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

Tayus

Approx 85% of my savings are in a normal savings account. 5% in a guaranteed ftse bond over 5 years (didnt really do any research on this just spur of the moment type of thing). 10% in premium bonds. The 30% of income saved each month is split the following way, 90% savings account 10% premium bonds.

stphnstevey

30% of income saved is a great start! I think you should be more worried about the % of income saved rather than how much you should have in savings.

Someone earning 20K and keeping 5K would build up a higher net worth than someone earning 90K and saving £50.

See Martin's article for where to start with savings:
http://www.moneysavingexpert.com/cgi-bin/viewnews.cgi?newsid1103213261,45760,

I invest in property, but still refer back to Martin's philosophies for my spare cash.

baldbloke_2

Tayus wrote:

Approx 85% of my savings are in a normal savings account. 5% in a guaranteed ftse bond over 5 years (didnt really do any research on this just spur of the moment type of thing). 10% in premium bonds. The 30% of income saved each month is split the following way, 90% savings account 10% premium bonds.

I hope your normal savings account is or includes a good Cash ISA and that you are trying to save as much as you can sensibly put by in to that account.

The FTSE Bond is just one of those things that everyone seems to do at some stage in their life although they are rarely recommended. If the purpose of investing is to see one's capital grow then the notion of having that growth artificially restricted and to miss out on any dividend income seems to defeat the object for most people.

The fact that you can save and want to save - the two qualities are not always present - is a great bonus for you.

If you are looking to increase your capital over time then I believe you might want to start reading up on making a monthly investment into UK Equity Funds - basically the FTSE. A modest investment of say £50 per month to start with (or less with some providers) will introduce you to the gains and losses of investing. Once you start you will find that you learn more and more very quickly. I think most people would suggest that your purchase of small amounts of Premium Bonds is not going to increase your wealth in the real world whereas a modest and considered investment in a Unit Trust or OEIC probably will if left for the recommended period of say 3 to 5 years.

Premium Bonds are for dreamers (nice people really!)or for those who do not need income or increased value to come from their capital.

You need to read articles such as the Savings & Investment one on this site or similar on the Microsoft Money site to see that it is important to look beyond the simple act of depositing cash if you wish to stay financially sound and not lose the value of the money you have worked hard to save.

dparky

regularsaver1 wrote:

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

Well lets say i didn't save it. I got some inheritance recently.

regularsaver1

ah right i'v had to save mine - every month ya know - share save, isa investor, isa saver and regular saver and then pension

Gorgeous_George

zag2me wrote:

Im 27 and had a great conversation with a very wise old man in a nursing home a few years ago which really changed my view on savings.

He sat me down and explained to me he had saved 10% of every single wage packet since the day he started work. He recomended 15% these days. I didnt take much notice of him until I found out later that week he was a self made milionaire, it just accumilated over time.

Anyway, I've been doing this for 3 years now and have a healthly sum in my savings, it hasnt really effected the way I life my life or spend my money as I just made a direct debit on the day i get paid. It really has worked for me.

Sadly, your wise old man was a millionaire in a nursing home and may have died wealthy.

I'm not arguing that you shouldn't save, but there's a balance. I save enough one way or another but I also have two or three holidays a year. I give money to my kids when they need it. I'm not sure that they'd rather wait until I die.

I'd say, it depends on your money earning potential. If you have an insecure job, save more. Perhaps 10 - 30% is a good guide but only if you don't forget to spend it sometime and save it again.



GG

Tayus

Gorgeous_George wrote:

Sadly, your wise old man was a millionaire in a nursing home and may have died wealthy.

I'm not arguing that you shouldn't save, but there's a balance. I save enough one way or another but I also have two or three holidays a year. I give money to my kids when they need it. I'm not sure that they'd rather wait until I die.

I'd say, it depends on your money earning potential. If you have an insecure job, save more. Perhaps 10 - 30% is a good guide but only if you don't forget to spend it sometime and save it again.



GG

Sometimes think im saving too hard and not enjoying myself, like you say!

Little_Penguin_2

Gorgeous_George wrote:

Perhaps 10 - 30% is a good guide but only if you don't forget to spend it sometime and save it again.



GG

I have always saved about 10-15% of my income without thinking about it, until quite recently when I had a change of circumstances. However I have spent it too! I went backpacking around the world, have bought reasonable second hand cars without having to take out loans, used some as a sizeable deposit for my flat and associated home improvments. Currently paying out for a new bathroom and then I'll start again

ReportInvestor

The miracle of compound interest means that the more you have saved / invested early on, the more you will benefit from this miracle when you retire.

If you want to retire at 60/65 rather than 75 (don't believe the government's false assumptions about 68) then the more you save the better.

Remember that your taxes will rise to pay for our pensions, so don't delay.

thor

Gorgeous_George wrote:

Sadly, your wise old man was a millionaire in a nursing home and may have died wealthy.

I'm not arguing that you shouldn't save, but there's a balance. I save enough one way or another but I also have two or three holidays a year. I give money to my kids when they need it. I'm not sure that they'd rather wait until I die.

GG

Well he was certainly no miser if he only saved 10% of his wages. That means he spent 90%. That is the problem today with people all too readily spending on things they don't need and then wingeing about how poor they are.