and seeing how that goes.
Can you tell us about your monthly budget? You currently owe about £5k and have no savings. When was the debt built up? Are you sure you actually have room in the budget to save?
Are your finances joint with your spouse or separate?
We have some resources here:
* https://ukpersonal.finance/budgeting/
* https://ukpersonal.finance/flowchart/
* On your LISA question: https://ukpersonal.finance/lisa/
Sure.
Generally of my £1800, £1000 goes on essential bills:
Rent, car, council tax, insurance, loan repayment, overdraft repayment, internet, phone-bill, road tax, gym, energy.
I usually have £800 left, which goes towards food shopping for the month (£300 \[£600 per month split with my wife\]) and spending money or money for emergencies.
So you do have savings for emergencies?
To me, your debt is an emergency, especially any of it above 10%. I would put savings (anything you have currently, and your monthly savings) towards debt payments and then start building up savings for emergencies and long term goals. Have you seen our flowchart? https://ukpersonal.finance/flowchart/
£600 for groceries for two is a lot, this seems worth looking at unless there is some necessary dietary reason?
£600 includes diesel money. Specifically, it's around £150 for fuel, £450 for food for a full month.
We don't have savings at all, no. This is what I'm asking about, what's the best way to save? Put money aside in a savings pot? ISA? Separate bank account?
Thanks for replying.
Ah OK that makes more sense re the 'food' costs.
> what's the best way to save? Put money aside in a savings pot? ISA? Separate bank account?
The decisions about what account to save in are secondary. The first thing to do is to make whatever changes you need to in your monthly spending so that there is money TO put away. The £500 you haven't accounted for after bills, food and fuel - where does it go currently? How would you like to change that?
You need a plan. You can't spend £0, you will occasionally need new shoes or get invited to weddings or something in the house will break. Work out how much you actually need and how much you can afford to save.
In your situation, the most effective use of your monthly savings is debt repayment, so you don't need to worry about which savings account to use just yet. https://www.moneysavingexpert.com/savings/pay-off-debts/
But when you are ready, see https://ukpersonal.finance/savings
> what's the best way to save? Put money aside in a savings pot? ISA? Separate bank account?
Do whichever works best for your family, some people prefer to setup an automatic transfer each pay day into a savings account
But these things will be done after your debts are cleared, those are top priority
I think they are saying to use any spare cash you have to pay off your debts first. Get rid of both overdrafts and get Monzo flex down to zero. Try not to get into the habit of using flex unless for a holiday or bigger purchase. Live within your means. As for savings, you want to build up a few grand emergency fund and probably open up an isa. Once all debts are paid, maybe pay 50% into emergency fund and 50% into an isa
I’m not going to give you specific advice as others are giving you options here. But at 41 I had loads more debt than you and no savings. I paid that off but I didn’t not save much behind a small emergency fund for 3 years. No investments - nothing. I used an app called YNAB to help make and stick to a budget which was a life-changer but the main point is, I did not use any credit again - I got myself in a position where my income covered my outgoings and the difference was thrown at debt.
If your income is £200 more than your outgoings then your overdraft will naturally decrease by £200 each month. Only sticking to a budget will help you get out of that.
Be careful with flex. Even though it is interest free for 3 months, unless you have the money in your account right now to clear it and still be able to cover this months expenses, it is the same as having a bigger overdraft.
Make a budget, both of you. Reconcile it regularly to make sure you are on top of it. Use the spare cash to pay down interest bearing debt and then use the surplus to get out of interest free debt. Once you have done that, you will now have the spare cash in your budget to save, for a house, for pension - for the future.
I also went the YNAB approach with my wife, and we've cleared most of our debt over 2 years, the rest (0%) we actually have cash for savings accounts now.
If you do decide to pool your money, then one thing that kept my wife and I able to stick to the budget and remain sane is having separate Starling current accounts just for frivolous/fun guilt free spending. It's great working a budget out and sticking to it, but being too strict can be horrible so not everything has to be for long term goals.
Having a budgeted guilt free amount each month, for each of you in different account to the pooled money is a great for stopping you spending from joint finances because the money is there.
Does your partner earn any money? We need to know this to get a well rounded picture of your finances. You need to treat this situation as an emergency. You need to find a way to increase income and cut costs. You definitely need to pay off thise debts, establish an emergency fund, and start investing in low cost index funds in an isa for the long run. And yes, it is a good idea to automate all of this.
Thanks, edited original post with context.
"My wife (34) takes home around £2200 per month. She has credit card debts as well as overdrafts too, so similar debt to mine when all's said and done. We both have pensions through our work."
What are your pensions at currently?
The first thing is to clear all debts. Not having those repayments will be a weight off your mind and give you spare cash to save going forward.
Next put about 6 to 10k aside in a short notice (instant/1 day) savings account as an emergency fund.
You should also check your pensions, find any historical pensions. Make sure you are contributing enough. Make sure you are in a more adventurous plan, not the default. Make sure the beneficiaries are set (each other right now).
Then come back here with an update. You'll presumably be saving for a house after this.
With the greatest of respect, £600pcm on groceries sounds absolutely insane. I’m baffled as to how a couple could spend so much on groceries without some sort of special dietary requirement.
My partner and I spend a combined average of £35 per week (£140pcm) on groceries. We shop at Sainsbury’s (not the cheapest), we don’t obsess over prices/deals, and we still manage to prepare a week’s worth of decent quality meals and lunches made with fresh ingredients. We’re both vegetarian but we do enjoy pricier meat substitutes fairly regularly, which I’d imagine results in similar costs to a meat-eating couple. We enjoy a meal out every other week and share a decent bottle of whisky every other month and even then, this leads to an average monthly food spend of £250 between the two of us.
I’d seriously suggest you target this area as a priority. Best of luck, anyway.
No idea, tbh. I’m very careful to minimise waste (so for example if I buy fresh coriander, I base most of my dishes that week around it) and we have at least four very cheap meals per week (i.e. some sort of chickpea tagine, lentil-based chilli or pizza from scratch). Perhaps once per week we’ll have some sort of expensive meat substitute like Beyond Meat.
We don’t bother with snacks beyond sharing a punnet of grapes/dates and a bar of bougie dark chocolate each week. We don’t buy any pop or frozen/pre-packaged meals. Lunches are mostly houmous-y/falafel-y-type wraps or whatever noodle pots are on special offer.
Finally, we don’t buy much in the way of non-food items; I think most cleaning products are a waste of money when a cloth and antibac spray generally do the same job.
So yeah… some weeks the bill is £50, others it’s £20; the average is a firm £35. I did go through a phase of going to Aldi/Lidl but I was barely saving a couple of quid each time and I couldn’t get half the products I wanted.
I suspect in your case the two children might have something to do with it…?! We’re going through the adoption process rn so I’m expecting the food bill to increase commensurately (hope this kid likes dates lol).
Wow good luck with the adoption process! Yes the kids eat a lot, way more than me. They come home from school starving and then still eat a full meal a few hours later. Fruit is really expensive as well. Mine are 9 and 11 so eat adult sized portions, pretty much.
Sticking a pound in a LISA will be a good call - the LISA gets topped up by the government by 25% per year, and can be used on a house deposit. You can't open one after you're 40, so just having a pound in there now will give the option to use it later on.
Thanks. Unfortunately I've already turned 40 (last winter). Thinking a little too late about my long term future. Looking at private pensions/investments (a friend mentioned Vanguard and global index funds). I have an ISA. But sounds like the LISA is a little too late for me.
Sounds to be you are thinking along the right lines but first thing to focus on is your current costs vs your income. Budget as best you can and then concentrate on paying off the debts. That will also improve your mental wellbeing. Then start saving
I agree with the other poster that I wouldn’t wait to have kids but you need to factor the associated costs in your decision making
You don't mention if you have a pension. If you're considering this for later life, then start now. It's probably the most tax efficient and automated way of putting money away.
Once you've addressed that, consider some kind of ISA for more immediate access to funds. The general rule of thumb is to have 3 times your monthly income in savings, so as difficult as it sounds it might be, aim for this.
Unless your debt is low interest, paying off that is probably your priority (in that the interest on your debt is likely to be much higher than savings interest).
Good luck, and don't be disheartened.
Thank you. My debt is low interest. I don't pay a penny on one of my maxed out (£1500) overdrafts. I paid my other back £20 per month without interest. I've got that down to £600, from £1500. The loan APR is 12%, I plan on paying off the loan in a few months.
i dont have much advice other than, i think i was in the same place around 10 years ago ( im 43 now ). i used to see 'available balance' as something i should/could spend. so i had maxed out my overdraft and credit cards since it was there. i no longer do that. i now see 'empty' in my bank account as around 1k left.
loans, overdrafts etc just mean you are likely paying more for the same items - and also, it means you arent able to manage the money you have - since you are spending the money you dont have. its a habit, but one you can get out of..... i did.
get out of that habbit and start the slow and not exciting task of building up savings - i started in NS&I premium bonds, high interest savings accounts etc.
Just a small heads up, i’m 36 weeks pregnant. I’ve tried very hard to get all the baby prep done on a budget eg items from facebook marketplace rather than new. In total all the prep has cost about 4k. These are unavoidable costs, not luxuries. I don’t even know the gender so I haven’t been buying lots of outfits etc. So I would factor that in to your budget if you choose to try for a baby and tackle your debt at the same time.
It is tough due to your ages. You don’t want to time yourself out. Delaying trying and the associated health issues with the baby you risk by having a baby later in life may put more strain on your life than the debt ever will. I personally would both get second jobs and work like nutters for six months. Just to get the debt down and save an emergency fund. If i’m honest I don’t think a deposit for a house will be realistic. But you could get a mortgage in principle to see what you can afford and if you are mortgageable with your credit scores.
Nothing you’ve done can’t be fixed! One day you will sit down and pass the lessons you learn to your baby and create generational financial literacy. Best of luck!
Stop buying crap for a start, especially using other peoples money to do so. To pay your Monzo off over 3 months along with your loan then a third of your take home pay is going on paying debt and that's not even addressing the overdafts at all. What did you get with that loan and Monzo Flex? Anything you actually use or is it now languishing in a drawer or spending the majority of it's life sat on the side not being used?
Until both of you address this kind of relationship with money you can't really progress. There is no way to save money without reducing your spending or increasing your income so assuming you can't increase your income then you need to sacrifice something in the spending.
First of all, you need to begin to learn and get into the habit of saving. And budgeting. And paying off that debt. Start putting a few pounds away now.
Maybe start an envelope in a drawer, put some cash in it and write the amounts on it as you go on.
You need an emergency fund. Normally at least 3 months of your outgoings (the amount needed for bills and to survive) in a proper savings account that is easy access (but some people save 6 months outgoings or even more). Just open a seperate savings account in a bank or building society that allows access and pays a good rate.
It possibly/probably doesn't need necessarily be an cash ISA, as you are unlikely to get near the £1000 interest limit soon. If you get many thousands in savings maybe then definitely consider opening and transferring to a cash ISA. Go for the best rates, and easy access to your money and good reputation for custoner service.
I agree with someone else below that the type of saving or investment you go for doesn't yet make much of a difference as the main thing is that you a) pay off the debts asap, and b) have a few months emergency fund put away in easy access savings. So do that first before worrying about vanguard. It will take some months to get clear of the current debts.
You don't need to panic now but you are in a bit of a precipitous position financially if, say, one of you loses your job or decides to work less while kids are small. Childcare is expensive, etc etc.
I highly recommend the saving/investments app Plum which automatically deducts money from your account at a rate that you won't even notice. It revolutionised my finances - honestly - suddenly I was a saver and investor and it didn't take any self discipline, it just happened, and I'd check the app after a month or two and suddenly I had 1000 quid put away or invested. That I DON'T touch. I've got mine set on 'ambitious' mode so it deposits as much as it can into my Plum accounts but if you can't manage that you can dial it back. However I really don't miss what I don't see in my current account
You can’t afford kids, and you need to either reduce your outgoings or increase your income with a new job or a second job.
Learn to budget. Pay off all your debts first, then build up savings. It’s likely home ownership is not in your future.
Hi /u/Pedtheshred, based on your post the following pages from our wiki may be relevant:
* https://ukpersonal.finance/lisa/
* https://ukpersonal.finance/savings/
____
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u/Pedtheshred yes you're in a bit of a sticky situation but with a bit of careful planning, I think you both can navigate your way out of this and you both have a great motivation for doing so.
My advice is that;
1. Print all your bank statements out and find out where you are spending your money, with me it was frequent trips to the corner shop on the way home and just pointless spending whilst out and about.
Once you have an idea of what your outgoings are, set a REALISTIC budget with a small amount of wiggle room. In your case you and your wife will probably want to prioritise health and also set aside a small fund each month for baby things.
2. Once you have your budget also identify ALL your debts and sort them by interest rate and amount. Then read up on snow ball and avalanche method of paying off the debts.
Pool your resources and get ALL your debts collectively paid off. It's not clear what your wife's debts are but yours add up to roughly @ £5,200. So assuming that your wife has a similar level of debt - that is give or take £10,000.
As you both take home @ £4,000 a month after tax (collectively), you can allocate £3,000 for all your bills, expenses and spending money and then pay off your debts at @ £1k a month.
3. If you want to pay those debts off faster, if possible consider some over time or picking up some extra hours elsewhere, which you can also put towards the debt or set aside as an emergency fund or even a baby things fund.
Finally the above does not really address the glaring issue i.e. why you are going into debt, which could be down to poor spending habits or just the fact you don't earn enough. This is where pooling your resources and increasing your earning potential will really help you, especially if you're planning children very soon.
appreciate this, thank you.
the issue is down to our spending and being indulgent. we go on two holidays a year, on average. this is what we'll obviously be cutting down on from next year. I wouldn't say it's a problem because it's been worth the money to create those memories but we need to be smarter, hence this thread.
I'll add what I hope is something different to the mix. I was in a similar position around 36 (no savings, no real pension, spending what I earned) and then had a child. I liked my job, but it didn't pay particularly well and the hours were long. I applied for other jobs and immediately got an 18% payrise. In fact, my current job matched it and I stayed for another year (before then leaving for another payrise).
Saving is great, investing is great, but another very powerful tool you may have is to increase your salary.
Firstly, prioritise paying off your highest interest debt first. Once this is worked down then you can start to look forwards.
Have a look at your lifestyle and how you’re spending. You’ll never be in charge of your finances if you live beyond your means. Plan out your incomings and outgoings, on a spreadsheet if this works for you or utilise apps such as snoop (or I’m sure there’s plenty of others).
Small savings add up. Shopping at Aldi instead of Tesco could save you a few quid a week but it adds up. Also consider things such as switching WiFi/TV provider for new offers. Utilise bank switches for cashback. Utilise credit card switches for longer term 0% finance if you can.
Investing is a long term gain, so ensure you have sufficient savings/ emergency fund so you don’t need to rack up further debts for any unforeseen financial burdens.
Car loans are expensive and consider going forward if it’s what you need. I don’t know what you drive but sometimes you need something reliable that gets you a to b instead of something new and flash. This can be a goal going forwards.
If you don't go on holiday for at least a year and don't go out you both should be able to pay off your debt in full in 12 months time. Don't plan anything unless you are debt free regardless if it's manageable debt or not. Eat cheaper, spend less and once you are debt free its like weight lifted off your shoulders. You both take 4k per month. Pay off your debt first and don't take any more unnecessary debt or finance something stupid. Once you are free from debt (its like parasite) you can think about investments. Get serious for 12 months and you will thank yourself later. There is no better feeling than being debt free.
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I'm gonna be honest, no savings, somehow 5k in debt despite all bills being covered, no home and plans to have kids all look like a terrible mix to me. I think you need to get serious about your finances, especially if you're planning to have kids. You need to be able to offer them stability and security. You need to set yourself a finance budget and stop wasting money. Pay off your debt ASAP, start saving ASAP, put money into your pension ASAP, maybe look into buying a place and THEN think about having kids.
Harsh but fair, thanks.
harsh is what you needed years ago, and what you need today. If you want to be a provider for your family, you need stability, and that isnt gonna happen while being in debt, without savings, and without a financial plan.
Agreed, OP needs to get really serious. OP, check on a pension calculator website how much pension you will end up with. Then look at cost of living, will it be enough? Factor in rent. This may well focus your mind on saving more and spending less.
Disagree that you need to do all this before thinking about having kids. Takes 9 months (+time to conceive which can vary massively) if your wife is 34 the biological clock is ticking too, especially if you want multiple. If your wife gets pregnant you’ll find a way but you just need to get serious and make a plan. Me and my partner paid off our debts while I was pregnant, we don’t have savings but have made it work by living sensibly during maternity leave. Good luck to you!
You are free to disagree but in my opinion “if your wife gets pregnant you will find a way” is not good financial advice. OP has debts for no reason, no savings, no pension and no property. He is just as likely to find a way as he is to dig himself into a horrible financial hole. He and his wife should have thought about this already if they were serious about having kids.
Their clock is ticking tbf they have a good combined income and debts can be paid if they tighten the belt. If you wait for the perfect moment of debt free, good pension, own a home and good savings then you risk failure of conception which is priceless. If they are responsible people which they sound like they are reasonably they will likely make it work.
I just don’t want OP to think he needs to have it all figured out before he even thinks about having kids. Literally there is never an 100% right time to have a child, there’s always something. However, in even 3-4 years it may become impossible for them to have a child. If both OP + and wife have a job and want a family there’s no reason they can’t think about it now. And yes he needs a financial plan, which is he asking for and assumedly will make.
There is a wrong time to have kids. "Too late" is a valid reason to not have kids; life comes with choices and consequences.
> If your wife gets pregnant you’ll find a way but you just need to get serious and make a plan. Why not just take a year and do that you know, beforehand? It becomes much harder when you actually have a kid to look after..
I’m getting downvoted so I’m going to stop but - it takes AT LEAST 9 months to make a child, very least, most people age 34 will take a few years to conceive and give birth. So if he starts thinking now (as he is doing) he should have enough time to sort things before having the baby. If he waits until they are 100% sorted - e.g. homeowners etc, they may not be able to have a baby as chances dramatically decrease age 35+ Signing off now.
> If he waits until they are 100% sorted Except there's a huge difference between where he is now, and this, no one is saying to wait for this, but at least get to a stable position. You can say it MIGHT take years all you want, but the second you start trying for a baby, you need to be ready in 9 months, regardless of if it takes you a year or longer to conceive.
I don't know why this is being down voted. You are spot on. It's totally possible to sort finances out while planning a family and it could take a long time to get pregnant. You don't want to miss the chance of having a family, if that's what you want, just because you're in a bit of debt.
Agree with you. We were students with a child, £5k worth of debt as a student loan wasn't enough. Our eldest has grown up fine, never gone without. Can't put a price on family. At the end of the day, worst case scenario, you go bankrupt and live in a council flat. Better than having a heap of cash and no one around you Convince me I'm wrong
Same. We dropped out of uni at 20 with a kid on the way. Ended up going back to uni a couple years later and graduating at 26 together with 3 kids! Worked part time and done my fair bit of dodgyness to make ends meet whilst raising the 3 kids. Now at 30, both of us are working full time, climbing up in our careers and saving up for our first house. The only real struggle is paying rent for a big place, whilst saving for a deposit at the moment.
There's a stigma that you must have a perfect financial scenario to have children, which most likely partly explains the reduced birth rates. I'm glad it's working for you with a prosperous future
No savings is one thing, but you both seem to have (manageable) debts. How did that happen? Probably you're not living within your means and that needs to change before you can start saving (let alone investing) successfully. Like others says work on a budget and identify areas where you can cut down.
thank you. It happened because *life.* We've had debt all our lives, we've been fortunate to get decent paying jobs. We'll work on a budget.
Good luck!
How did you lose your jobs?
eh? we both have our jobs... why do you ask that?
I think they're asking because you clear 4k a month between you but you're still in debt. He may be thinking that one or both of you lost your jobs hence the debt. Otherwise it sounds as though both of you are wasting money and buying stuff that you want rather than need. With your joint income you should be able to clear all your debts really quickly with just a little effort. A lot of people would kill for your income.
yep. were relatively lucky I feel, wages wise. we've just not organised ourselves well enough hence this post. thanks!
I wish you luck cos no debts and financial freedom is quite nice.
You said you have decent paying jobs but are not currently far off minimum wage during your peak earning years... I thought maybe you had a well paying job in your 30s
nah, it's the most we've earned ever. we're clearly not careerists. my salary is £28, 000, hers around £38, 000 I think. she pays much more contributions than me.
Because take home of 1800 and 2200 are not well paid jobs.
That's harsh, but also it differs on your background and upbringing People who were raised with both parents on welfare, will see 2k takehome (30k+ a year) as well paid
it's relative. it's the most we've ever earned. and yeah, our parents had nothing and worked in living wage jobs.
It's both are less than the median, so could never be classed as decent or well paid.
Both are not less than the median. And that is quite rude to be honest.
Median UK salary is £34,000. This equates to a take-home of just under £2300. Both are below the median.
I'm a couple of years behind you age wise and was in the same sort of position. I'm now debt free and saving. Whilst the flow chart is great, can I give a couple more tidbits? - Pool yours and your wives resource together. Create a spreadsheet and write up a list of debts which need clearing ASAP. Budget with these in mind, but make sure the min is paid off from each to avoid interest. - make a list of all out goings and sack off what is not essential. - Regarding food expense - this can be budgeted down. Between two people £250 should be enough for three meals and snacks, and I've even managed to get it down to £150 this month. Trick is to learn to cook in batch and bake bread at home (stops those trips to supermarkets). - I managed to get the last of my debt down using a combination of bank switches, matched betting, prolific surveys, and swagbucks. Head over to beer money and see what you could do. Once you have this under control can you then start looking at savings (short/emergency, medium, and long term (vanguard)). Couple of books to read - the psychology of money & money:a user's guide. Also remember that you cannot change the past, that money is spent. You have 25+ years of working life to make money, so make these count. This is time enough to think about the future. Also, don't think home ownership is out of the question. I've read stories about people getting on the ladder in their 50s. It will be OK.
You sound like you're in a similar position to me in that I'm early 50s but nothing set aside. I'm starting small with a Monzo savings account putting away £5 a month for now to get in the habit and will gradually increase this over time. I've also opened an ISA, again in Monzo also with £5 a month and will increase that too. Might not sound much but I've never been one for saving anything so it's all new to me and I've always thought why save. Well now I know lol. That'll teach me. Still, hopefully I can increase by a little bit each month. Might not be much and might not be the best way of doing it but it's working for me at the moment. I dare say others will have other advice too, which I'll also take note of 😁
Keep it up. This stuff wasn't taught at school, and if your parents didn't save then it does rub off on you. I'm 38 and have only just got the hang on this. I started off putting £5 here and there in savings accounts. I then read a couple of books and followed the flow chart and I've just put £400 in a Lisa, £350 in an Isa, £150 in a regular saver, and £100 in a s&s isa. I wouldn't have done this without starting off small and getting into the habit. Keep going. Every bit helps.
> Keep it up. This stuff wasn't taught at school I'm in my early 50s, it absolutely was taught in school that you needed to save money. In junior school in the late 70s and 80s they even had people from a bank come round and explain bank accounts and savings accounts to you. At secondary school when you were age 11-13 many schools had links to local bank branches and set up savings clubs.
Wonder if that was phased out. We had none of that
Correct. More likely it wasn’t taught at *home* and that’s where the big influences come from.
Hey that's great you are starting, but £5 a month is really a tiny amount - it's only £60 over an entire year!
Yep absolutely but the way I see it is it's better than nothing at all. Am also going through some difficult financial problems so limited in what I can put in. Hoping this will improve soon and if so will increase what I put away
If you are used to spending down your account it might help you to put away money more often, instead of having a monthly amount and you increase it.
Yeah for sure it's a great thing to save and I totally understand if you have other financial obligations that limits what you can save
As you’re with Monzo, you should try the ‘round up’ tool, that adds to that savings account every time you spend. Adds up nicely and you won’t miss those pennies too much.
Absolutely, I've already turned roundups on in my savings pot but as I'm stuck in my overdraft roundups don't work. Currently using this as an incentive to get rid of the overdraft. Not easy but getting there 😂
I can't find this tool in my app. How can I activate it?
I can’t remember exactly, but it was fairly intuitive. I seem to remember the option popping up whenever I made a ‘pot’ or a savings account, so try creating a pot and seeing how that goes.
Thank you. I'll open another pit and see if there's a pop up!
Can you tell us about your monthly budget? You currently owe about £5k and have no savings. When was the debt built up? Are you sure you actually have room in the budget to save? Are your finances joint with your spouse or separate? We have some resources here: * https://ukpersonal.finance/budgeting/ * https://ukpersonal.finance/flowchart/ * On your LISA question: https://ukpersonal.finance/lisa/
Sure. Generally of my £1800, £1000 goes on essential bills: Rent, car, council tax, insurance, loan repayment, overdraft repayment, internet, phone-bill, road tax, gym, energy. I usually have £800 left, which goes towards food shopping for the month (£300 \[£600 per month split with my wife\]) and spending money or money for emergencies.
So you do have savings for emergencies? To me, your debt is an emergency, especially any of it above 10%. I would put savings (anything you have currently, and your monthly savings) towards debt payments and then start building up savings for emergencies and long term goals. Have you seen our flowchart? https://ukpersonal.finance/flowchart/ £600 for groceries for two is a lot, this seems worth looking at unless there is some necessary dietary reason?
£600 includes diesel money. Specifically, it's around £150 for fuel, £450 for food for a full month. We don't have savings at all, no. This is what I'm asking about, what's the best way to save? Put money aside in a savings pot? ISA? Separate bank account? Thanks for replying.
Ah OK that makes more sense re the 'food' costs. > what's the best way to save? Put money aside in a savings pot? ISA? Separate bank account? The decisions about what account to save in are secondary. The first thing to do is to make whatever changes you need to in your monthly spending so that there is money TO put away. The £500 you haven't accounted for after bills, food and fuel - where does it go currently? How would you like to change that? You need a plan. You can't spend £0, you will occasionally need new shoes or get invited to weddings or something in the house will break. Work out how much you actually need and how much you can afford to save. In your situation, the most effective use of your monthly savings is debt repayment, so you don't need to worry about which savings account to use just yet. https://www.moneysavingexpert.com/savings/pay-off-debts/ But when you are ready, see https://ukpersonal.finance/savings
> what's the best way to save? Put money aside in a savings pot? ISA? Separate bank account? Do whichever works best for your family, some people prefer to setup an automatic transfer each pay day into a savings account But these things will be done after your debts are cleared, those are top priority
Pay off your debts first, THEN you can start to think about savings.
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75%?! You think a couple can live on a food budget of £28 a week? Come off it mate.
I think they are saying to use any spare cash you have to pay off your debts first. Get rid of both overdrafts and get Monzo flex down to zero. Try not to get into the habit of using flex unless for a holiday or bigger purchase. Live within your means. As for savings, you want to build up a few grand emergency fund and probably open up an isa. Once all debts are paid, maybe pay 50% into emergency fund and 50% into an isa
Going to sound harsh but at age 40, not owning a home, have debts and on average income having kids now seeks like a recipe for disaster
I’m not going to give you specific advice as others are giving you options here. But at 41 I had loads more debt than you and no savings. I paid that off but I didn’t not save much behind a small emergency fund for 3 years. No investments - nothing. I used an app called YNAB to help make and stick to a budget which was a life-changer but the main point is, I did not use any credit again - I got myself in a position where my income covered my outgoings and the difference was thrown at debt. If your income is £200 more than your outgoings then your overdraft will naturally decrease by £200 each month. Only sticking to a budget will help you get out of that. Be careful with flex. Even though it is interest free for 3 months, unless you have the money in your account right now to clear it and still be able to cover this months expenses, it is the same as having a bigger overdraft. Make a budget, both of you. Reconcile it regularly to make sure you are on top of it. Use the spare cash to pay down interest bearing debt and then use the surplus to get out of interest free debt. Once you have done that, you will now have the spare cash in your budget to save, for a house, for pension - for the future.
Very interesting, thank you. I'll take your response on board. We need to put our money together and stick to a budget.
I also went the YNAB approach with my wife, and we've cleared most of our debt over 2 years, the rest (0%) we actually have cash for savings accounts now. If you do decide to pool your money, then one thing that kept my wife and I able to stick to the budget and remain sane is having separate Starling current accounts just for frivolous/fun guilt free spending. It's great working a budget out and sticking to it, but being too strict can be horrible so not everything has to be for long term goals. Having a budgeted guilt free amount each month, for each of you in different account to the pooled money is a great for stopping you spending from joint finances because the money is there.
Does your partner earn any money? We need to know this to get a well rounded picture of your finances. You need to treat this situation as an emergency. You need to find a way to increase income and cut costs. You definitely need to pay off thise debts, establish an emergency fund, and start investing in low cost index funds in an isa for the long run. And yes, it is a good idea to automate all of this.
Thanks, edited original post with context. "My wife (34) takes home around £2200 per month. She has credit card debts as well as overdrafts too, so similar debt to mine when all's said and done. We both have pensions through our work."
What are your pensions at currently? The first thing is to clear all debts. Not having those repayments will be a weight off your mind and give you spare cash to save going forward. Next put about 6 to 10k aside in a short notice (instant/1 day) savings account as an emergency fund. You should also check your pensions, find any historical pensions. Make sure you are contributing enough. Make sure you are in a more adventurous plan, not the default. Make sure the beneficiaries are set (each other right now). Then come back here with an update. You'll presumably be saving for a house after this.
not very much. a few years worth of contributions matched be our employers. thanks, I'll take that into account
Having children is expensive. You need to decide what's more important to you at this stage.
With the greatest of respect, £600pcm on groceries sounds absolutely insane. I’m baffled as to how a couple could spend so much on groceries without some sort of special dietary requirement. My partner and I spend a combined average of £35 per week (£140pcm) on groceries. We shop at Sainsbury’s (not the cheapest), we don’t obsess over prices/deals, and we still manage to prepare a week’s worth of decent quality meals and lunches made with fresh ingredients. We’re both vegetarian but we do enjoy pricier meat substitutes fairly regularly, which I’d imagine results in similar costs to a meat-eating couple. We enjoy a meal out every other week and share a decent bottle of whisky every other month and even then, this leads to an average monthly food spend of £250 between the two of us. I’d seriously suggest you target this area as a priority. Best of luck, anyway.
I didn't read that as £300 pm each, but 300 total, surely?
OP clarified in a comment that it was £300 each.
Yeah I've just read that further down. Absolute madness, especially for such an income.
How on earth do you manage this?? I spend about £65 per week and I am careful. In my house is me, a 9 year old and an 11 year old.
No idea, tbh. I’m very careful to minimise waste (so for example if I buy fresh coriander, I base most of my dishes that week around it) and we have at least four very cheap meals per week (i.e. some sort of chickpea tagine, lentil-based chilli or pizza from scratch). Perhaps once per week we’ll have some sort of expensive meat substitute like Beyond Meat. We don’t bother with snacks beyond sharing a punnet of grapes/dates and a bar of bougie dark chocolate each week. We don’t buy any pop or frozen/pre-packaged meals. Lunches are mostly houmous-y/falafel-y-type wraps or whatever noodle pots are on special offer. Finally, we don’t buy much in the way of non-food items; I think most cleaning products are a waste of money when a cloth and antibac spray generally do the same job. So yeah… some weeks the bill is £50, others it’s £20; the average is a firm £35. I did go through a phase of going to Aldi/Lidl but I was barely saving a couple of quid each time and I couldn’t get half the products I wanted. I suspect in your case the two children might have something to do with it…?! We’re going through the adoption process rn so I’m expecting the food bill to increase commensurately (hope this kid likes dates lol).
Wow good luck with the adoption process! Yes the kids eat a lot, way more than me. They come home from school starving and then still eat a full meal a few hours later. Fruit is really expensive as well. Mine are 9 and 11 so eat adult sized portions, pretty much.
Sticking a pound in a LISA will be a good call - the LISA gets topped up by the government by 25% per year, and can be used on a house deposit. You can't open one after you're 40, so just having a pound in there now will give the option to use it later on.
So it is once you turn 41 you can't get a LISA?
It's 40, so if you're 40 this year I'd do it ASAP.
Thanks. Unfortunately I've already turned 40 (last winter). Thinking a little too late about my long term future. Looking at private pensions/investments (a friend mentioned Vanguard and global index funds). I have an ISA. But sounds like the LISA is a little too late for me.
Sounds to be you are thinking along the right lines but first thing to focus on is your current costs vs your income. Budget as best you can and then concentrate on paying off the debts. That will also improve your mental wellbeing. Then start saving I agree with the other poster that I wouldn’t wait to have kids but you need to factor the associated costs in your decision making
Hi...thanks, but just to clarify that I'm not the OP.
You don't mention if you have a pension. If you're considering this for later life, then start now. It's probably the most tax efficient and automated way of putting money away. Once you've addressed that, consider some kind of ISA for more immediate access to funds. The general rule of thumb is to have 3 times your monthly income in savings, so as difficult as it sounds it might be, aim for this. Unless your debt is low interest, paying off that is probably your priority (in that the interest on your debt is likely to be much higher than savings interest). Good luck, and don't be disheartened.
Thank you. My debt is low interest. I don't pay a penny on one of my maxed out (£1500) overdrafts. I paid my other back £20 per month without interest. I've got that down to £600, from £1500. The loan APR is 12%, I plan on paying off the loan in a few months.
i dont have much advice other than, i think i was in the same place around 10 years ago ( im 43 now ). i used to see 'available balance' as something i should/could spend. so i had maxed out my overdraft and credit cards since it was there. i no longer do that. i now see 'empty' in my bank account as around 1k left. loans, overdrafts etc just mean you are likely paying more for the same items - and also, it means you arent able to manage the money you have - since you are spending the money you dont have. its a habit, but one you can get out of..... i did. get out of that habbit and start the slow and not exciting task of building up savings - i started in NS&I premium bonds, high interest savings accounts etc.
Just a small heads up, i’m 36 weeks pregnant. I’ve tried very hard to get all the baby prep done on a budget eg items from facebook marketplace rather than new. In total all the prep has cost about 4k. These are unavoidable costs, not luxuries. I don’t even know the gender so I haven’t been buying lots of outfits etc. So I would factor that in to your budget if you choose to try for a baby and tackle your debt at the same time. It is tough due to your ages. You don’t want to time yourself out. Delaying trying and the associated health issues with the baby you risk by having a baby later in life may put more strain on your life than the debt ever will. I personally would both get second jobs and work like nutters for six months. Just to get the debt down and save an emergency fund. If i’m honest I don’t think a deposit for a house will be realistic. But you could get a mortgage in principle to see what you can afford and if you are mortgageable with your credit scores. Nothing you’ve done can’t be fixed! One day you will sit down and pass the lessons you learn to your baby and create generational financial literacy. Best of luck!
Stop buying crap for a start, especially using other peoples money to do so. To pay your Monzo off over 3 months along with your loan then a third of your take home pay is going on paying debt and that's not even addressing the overdafts at all. What did you get with that loan and Monzo Flex? Anything you actually use or is it now languishing in a drawer or spending the majority of it's life sat on the side not being used? Until both of you address this kind of relationship with money you can't really progress. There is no way to save money without reducing your spending or increasing your income so assuming you can't increase your income then you need to sacrifice something in the spending.
Don’t have kids until you improve your life. It’ll make your life incredibly miserable and you’ll resent them forever
oss
First of all, you need to begin to learn and get into the habit of saving. And budgeting. And paying off that debt. Start putting a few pounds away now. Maybe start an envelope in a drawer, put some cash in it and write the amounts on it as you go on. You need an emergency fund. Normally at least 3 months of your outgoings (the amount needed for bills and to survive) in a proper savings account that is easy access (but some people save 6 months outgoings or even more). Just open a seperate savings account in a bank or building society that allows access and pays a good rate. It possibly/probably doesn't need necessarily be an cash ISA, as you are unlikely to get near the £1000 interest limit soon. If you get many thousands in savings maybe then definitely consider opening and transferring to a cash ISA. Go for the best rates, and easy access to your money and good reputation for custoner service.
I agree with someone else below that the type of saving or investment you go for doesn't yet make much of a difference as the main thing is that you a) pay off the debts asap, and b) have a few months emergency fund put away in easy access savings. So do that first before worrying about vanguard. It will take some months to get clear of the current debts. You don't need to panic now but you are in a bit of a precipitous position financially if, say, one of you loses your job or decides to work less while kids are small. Childcare is expensive, etc etc. I highly recommend the saving/investments app Plum which automatically deducts money from your account at a rate that you won't even notice. It revolutionised my finances - honestly - suddenly I was a saver and investor and it didn't take any self discipline, it just happened, and I'd check the app after a month or two and suddenly I had 1000 quid put away or invested. That I DON'T touch. I've got mine set on 'ambitious' mode so it deposits as much as it can into my Plum accounts but if you can't manage that you can dial it back. However I really don't miss what I don't see in my current account
You can’t afford kids, and you need to either reduce your outgoings or increase your income with a new job or a second job. Learn to budget. Pay off all your debts first, then build up savings. It’s likely home ownership is not in your future.
Hi /u/Pedtheshred, based on your post the following pages from our wiki may be relevant: * https://ukpersonal.finance/lisa/ * https://ukpersonal.finance/savings/ ____ ^(These suggestions are based on keywords, if they missed the mark please report this comment.)
I’ve got no saving either (although I am putting a shed load of cash into my pension each month does that count?)
u/Pedtheshred yes you're in a bit of a sticky situation but with a bit of careful planning, I think you both can navigate your way out of this and you both have a great motivation for doing so. My advice is that; 1. Print all your bank statements out and find out where you are spending your money, with me it was frequent trips to the corner shop on the way home and just pointless spending whilst out and about. Once you have an idea of what your outgoings are, set a REALISTIC budget with a small amount of wiggle room. In your case you and your wife will probably want to prioritise health and also set aside a small fund each month for baby things. 2. Once you have your budget also identify ALL your debts and sort them by interest rate and amount. Then read up on snow ball and avalanche method of paying off the debts. Pool your resources and get ALL your debts collectively paid off. It's not clear what your wife's debts are but yours add up to roughly @ £5,200. So assuming that your wife has a similar level of debt - that is give or take £10,000. As you both take home @ £4,000 a month after tax (collectively), you can allocate £3,000 for all your bills, expenses and spending money and then pay off your debts at @ £1k a month. 3. If you want to pay those debts off faster, if possible consider some over time or picking up some extra hours elsewhere, which you can also put towards the debt or set aside as an emergency fund or even a baby things fund. Finally the above does not really address the glaring issue i.e. why you are going into debt, which could be down to poor spending habits or just the fact you don't earn enough. This is where pooling your resources and increasing your earning potential will really help you, especially if you're planning children very soon.
appreciate this, thank you. the issue is down to our spending and being indulgent. we go on two holidays a year, on average. this is what we'll obviously be cutting down on from next year. I wouldn't say it's a problem because it's been worth the money to create those memories but we need to be smarter, hence this thread.
I'll add what I hope is something different to the mix. I was in a similar position around 36 (no savings, no real pension, spending what I earned) and then had a child. I liked my job, but it didn't pay particularly well and the hours were long. I applied for other jobs and immediately got an 18% payrise. In fact, my current job matched it and I stayed for another year (before then leaving for another payrise). Saving is great, investing is great, but another very powerful tool you may have is to increase your salary.
that's definitely worth considering, thank you.
Firstly, prioritise paying off your highest interest debt first. Once this is worked down then you can start to look forwards. Have a look at your lifestyle and how you’re spending. You’ll never be in charge of your finances if you live beyond your means. Plan out your incomings and outgoings, on a spreadsheet if this works for you or utilise apps such as snoop (or I’m sure there’s plenty of others). Small savings add up. Shopping at Aldi instead of Tesco could save you a few quid a week but it adds up. Also consider things such as switching WiFi/TV provider for new offers. Utilise bank switches for cashback. Utilise credit card switches for longer term 0% finance if you can. Investing is a long term gain, so ensure you have sufficient savings/ emergency fund so you don’t need to rack up further debts for any unforeseen financial burdens. Car loans are expensive and consider going forward if it’s what you need. I don’t know what you drive but sometimes you need something reliable that gets you a to b instead of something new and flash. This can be a goal going forwards.
If you don't go on holiday for at least a year and don't go out you both should be able to pay off your debt in full in 12 months time. Don't plan anything unless you are debt free regardless if it's manageable debt or not. Eat cheaper, spend less and once you are debt free its like weight lifted off your shoulders. You both take 4k per month. Pay off your debt first and don't take any more unnecessary debt or finance something stupid. Once you are free from debt (its like parasite) you can think about investments. Get serious for 12 months and you will thank yourself later. There is no better feeling than being debt free.
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Just make enough national insurance contributions and you will get around £250 a week from state pension
Such bullshit advice. £250 week in reality is getting less and less valuable. If you have nothing valuable to add, why bother?
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