How much should I have in bank savings at my age?

Tayus

Im 21 and i save 30% of my wage a month. You should read the book "Automatic millionaire".

Stonk

I imagine the book says you should save regularly, pay off debts ASAP, and use the "miracle" of compound interest.

£1000 per month, growing at 5% compounded, will make you a millionaire in 33 years. Of course, later on £1000 will be worth less and easier to come by, so you can save more and more over time, bringing Millionaire Day ever closer. Then again, in 33 years, being a millionaire won't be anything special!

baldbloke_2

Tayus wrote:

Im 21 and i save 30% of my wage a month. You should read the book "Automatic millionaire".

I'd be interested to hear the types of savings that you have - in general terms of course - and to know what strategy you have adopted.

You are very sensible and conscientious to be trying this and achieving this much at a relatively young age.

Good Luck.

cloud_dog

londonman81 wrote:

I also like dabbling in shares and want to invest around £200 each month into a different share. So then I'll put that much less in the bank.

For £200 pm you should probably look at a collective investment vehicle as dealing charges would take afair bir from each £200. Look at Unit Trusts, OIEC, etc, or ETF's similar (tend to track an index) but with low (no???) dealing charges. Alternatively look at the Halifax Share Dealing where they have low charges but only do investments on a specific day each month (pooling investors money).

cloud_dog

dparky

I'm currently a 20 year old student. I currently have around 8k in savings.
I have:-
5k in a ISA
1k in a instant saver (spends such as new car etc)
and 2k in a Online Saver

I'v only been saving since January 2006 when i opened my first saving account. My salary varies from £400 to £800 (after tax) per month depending on hours i do as i go to college. I used to spend spend spend, until i realised saving is actually better than spending. I now love saving, and now know how important it is to save. I didnt even need a student loan because i had saved the money for the degree fees etc.

All i can say is, it is never too late to start saving. 25 years old is still a young age. Don't forget you might get pay rises in the future which will add to savings.

Stonk

dparky wrote:

I didnt even need a student loan because i had saved the money for the degree fees etc.

Take the student loan, even if you don't need it! It is free money, 0% interest in real terms, and the lender doesn't even ask you to repay a penny until you can comfortably afford to. You'll never get anything like that again once you stop being a student.

( Before anyone points out you can get interest-free credit on all sorts of things, I'll just counter that by buying something on interest-free credit you are giving up the substantial discount you could otherwise have negotiated. )

stphnstevey

londonman81 wrote:

I'm 25 years old and have been working for 18 months full time, having previously been a student.

I know this is a very open and vague question depending on many factors such as my earnings etc, but I really would like to know people's opinion...

How much cash should I have in my savings account by the age of 25?

I just want to get an approx benchmark figure against which to compare myself so that I know that I'm on course to cope with lifes expenses....

Many thanks in advance!

I'm all for saving but I think you might be confusing two reasons for saving:

a) In case of emergency
b) To be able to invest

a) Depending on how money savy and how well you manage your money, have you considered Martin's idea that you might NOT need a massive amount of savings as a BACK UP for that emergency situation. With the availability of interest free periods on credit cards, these can act as a short term back up.

However, credit is only for those that can 'manage' it and if your money management is poor, then this might cost you more than it's worth.

b) Pay yourself first. Most people live to their means and when they receive a raise, they spend more. Setting a percentage of your salary into a seperate savings account each month and you won't miss it, you will just live to what ever is left.

You need to be able to build a pot of savings, but if this is just in a savings account, then your only just guarding yourself against inflation with minimal gain.

Once you have amassed a resonable amount, you need to decide what you want to invest in. The goverment used do this for you in the form of a state pension. There will be no state pension by the time people our age retire, so everyone needs to make prepaprations for that now.

regularsaver1

dparky - how can you save £8k since jan 06 as you stated that when you opened your first savings account?

Tayus

baldbloke wrote:

I'd be interested to hear the types of savings that you have - in general terms of course - and to know what strategy you have adopted.

You are very sensible and conscientious to be trying this and achieving this much at a relatively young age.

Good Luck.

Lets just say that i have over 10k put away. It feels quite good knowing that i have that amount behind me should anything happen. I'd definately say reading books like "The automatic millionaire" has helped me to achieve this.Once you start saving regularly you dont notice it going out. One point to note is that i dont have my own house yet.

baldbloke_2

Tayus wrote:

Lets just say that i have over 10k put away. It feels quite good knowing that i have that amount behind me should anything happen. I'd definately say reading books like "The automatic millionaire" has helped me to achieve this.Once you start saving regularly you dont notice it going out. One point to note is that i dont have my own house yet.

Thanks. I wasn't really asking you to give the amount since that is your private business but I was interested to know whether you were simply saving in a convenient high rise account with your bank or somewhere that took a little more research to discover or even maybe some investments - and whether you pay much attention to the interest rate you are receiving.

I'm not sure that many 21 year olds can borrow the sum required to buy even a small flat or old 2 bed terraced house - but your ambition is commendable.
You'll need to keep the value of your savings/investments as high as you can.