What Is A Good UK Target Budget?

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Nomad
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What Is A Good UK Target Budget?

Post by Nomad » Thu May 17, 2018 8:31 am

I am thinking of pulling the early retirement trigger in a year or two and I live in the UK.
I am single and my house has no mortgage only single person council tax.

I was wondering what people in a similar but retired position spend and also how their spending changed
going from working full-time to retirement.

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C40
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Re: What Is A Good UK Target Budget?

Post by C40 » Thu May 17, 2018 8:44 am

Hello tiberius. Spending depends more on the person than the location, particularly when your housing costs are little/none.

How much do you currently spend? Your future spending will be about the same unless you make changes. What types of changes do you expect to make after retiring? Spending less on gas/food/clothes? Spending more on tea/shoes/croquet sets/pints at the pub with friends?

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chenda
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Re: What Is A Good UK Target Budget?

Post by chenda » Thu May 17, 2018 9:51 am

With no mortgage and no car, and someone to split the household bills (this more than makes up for the loss of single person discount at lower council tax bandings) with then £500 a month is a reasonable minimum budget. As you are single I would increase it to about £700.

Nomad
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Re: What Is A Good UK Target Budget?

Post by Nomad » Thu May 17, 2018 5:16 pm

C40 wrote:
Thu May 17, 2018 8:44 am
Hello tiberius. Spending depends more on the person than the location, particularly when your housing costs are little/none.

How much do you currently spend? Your future spending will be about the same unless you make changes. What types of changes do you expect to make after retiring? Spending less on gas/food/clothes? Spending more on tea/shoes/croquet sets/pints at the pub with friends?
Well,l I just sold my old house and kind of in the process of working out what my outgoings without those overheads of the mortgage, council tax etc.
I will have a much better idea in about 2 months.
I suppose I need a very accurate audit for the foreseeable future. I was hoping to do a little travelling especially in the Summer - but off peak and
last minute bargains...

Nomad
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Re: What Is A Good UK Target Budget?

Post by Nomad » Thu May 17, 2018 5:17 pm

chenda wrote:
Thu May 17, 2018 9:51 am
With no mortgage and no car, and someone to split the household bills (this more than makes up for the loss of single person discount at lower council tax bandings) with then £500 a month is a reasonable minimum budget. As you are single I would increase it to about £700.
Wow that is cheap. I could possibly manage that now... temptation...

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Re: What Is A Good UK Target Budget?

Post by jacob » Thu May 17, 2018 5:36 pm

https://wiki.earlyretirementextreme.com ... ton_Levels

It's hard to set a target, because targets are arbitrary.

How much does the average UK person spend?
How much does the average UK student spend?
How much does Mark Boyle spend?

The question is not one of quantity of spending but quality of spending. That is, the question is not about how much is being spent but how it's being spent.

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C40
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Re: What Is A Good UK Target Budget?

Post by C40 » Fri May 18, 2018 2:36 pm

@tiberius - well, until then (the two months), and without us knowing much of anything about you, any advice from us (of specific numbers) would just be making up numbers or expecting you to spend similarly to us.

The first step in projecting spending is always to understand your current and recent spending in depth. If you know your total spending and have details of categories (how much on groceries, eating out, mortgage, insurance, utility bills, tea, etc.), projecting your future spending will be quite straightforward (other than accounting for uncommon and expensive things.)

Nomad
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Re: What Is A Good UK Target Budget?

Post by Nomad » Sat May 19, 2018 12:01 pm

Looking through my fixed costs they are about
200 housing ( house owned outright, council tax + bills )
100 car ( ignoring deprecation of 100 )
100 food
75 house phone/internet/netflix/mobile phone etc.
25 miscellaneous

So fixed costs are about 500.
The item really under investigation is discretionary spending.
I suppose a better original question would have been.
How much discretionary spending to UK people spend / what on / and how has it changed pre and post retirement...

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Re: What Is A Good UK Target Budget?

Post by jacob » Sat May 19, 2018 12:50 pm

tiberius wrote:
Sat May 19, 2018 12:01 pm
The item really under investigation is discretionary spending.
I suppose a better original question would have been.
How much discretionary spending to UK people spend / what on / and how has it changed pre and post retirement...
Fixed costs look good.

Discretionary spending can be anything from negative to rather positive. See the table/link I posted above. Especially the part about yields, flows, and systems.

My net-discretionary spending (in the US, although I don't think it's different in the UK) is very low, but I have a significant amount of "churn". I buy a lot of things used so the "driving it off the lot hit"-depreciation is already gone. In most cases, I can sell it for about the same price again when I get tired of it. Because I like to make stuff, my activities tend to be asset (tools) and time (effort) heavy but require very little in material/lost spending. If your discretionary spending is mostly sunk costs such as paying for events, restaurants, movie tickets, ... spending could be a lot higher.

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Bankai
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Re: What Is A Good UK Target Budget?

Post by Bankai » Sat May 19, 2018 2:25 pm

Hi Tiberius,

Your fixed expenses look really good. Especially £200 for housing - how much do you account for house maintenance?

Not sure why you don't include car depreciation - do you plan to go car-free after your car dies?

Regarding discretionary spending, it really depends on your interests and habits. We currently spend about £150 per person per month on all discretionary spending (clothing, travel, commuting, hobby, alcohol, gifts, health - is this really discretionary though? personal care, eating out, stuff & unaccounted cash spending). However, we both still work. I wouldn't be surprised if this goes down to £100 or below once we both retire.

I think rather than trying to come up with a number based on other people's numbers, a better approach is to track your own expenses. Once you know where your money goes, you can cut/optimise etc. until you're satisfied.

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chenda
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Re: What Is A Good UK Target Budget?

Post by chenda » Sat May 19, 2018 3:38 pm

All my household bills (including mobile) come to about £215 a month, but I also put £150 a month aside for the maintenance bill (I live in a one bed flat) and to cover repair or replacement of white goods etc. Do you have a sink fund for household maintenance ?

FWIW, I spend about £300 a month on discretionary spending, although this includes essentials like clothes. It is pretty luxurious, but I work part time.

Welcome btw, are you highlands/islands ?

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Re: What Is A Good UK Target Budget?

Post by Nomad » Sun May 20, 2018 7:32 am

chenda wrote:
Sat May 19, 2018 3:38 pm
All my household bills (including mobile) come to about £215 a month, but I also put £150 a month aside for the maintenance bill (I live in a one bed flat) and to cover repair or replacement of white goods etc. Do you have a sink fund for household maintenance ?

FWIW, I spend about £300 a month on discretionary spending, although this includes essentials like clothes. It is pretty luxurious, but I work part time.

Welcome btw, are you highlands/islands ?
Aha, I've not really budgeted for white goods replacement. I have good quality appliances and hoping they last a long time. Yep, probably should have thought about that. On cue, my kettle just died :)

300 is more like what I envisaged would be discretionay spending. Bankai was managing on 150 which sounds very economical.

I'm not highlands and islands I'm Lancashire/Merseyside...

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