What do I do now with our finances ?

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Pudding

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Hi there.

I am in my mid 40s, married with two kids. One is doing the Leaving and intends to go to a local college rather than Dublin. The second lad is only starting secondary school next year. Between myself and my wife we earn approx €110,000 gross and she is in a public sector job which she joined in 2006. She currently does a four day week. Our combined net monthly take home pay is about €5750 but that’s with VHI, property tax and pension taken out.

We currently have about €20,000 in savings and we are mortgage and debt free. I currently put 25% of my salary into my pension and my employer puts in another 6%. I earn €71000 per annum. I also invested in solar which gives me zero electricity bill for the year also. My home is worth approx €600k

Can anyone give me any advice in trying to put my finances in order as I fund lately we are spending all of our monthly salaries whereas we should be saving. Thanks
 
Pudding said:
Can anyone give me any advice in trying to put my finances in order as I fund lately we are spending all of our monthly salaries whereas we should be saving. Thanks
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If you own a mortgage-free home worth €600k in your mid-40s, while maximising your tax-relieved pension contributions, I would suggest that your finances are already in good shape.

Your kids are at an expensive stage - that won’t always be the case.
 
Do a spending diary for a few months to track where the money is going, the spend might be justified or might not but you'll only know by figuring out where the money is going then you can see if some areas are excessive and can be better budgeted.

Lots of different apps etc to do it or use a spreadsheet or personally I prefer an actual diary and pen!
 
Pudding said:
whereas we should be saving.
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If you are putting €22k a year into your pension you are saving lots! Likewise your spouse with a public service pension. This is all a kind of saving.

You are in great financial shape for your age. No need to change whatever you are doing. There are some bores on AAM with tips on how to darn your old socks but just ignore them, life is too short.

Pudding said:
Our combined net monthly take home pay is about €5750 but that’s with VHI, property tax and pension taken out.
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One thing to note is that if you are getting VHI deducted at payroll you might not be getting the best value deal. Take a bit of time to shop around.
 
€5750 spend each month with no childcare and mortgage seems a bit spendy but as the others say, put together a spending diary and track where the money is going. There is no issue spending it as you are significantly saving with the pension but you may be wary of lifestyle creep and want to avoid that.

Cars & car loans
Fuel, insurance, maintenance
House maintenance
Food and eating out, take away.
Entertainment
Clothes & shoes
School costs, books, trips, etc
Phones, broadband
Subscriptions
Rubbish, gas, electricity - house running expenses
Leisure and sport activities
Gifts, parties, celebrations, Christmas etc
Holidays & nights away.
Etc

The diary will help you understand the spend and you can make family decisions on what is important to you to keep, change, or stop using.

Best of luck, you seem to be doing really well and you should have some golden times with the kids in the next 4-6 years when they are still at home and you have the ability to plan and take some excellent holidays with them.
 
Dr Strangelove said:
There are some bores on AAM with tips on how to darn your old socks but just ignore them, life is too short.
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I expected a retort like this from you.

The OP is spending money somewhere and the suggestions about keeping a diary of his spending habits is a great start.

Is he cooking his meals from scratch. Are there regular visits to JD Sports. Maybe the nails could be done every second week. Is he driving a petrol guzzler...etc.
 
To me proper budgeting is not about darning socks! If you have enough as such then to me the motivation is to spend as little as needed on the things you must have so that you can spend on all the things you want rather than need, for example have the cheapest electricity deal possible and eat nice meals out on the savings to put it simplistically.
 
gledswood said:
I expected a retort like this from you.

The OP is spending money somewhere and the suggestions about keeping a diary of his spending habits is a great start.

Is he cooking his meals from scratch. Are there regular visits to JD Sports. Maybe the nails could be done every second week. Is he driving a petrol guzzler...etc.
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does it matter? all seems to be in hand, no point in frugality for frugality's sake.
 
As has been pointed out, you are saving 25% of your salary. People often don't count pension saving, which they should! As also pointed out, your kids are expensive too, so don't worry if things are tight for a few years. If you feel you don't have enough cash at the moment, redirect some of your pension savings to cash savings for a while to build up cash reserves and then go back to maxing out.

But overall, being mortgage free in your mid 40s is a brilliant position to be in.

Steven
www.bluewaterfp.ie
 
I suppose it is about control, if you know in what Category the money is being spent then you feel in control and mentally approved the spend. If you just see €6K going in at the start of the month and €0 being there at the end of the month then of course you get a bit stressed because it just disappears.
 
Almost 6k a month for a family of four net of health insurance and with no mortgage or electricity bill does seem quite high? Is there a large childcare cost that is unavoidable until secondary school or large commuting costs or school fees? Otherwise biggest bill should be grocery?
 
misemoi said:
Almost 6k a month for a family of four net of health insurance and with no mortgage or electricity bill does seem quite high? Is there a large childcare cost that is unavoidable until secondary school or large commuting costs or school fees? Otherwise biggest bill should be grocery?
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Nope. None of the above. Both of us work locally and spend about €200 on diesel. The other car is electric so that’s free. I guess I’ll have to drill down on what we’re spending it on
 
Teenagers years and secondary school students are definitely expensive. Perhaps less than creches years but not that far off. However to me, having kids approximately the same age, it seems quite high. We are looking more at 4.5k with about 10/12k spent on holidays included. But cars would be an additional expense, generally small and every 10 years or so. Our net income would be similar. We are careful somewhat but spend on what we like.
 
Pudding said:
Nope. None of the above. Both of us work locally and spend about €200 on diesel. The other car is electric so that’s free. I guess I’ll have to drill down on what we’re spending it on
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Def do a deep dive. Even if the expenses continue then at least you will be comfortable knowing what you are spending on. Especially if it feels it is all gone every month, how do seasonal things like Christmas and holidays get covered? I have always been better at knowing my spending when I had almost none to spend and had to monitor carefully!
 
I did a spending diary for a while, I would say up to 10 years ago. Found it very useful. Helpful to know where you can cut and what you can spend if you want to. I was supposed to go back to it a couple of years ago as I know our expenses have increased massively since then. Just did not take the time yet.
 
Looks like you are in a really good spot. Debt free, maximising pension, and hard cash to hand should something unexpected arise.

Agree with earlier comments that you should track your spending. An approach you could take here is set a realistic monthly saving target, and cut where needed to meet that target. May take a few months, even a year to get there.

That is what I do. Set a target, meet it, and then spend whatever is left on whatever I like. Took awhile but adjusted my spending behaviour to ensure I meet my saving target each month. On the rare months I now fall short of my saving target, I carry the shortfall forward and make it up.

May seem unnecessarily militant but it keeps me focused, and I never beat myself up, or fret, if I spent wisely or stupidly (post saving) in any given month. It is a nice place to reach for.
 
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