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Minimum income calculator

Minimum annual wage for a couple with one child aged under 1, (adjusted to account for our actual mortgage and energy costs) according to the Joseph Rowntree Foundation’s Minimum Income Standard

Ever since I started this blog, I have been plagued by the thought that potential readers would be perfectly justified in dismissing my money-saving efforts as ridiculous. At the outset, I set myself a budget of £80 a week, after mortgage and household bills. To me, it sounded high; after all, unemployment benefit in the UK is currently set at £71 a week and that’s for everything. What’s more, I’ve been regularly relying on store-cupboard ingredients, falling back on store-card loyalty points, foreign currency or vouchers that I had in reserve. I’ve even gone over budget a couple of times. In short, I have felt like a bit of a fraud, albeit one that ’fesses up to her failings.

Today, however, the Centre for Research in Social Policy, funded by the Joseph Rowntree Foundation, published a report entitled A Minimum Income Standard for the UK. It’s a fascinating read. According to the report: “A minimum standard of living today includes, but is more than just food, clothes and shelter. It is about having what you need in order to have the opportunities and choices necessary to participate in society.” You can read the report and discover more about the Centre’s approach here.

Minimum income calculator

Weekly outgoings for a couple with no children, (adjusted to account for our actual mortgage and energy costs) according to the Joseph Rowntree Foundation’s Minimum Income Standard

What I found particularly heartening is that, using the website’s Minimum Income Calculator, I have discovered that my weekly budget falls well below the ‘minimum’: in fact, as a couple with no children, my husband and I would need £557.28 per week to conform to the standard of living defined in this report. To make a direct comparison (i.e. stripping out mortgage costs and household bills), my weekly budget should be £128.30. It appears I am £48.30 short of attaining this meagre standard each week. Now clearly, I actually have more money than this: I am choosing to save it rather than spend it and I am lucky to be in a position to choose at all.

However, it’s not as if we’re saving to buy a pair of designer shoes. We’re saving for the next stage of our lives and that has been bought into sharp perspective by a further turn on the Minimum Income Calculator.

Reader, I would like to have a baby. There I’ve said it. I’m not saying that I want to have a baby right this second, but I would like one in the next few years. I am 30, I am married and I own a tiny proportion of my own home. To the casual observer, there is no reason on this earth that I shouldn’t have one.

My employment contract entitles me to statutory maternity pay (SMP). Nothing more, nothing less. For those not familiar with SMP: for the first six weeks, you get 90% of your average gross weekly earnings. For the remaining 33 weeks, you get £135.45 per week.

Minimum income calculator

Weekly outgoings for a couple with one child aged under 1, (adjusted to account for our actual mortgage and energy costs) according to the Joseph Rowntree Foundation’s Minimum Income Standard

Back to the minimum income calculator. If my husband and I had a child aged 0-1, we would need £619.24 a week, assuming we continued to live in our five-room flat (kitchen-diner, sitting room, 2 bedrooms, bathroom), to achieve this basic standard. My share of that is £309.62. It doesn’t take a genius to work out that my maternity pay would leave me £174.17 short every week, or £5,747.61 over those 33 weeks.

And it doesn’t stop there; it’s not as if I can just go back to my job after nine months and leave the child at home. When/if I go back to work, I will then have to pay for childcare. As you all know, my disposable income is currently £820 per month (and it’s not looking likely that that will change for the better any time soon). According to the calculator, I would need disposable income of £696.17 per month, before childcare to maintain a minimum standard of living. That would leave me £123.83 to spend on child care per month. My official working hours are 9am to 5.30pm. Let’s assume that I never work late (I wish), I make that 40 hours per week. According to the daycare trust’s 2010 report, the average cost for 25-hours of care for children aged under 2 in London was £109. For my 40-hour week, not including travel time, that is £174.40. Errrrrr…..

In other words, with my ‘spare’ £123.83, I could afford just over 28 hours of childcare. Per month. At 2010’s prices. Let’s say the husband chips in: we can afford 56 hours of childcare per month. Woop di woop di woo.

This morning, as per my daily routine, I watched BBC news as I put on my make-up. Today’s discussion was the age at which women are ‘choosing’ to have children. It was the usual discussion: we’re having children later, blah di blah di blah. Women who wait to have children are risking infertility, miscarriages and complications. So far, so predictable—although this was the BBC, so it was less scare-mongering than usual. One aspect that was missing, however, from the segment I watched at least—I had to leave for work half-way through— was the issue of money. Has it not occurred to anyone that even if we’ve miraculously found someone to have children with during our child-bearing years (NOT a given, and something I am thankful for every single day), we can’t actually afford to have them?

say it with flowers

Say it with flowers: not-so-sweet williams

Friday

Wake up with: £80

Go to bed with: £60

The week gets off to a wonderful start: delicious injera with school friends at Addis on Caledonian Road. The total for food, wine and service is a very reasonable £15 a head. We transfer over to Patisserie Valerie for pudding and a gawp at the new Kings Cross, then onto the one pub in the whole of London that hasn’t been completely occupied by football supporters for a little supplementary wine. I spend an additional £5 (if it sounds suspiciously exact, it’s because I lent £5 to one of the girls in the restaurant and she then treated me to cake and wine). I set off home on my trusty bike.

Saturday

Wake up with: £60

Go to bed with: £31.48

I wake up feeling like I’ve been hit by a train but I have to go to Uckfield to look at a house. As a concession to the summer cold I appear to have developed overnight, I decide to get the bus, rather than cycle to London Bridge. Big mistake! An hour later, I’ve only got as far as my office, a 15-minute cycle ride. I just make the train, shelling out £16.70 on the return fare. In the spirit of budgeting, I have bought my own drinks and snacks.

The house is lovely, but not ‘the one’ – the husband would barely fit through the door (height, you understand, not the result of my cooking!).

Still, it’s not a wasted journey; I while away the time until the next train home with a wander around the local Waitrose; I have a craving for curry tonight to clear these damn sinuses.

The darling husband rescues me from 149 hell, by agreeing to pick me up from Angel tube – there goes the last of my Oyster credit. We stop at the shop for milk and a little treat on the way home and I cook up a devilishly hot massaman curry.

Sunday

Wake up with: £31.48

Go to bed with: £10.14

It’s raining and I’m still feeling sorry for myself, so I resolve to spend a lazy day at home. The courgette and tomato plants need potting up, so I nip to the local garden centre to pick up some compost and plant feed. Ouch, almost £20 later, I’m beginning to regret my executive decision to wait for a bigger garden before we build a compost heap.

The husband has got us steak and chips for tea, and creme caramel for pudding. It almost makes up for the fact that the dreaded football is on again. Almost.

Monday

Wake up with: £10.14

Go to bed with: £10.14

It’s a proud day in the LoveRichCashPoor household. Having received a statement informing me in teeny tiny print that my 0% interest period expires on 7 July, today, I clear the outstanding balance on my credit card – and then take the scissors to it to ensure that I never use it again.

Supper club is cancelled for the football, so the husband and I eat our second massaman curry of the week for tea.

Tuesday

Wake up with: £10.14

Go to bed with: -£23.81

Hurrah, the sun has made a guest appearance to the season that will hitherto be known as The Summer the Sun Forgot; I make an executive decision that I deserve a lunch break and go for a little wander around Spitalfields. I’m ostensibly nipping out to buy some squid ink spaghetti, but I get sidetracked on a detour down Fournier Street when I discover that one of the houses is an antiques shop cum cafe. I’m in love, and grateful that I destroyed my credit card yesterday.

I think all that lunchtime virtue sets off a bit of a chain reaction come evening. I’ve arranged to meet an old school friend for dinner at El Parador on Eversholt Street. The cash has run out, but the sunshine, the company and the delicious tapas on offer (and possibly the wine) bring out my reckless streak. I pay by card (debit, obviously), and promptly go over budget to the tune of £20.00. Woops.

Wednesday

Wake up with: -£23.81

Go to bed with: -£33.78

In my experience, budgeting is a little like dieting: the minute you slip, the temptation is to give up altogether. I pop to the supermarket after work and somehow I leave with a pack of tiger prawns, some a cherry tomatoes, a lemon and two bunches of sweet williams (albeit at £1.50 each). This is decidedly off-message but god it feels good.

Thursday

Wake up with: -£33.78

Go to bed with: -£33.78

Total overspend this week: £33.78

As the buyer’s remorse sets in from yesterday’s supermarket blow-out, I give myself a stern talking to – we need washing powder, rice and tea bags and here I am with flowers and shellfish.The worst thing is, I haven’t even bought anything that outrageous – as my inner sulky teenager protests: it’s not as if I bought a new dress or champagne. In a way she has a point: I spent £3 on flowers, bought some compost, a train ticket and two reasonably priced restaurant meals this week and somehow this has amounted to an epic failure. It’s a salutary lesson on what it means to live on a tight budget. My inner sanctimonious goodie two shoes (you know, the one, she’s always banging on about food waste, or reminding everyone that one cappuccino could be standing between me and the dream) points out that a lot of people out there live on considerably less. She’s right of course, but I’d still like a new dress and the flowers are beautiful, so there. Still, next week I will do better.

Had any budgetary dramas of your own this week? Feel free to share them in the comments box below and thank you ever so much for reading.

To cut a very long story short: it’s audit time at number 53.

We need to save up a lump sum and we need to do it as quickly as possible. Our mission is to cut back and slim down. Well, at the moment, it’s my mission, but I’m hoping the husband will get on board sometime soon.

First step: assess the money we have…

That was quick, you say?  Well yes, because we have NOTHING. Correction, we have a lovely house, incredible friends and family and each other. But we don’t have any spare cash and we need some because we’re chasing the dream—more on that when any of our plans come even close to fruition. Full disclosure: we have the deposit for our next house and a small fund of money at our disposal for essential works on our flat. But that doesn’t really count as it belongs to the bank, rather than us.

Why do we not have any savings? Well, first we saved to buy a dilapidated flat, then we did it up, then we got married, then we went on honeymoon. Then we tried to buy a family home. Three failed property purchases later, and we’ve shelled out three sets of survey, mortgage application and solicitor’s fees. Humph.

Truth be told, with a balance still to clear on my credit card, I actually have minus nothing.

As for money coming in and money going out… well I’m still trying to pin the hubs down on that one, but I’ve done my calculations. I’m a pretty open person, but my employment contract expressly prevents me from revealing my income—suffice to say it is almost exactly the mean, full-time wage in the UK.

So, after income tax, NI, council tax, gas and electricity, mortgage, TV licence, water rates, life insurance, buildings & contents insurance, mobile phone, cable and internet and landline rental, I have £820 left per month.

Sound a lot? It is in the grand scheme of things. A perfectly respectable sum, princely in some parts of the world. But we live in London, we have active social lives and demanding jobs.

If I save £500 a month, it will take me 17 months to reach my goal. That leaves me with £320 a month, or £80 a week, for everything else, broadly: food, travel and entertainment. Again that sounds like a lot. Of course I could live off a lot less if I never went out, never celebrated and never bought presents for friends and family. I could save more if I could devote hours of my day to bargain hunting. But this isn’t just any old mission to save money. There’s a tried and tested formula for that. This is a mission to save money with joy and generosity—and a full-time job.

So I am going to attempt to live off less than £80 cash a week. No debit cards, no credit cards, no loans. Just cash. And when it’s gone, it’s gone.

I say less than, because 17 months sounds like an interminable amount of time to wait and I’ll do everything I can to cut that back. Some weeks it will be possible. Some weeks it won’t.

I’m writing this to keep me on track – but if anyone out there is reading, well hello and thanks for sharing my mission…

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