how much should i be saving (not including pension)

jon3001

gozomark wrote: »

actually there are so many flaws in this formula

different tax rates
stable or growing income levels
age start working (straight from school, or university/PhD)

The formula is based on averages after extensive statistical study.

Yes - many doctors are UAWs. They start working late, burdened with heavy graduate loans and spend it all on lavish lifestyles. Their parents were probably PAWs - running small businesses from an early age and being thrifty. The doctors want to outdo their parents and show wealth rather than build it.

jon3001

Lokolo wrote: »

Its a bit crap if you put all the money into your house if you don't include house equity :-|

Heh - but what's the point in putting it all into a house? All you do is borrow against it. If all you do is have enough to pay off a mortgage then you've bought too much house, will be burdened by debt and won't accumulate wealth.

Lokolo

jon3001 wrote: »

Heh - but what's the point in putting it all into a house? All you do is borrow against it. If all you do is have enough to pay off a mortgage then you've bought too much house, will be burdened by debt and won't accumulate wealth.

What I mean is. I save £75k on my £30,000 salary until I am 25. (which is = to my thingy calcualtion).

Now I go put that £75,000 on a house deposit leaving me with nothing, making me an UAW......

ed123_2

.....best for you would be a final salary pension scheme but not many about these days. You could then look at a SIPP (self invested personnal pension). Given your age you would be looking at 40 years till retirement so the stockmarket would be best I would go for a High yield portfolio and reinvest the dividends within the SIPP. So with a net income of approx £24k pa I would save £1k per month.....but their could be a lot of other variables

jon3001

Lokolo wrote: »

What I mean is. I save £75k on my £30,000 salary until I am 25. (which is = to my thingy calcualtion).

Now I go put that £75,000 on a house deposit leaving me with nothing, making me an UAW......

The formula is used to gauge yourself against the averages for your age and income group.

Despite that, if someone had to put 100% of their wealth into their home (probably a depreciating asset which is costing money to maintain) and has nothing left over then then in which category do you they'd fit the most?

Given that mortgages are usually the cheapest way of money, someone who wants to accumulate wealth would usually seek returns elsewhere rather than put it into a non-productive asset. If they seek the 'safety' of paying off the mortgage then that is probably UAW behaviour.

Lokolo

jon3001 wrote: »

The formula is used to gauge yourself against the averages for your age and income group.

Despite that, if someone had to put 100% of their wealth into their home (probably a depreciating asset which is costing money to maintain) and has nothing left over then then in which category do you they'd fit the most?

Given that mortgages are usually the cheapest way of money, someone who wants to accumulate wealth would usually seek returns elsewhere rather than put it into a non-productive asset. If they seek the 'safety' of paying off the mortgage then that is probably UAW behaviour.

I don't believe thats true. Typical UAW behaviour is spending what you earn, so you earn more you spend more, without saving any extra etc.

I don't see how putting money into a house makes you a UAW?

And up until late, isn't having a house a way to accumlate wealth?

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also stop ruining my plans damnit

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edit:

Also if I then stated I earnt £30,000 a year and I save £15,000 a year. Would you still call me a UAW?

musclesza

hewhoisnotintheknow wrote: »

aged 26
live alone
earn 35
700 mortgage
250 a month bills

I do save, but i wanted to see how much yoyu guys think i should be

Coming back to your question: you making roughly 2100 p/m of which 1000 is gone before you even buy a beer....

Work out all your bills - if you have and it comes to 250 thats grand(all bills incl mobile gym !!!!!! subscription whatever is fixed monthly payments you cant avoid) then you should be looking to save minimum 300 a month its possible to save 700 if you not going out much
So aim for minimum 300 but preferably in the current climate to get 500 into a decent saving scheme (which you can get access to)

jon3001

Lokolo wrote: »

I don't believe thats true. Typical UAW behaviour is spending what you earn, so you earn more you spend more, without saving any extra etc.

I don't see how putting money into a house makes you a UAW?

I know a GP. He earns £100K, lives in an expensive neighbourhood (i.e. big mortgage). Probably he does have a lot of housing equity. On top of that he has to have the toys to go with it (more consumption), he drives a Lexus (more consumption) and sends his two kids to private school (over @10K a time). How much of his salary is going to be left to build wealth?

Compare that to a self-employed high-earner who knows he has to put money aside for the bad times. They'll probably live in a more modest home (smaller outgoings in terms of tax and maintenance) and won't be as flash with the cash. They'll have more excess cash and they'll want it to work harder (e.g. investment).

How do you view your personal housing consumption plans? How does it affect the rest of your spending?

Lokolo wrote: »

And up until late, isn't having a house a way to accumlate wealth?

Long-term house inflation is in line with wage inflation. It's a cyclic market and there will have been winners and losers in the current boom/bust. During the expansion period the average person will experience higher gains through gearing. If you pay your mortgage off you aren't doing gearing.

Lokolo wrote: »

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also stop ruining my plans damnit

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What are your plans? How am I personally ruining them?

Lokolo wrote: »

Also if I then stated I earnt £30,000 a year and I save £15,000 a year. Would you still call me a UAW?

Depends on your net worth and comparison to the averages in your age/income bracket. People who steadily save 50% of their gross income shouldn't remain in the UAW category for too long.

Joe_Bloggs

@hewhoisnotintheknow
You say that you save but how much have you saved In the past Calendar Year ?

You can save by spending the same amount of money but get more in return. You can save by changing your behaviour. You can save by avoiding penalty charges for every day events. You can save by asking questions. You can save by standing up for your consumer rights. You can save by shopping around. You can save by reading Martins numerous insights into money saving.

If you can build up a cushion of savings then you; have more freedom to change jobs, a greater ability to cope with a change in circumstances, will not have to pay high interest rates and fees on loans for purchases.
J_B.

Lokolo

jon3001 wrote: »

I know a GP. He earns £100K, lives in an expensive neighbourhood (i.e. big mortgage). Probably he does have a lot of housing equity. On top of that he has to have the toys to go with it (more consumption), he drives a Lexus (more consumption) and sends his two kids to private school (over @10K a time). How much of his salary is going to be left to build wealth?

Compare that to a self-employed high-earner who knows he has to put money aside for the bad times. They'll probably live in a more modest home (smaller outgoings in terms of tax and maintenance) and won't be as flash with the cash. They'll have more excess cash and they'll want it to work harder (e.g. investment).

Totally agree with that. But spending the money on an average house isn't making me a UAW. Without the mortgage (because of the large deposit), it allows me to save more in the future.

jon3001 wrote: »

What are your plans? How am I personally ruining them?

Because my plans are to save £65k until I am 25 (by then I will hopefully be earning £30k) and then use it as a house deposit. What you are saying is in doing so is idiotic (becoming a UAW)

jon3001 wrote: »

Depends on your net worth and comparison to the averages in your age/income bracket. People who steadily save 50% of their gross income shouldn't remain in the UAW category for too long.

Exactly so saving for 5 years and buying a house (with little mortgage) means they aren't a UAW as such, but doing it for a lifetime then yeh I agree with that.