How much to save??

truescot

I am 35, have recently moved to a house I will be in with my wife and two kids for the foreseeable future and we have sorted out our debts/mortgage/life cover/pensions/Child Trust Fund etc. (Which incidentally we are very proud of!!) We have started saving a bit each month but not really for anything in particular (we have a seperate account for house improvements).

I just wondered what peoples thoughts are on a reasonable "nest egg" to have saved "for a rainy day" (just to use 2 cliches!). It seems pointless to just save for the sake of saving when life is there to be enjoyed, but we like the idea of having some money put away.

My IFA (family member) said that it is generally recommended to have 3 months salary saved for unforeseen circumstances.

What do people think? Is this woefully inadequate or a waste of money that we could spend on clothes/holidays/cars/chocolate/give to charity etc(delete as appropriate).;)

Janey51

I seem to remember reading somewhere that everyone should have enough money saved to cover household bills and expenses for a 3 month period so I would agree with your frindly IFA person.

I can relate to this as I have been off sick for 4 months and had not been in my job for long enough to qualify for the sick pay scheme.
Luckily I have savings because it's bad enough being ill without having to worry about money.

Maybe this would be a good initial savings goal. At least you would have peace of mind.
Better than a holiday!

opinions4u

Here's my take:

1) 3 months savings for if incomes suddenly stop (e.g. insolvent employer etc = no redundancy payout).

2) Enough to pay cash for your holiday - if you spend £4,000 on holiday every year, you need to save £333 a month towards it.

3) Enough to replace your car without needing credit - Typically £200 a month if you like a shiny new one, less is you like to bargain hunt second hand. More if you like a posher car!

4) Review what else will need doing in life - house repairs, improvements, school/uni fees in future, laptop replacement every couple of years etc etc and save accordingly if you can.

My ethos is that if you have to borrow to do something, it costs more than if you'd saved for it.

Many banks offer Regular Saver accounts. Highest rate that seems to be around without the need for a current account is Halifax (7% adults, 10% kids) but very often you will find your current account provider will be able to beat 7%. Opening one in your name now, and one in your partner's name in 6 months, will mean that you are never more than 6 months away from having one maturing!