How to apportion my savings?

The_Dark_Defender

I have come up with the following savings categories (all held in the one savings account) but I'm not sure how to apportion them exactly. What would you recommend?

Long term savings
Holidays
Christmas
Loan back up/emergencies

Obviously the loan back up one will be low, it's just in case I get in trouble with my repayments at some point!


Thanks.

jon3001

The_Dark_Defender wrote: »

I have come up with the following savings categories (all held in the one savings account) but I'm not sure how to apportion them exactly. What would you recommend?

I'm not sure what you're asking exactly. Are you asking what you should be using your savings for? How much of your savings should be used for what? Where you should be saving? Etc?

The_Dark_Defender wrote: »

Long term savings

What do you mean by 'long term'? Do you have a specific purpose in mind (e.g. retirement)? Would this money be better invested rather than saved?

The_Dark_Defender wrote: »

Holidays
Christmas

I'm assuming that these will be annual expenses. Would the regular savings accounts offer better value?

The_Dark_Defender wrote: »

Loan back up/emergencies.

I'd go for the best rate, easy access account. Look at ISAs if you're not already using them.

Money_Grabber13579

Don't use an ISA for emergency funding. If you withdraw your money from it, you'll lose your allowance. Use an ISA as a more long term saving option.

anniecave

depending on what the loan is for, you may want to consider making overpayments to it or paying it off early. Depending on penalties, whether this is possible, and what rates you are paying on the loan versus what rates you may be getting on your savings.

How much do you you need for xmas / holidays? That's a good start.

Other savings are then any money not needed for this.

jon3001

Money_Grabber13579 wrote: »

Don't use an ISA for emergency funding. If you withdraw your money from it, you'll lose your allowance. Use an ISA as a more long term saving option.

An emergency fund is something that you should expect to have available for the long-term but not withdraw from unless absolutely necessary. It's purely for contigencies and withdrawals should be the exceptions rather than the rule. If you expect withdrawals then other options may be better.

john_s_2

One thing I think you've missed is things that will need replacing when they break. Things like fridges, cookers, boilers, televisions, sofas, cars, microwaves...

... computers, mobiles, lawnmowers. I'm sure you get the picture.

What I do is list all these items, how long I reckon they'll last, how much they cost to replace, and from that work out how much I should have saved towards each item by now. Add it up and that's how much you should have in your savings (aside from any other purposes for your savings). Obviously this list should be reviewed from time to time to ensure that the replacement costs are realistic (inflation), and to tick down the years left as they go by. And to add any items you'd forgotten to include (usually when they break).

jamesd

The_Dark_Defender wrote: »

Long term savings
Holidays
Christmas
Loan back up/emergencies

Obviously the loan back up one will be low, it's just in case I get in trouble with my repayments at some point!

How does the balance outstanding on the loan compare to the other amounts?

Do you have available credit, for example from credit cards?

The reason I'm asking is that it may be better to pay more on the loan and use the credit to do the other things, repaying the short term credit as rapidly as possible once you use it. This way you could end up paying less interest, depending on what the credit card charges are and just how long it takes to repay the short term parts.

A 0% introductory offer card is ideal for this sort of thing because you could probably repay all of a holiday or christmas spend before the end of the 0% period.

You'd still need to budget for the other things so you don't overspend, of course. But that budget would be purely on paper, other than a month or two of bills payment money that you keep around just so a delay in getting paid doesn't cause you to miss payments.