How Much do you Save?

It depends on what you are saving for.


Your emergency fund is probably more important to get sorted first, and it looks like you have done so. A rough guide is to hold readily accessible funds to the equivalent of 3 to 6 months of necessary expenditure (or more depending on your job security, or whether you have a working spouse etc.). I have just stashed half my emergency fund (total fund currently £5k) into a Nationwide Flexdirect account, and the other half into a short term bond fund in my ISA.


If you are saving for retirement, the younger you start saving the better, and the less you need to put away on a month by month basis. For retirement think half you age as a percentage to put away from your gross salary into a SIPP perhaps. You might want to do this on top of your company pension. You won't be able to access your SIPP until your are at least 55 though, but that's a good thing as you won't be tempted to spend it!. There are also perks like 25% tax free lump sum, and if you are a higher rate (40%) tax payer while working, you are likely to be a 20% tax payer in retirement, so you get the 20% "bonus" on top.


I wasn't much of a saver when I was younger, as my salary was quite small compared to nowadays. When I first bought a house my mortgage would take a substantial sum out of my salary, but I always kept my mortgage to about a third of my monthly income, which is a good rule of thumb. Typically you see when your retire with a company pension the pension pays about two thirds of your working salary (if you have maxed the yearly contributions), and by then you should have paid the mortgage off - so your standard of living shouldn't really drop. Of course that's the theory!


We have already paid our mortgage off, but we live in a modest house, as we have other things in life other than tending "Bravepants Mansion".


I'm 49 at the end of this month and from age 40 I have been paying 10% of my gross into an AVC with my company pension. I have just increased this to 15%. I'm in the 40% bracket so it is worth me doing this.


I am also trying to live on half my net take home salary and stash the other half. I currently have £500 per month going into an S&S ISA, but I have also made lump sum payments into that over the last year. I will increase to £1000 a month in a month or two once I have paid for some work to be done on our house. I also have a few hundred extra staying in my current account for sundries. If I get too much in there I will lump sum into my ISA.


I would like to retire at age 55, but this depends on how my investments perform! I get roughly half my company pension from age 60, so I may phase my retirement to fund the gap between 55 to 60.


You see how deciding how much you save really depends on your plans for the future. The best way to save automatically is to spend less, so don't worry about saving, just spend less. Of course the old adage is to "pay yourself first". When your salary comes into you bank account, the first standing order should be out to a savings account that you don't touch.


Good luck!

I've saved hard for years , and always lived frugally. I'm another person who's never been on a high wage (usually it's been around 20k annually) started saving around 2005 and have managed to reach about £175,000. Now a good part of that is due to investment returns over the past 7 years which have been brilliant and a couple of lucky turns.

But it wasn't at all that difficult. I have a car and a nice home, but no expensive tastes. I've dropped back to part time work and only pick up about £900 per month so my saving is now down to about £200 per month. But I recon I'm getting about £600 monthly in investment income which I let roll up.

Modest savings wisely invested can make you rich fairly easily, you just have to give it time and keep at it every month. My aim is to leave work eventually and enjoy more of my free time (I've always hated work!) and that's been my goal.

The thing overall I have found is the feeling of security and safety having money behind you gives. Both my parents worked hard and earned far more than I ever have but they both wasted their money and never had any money behind them, I was determined never to have that constant fear of job loss etc.

Keep up the good work and before you know it you'll be surprised with how much you've accumulated.

jamesd wrote: »

Right, seldom less than £100k though I expect it to be around £200k in a few months after moving some S&S ISA money. More than £60k of stooze pot helps. I started out in P2P with Zopa back in 2008.

From investments to stooze pot it just takes time and perseverance to grow the amounts.

I just started stoozing again! Got just short of £20k from two cards at 0% over average 2.5 years, with a one off average fee of 2.5%. Used half of the cash to fund renovation of my back yard and parking area, the other half is in P2P in order to "reclaim" the fee! So a free loan to get some work done on the house!

What I 'save' is simply my income - spending each month, it's never a set amount. Most months I will have 'saved' perhaps between £400 and £800 per month.

I'm currently on holiday in Canada for my girlfriend's 50th birthday. We won't be spending vast amounts of money but for a 'special' birthday and my first holiday outside of Europe we won't have a limit to the budget. If, when I total up the spreadsheet at the start of next month I find I've 'saved' nothing or indeed spent more than my income then so be it.

As long as the overall trend over time is an increase in my savings/investments/wealth, that is what I'm aiming for.