We can’t cope on one income, can we?
After going back to work and hating it, and realising that nearly all my salary would be going on nursery fees I started to look at how we’d manage financially if I quit.
Firstly I took a really good look at exactly what I was taking home after childcare, petrol, parking and then added on the realities of the costs of working, shop bought lunches, extra takeaways etc. that come from a lack of time to plan and prepare when getting everyone out of the house on time. For me this meant I was £200 a month better off (at best).
So the reality was we were essentially going to be without a salary anyway (I know for some people £200 means the difference between paying the mortgage or not- I know I’m in a fortunate position). Either way we needed to take a serious look at our finances. Here are the steps I took, and ones you could consider if you’re looking for your own career space.
1) Stop spending money
I know that’s a pretty novel idea, but it seemed to work. I came across (on pinterest- no original thought here) the idea of a ‘no spend month’ and as I was looking at this in January it was perfect as we had a house full of new toys and cheese and biscuits. The no spend month was great for 3 reasons, firstly we saved money and were able to bolster our emergency fund, secondly it proved we were able to live within our potentially reduced income, and thirdly it made us aware of how much we’d been randomly buying things we didn’t need.
2) Get your bills in order
We’re generally OK at this, I read Martin Lewis’s email, shop around for insurance etc., but it’s always worth checking if you can save money, and what you actually need- we cancelled a gym membership and reduced and haggled our TV and internet.
3) Analyse your spending
There are some great budgeting tools out there which will profile your spending habits. When I did this, I tried to be really honest about our spending, especially on eating out which I knew was too high. The results of the budget tool were balanced with our new income, which is great, but I’d left out holidays. I initially thought this would be fine, that we could swap holidays for me not having to go to work, but when I mentioned this to my friends they were aghast (nice with it though). I took their reaction on board and took another look. If I stopped getting lunch out a few times a week we’d be able to afford a holiday. No contest.
The money blogger Mr Money Moustache says wisely ‘the world is not your personal buffet… sustenance comes from your backpack.’ I like that, I’m going to be doing a lot of picnics and packed lunches this year. My kids are generally good eaters, which is great, but 2x kids meals for toddlers is expensive (plus who actually enjoys eating out with a 1 year old?)
4) Online banking
I’m sure most people do this (?) but I think if you’re going to be a lot closer to the overdraft you need to be checking your banking frequently so you can plan and spread things where you need to.
5) Emergency fund, the car needs work, the washing machine breaks etc etc. You know how much will make you feel secure.
6) Meal planning
Boring but necessary, I found a few months ago that I was trying to keep costs down in our online shop but then totally negating that by doing a ‘top up’ at the weekend (which always seemed like £40 for some bread and hummus?!) Also do you find yourself throwing food away? I found I was planning too many full meals, when realistically sometimes we’d just have soup or beans on toast, you need to plan realistically based on how your family eats (not how you think you should!)
In the dark days of new babyhood we used to have roughly the same thing every week so I didn’t have to think about it, it was
Sunday- roast, Monday- curry (leftover meat), Tuesday- takeaway, Wednesday- fish, Thursday- pasta, Friday- pizza (super cheap homemade) Saturday, whatever we’d bought in the top up (see above). I know that’s not particularly gastronomically inspiring, but it’s what got us through, and could be a good place to start if you’re new to meal planning.
7) Days out and activities
This is probably worth another whole post in itself, but if you’re reducing your income you’ll need to think about days out. A trip to see a show, lunch, travel for me and two tinies cost me the best part of £70, and Shakespeare it weren’t! With a bit of searching you can find brilliant cheap (or free) days out, and save the paid ones for a real treat. We got National Trust membership for Christmas and have already got our money’s worth (great for picnics when the weather warms up a bit!).
So that’s where we’re up to with our budgeting, although I’m in my first month post salary so I may have to look again if it doesn’t add up. We still have some luxuries, my 16 month is in nursery one school day a week, we have a cleaner, and I have a gym membership. All these I could give up if needed (although I dunno, the nursery is pretty helpful… maybe I’d rather go back to work…)
What do you think? Are there any steps you’ve taken that I’ve missed?