Financial security

Tayus

well how much should i put away each week?

Loaded_Bachelor

Ermm, that's a difficult one :-/

I'm now thirty something and have good savings although this is only after riding a financial roollercoaster for twenty years;......okay I'm 38 you've worked it out.

My savings are substantial but I worked out the other day that if I'd just saved the equivalent of £250 per month (in todays terms) for those 20 years, half in cash investments and half in share investments then I would be about as well off as by going the volatile route which I have.

The problem of course is that when you are 18 or 20 or even 25 you usually don't look beyond next month and feel pretty much bullet proof to losing your job or things going wrong etc and don't give enough thought to the future.

So to get around this I really would advise any relative youngsters to maybe sit down and devise a long term savings strategy. I know that £250 per month is a lot for most of us to save each month but even if say £50 can be saved per month with a view to gradually increasing it each year then this would be a great long term strategy and create a kind of savings discipline.

If I had my time again I'd probably split the £50 per month three ways, and into three seperate savings accounts. Perhaps a Cash Isa, an Equity Isa and an instant access Internet cash account.

I would then say to myself that the Equity Isa is a no touch under any circumstances account, the cash Isa is an absolute emergency fund only account and the Internet cash account can be used to "borrow" from ones self with a view to always paying back the funds into it.

dunstonh

Not forgetting retirment planning where you should be looking for at least 10% of your money going into pensions (including any employer contribution).

(ignoring full occupational schemes) - Buying a pension should be the most expensive purchase in your life. However, because of bad planning by most people it isnt. If you dont plan when you are young, you might as well start looking for a comfortable cardboard box and shopping trolley now and forget about being financially secure.

There is no one answer that fits all. Do you plan on buying a house? yes, then you need a little emergency fund than someone without plus you need to save for the deposit and costs and furniture. Do you intend on having children? - more money needed. Do you have certain events that you want to happen in your life - more money.

Leia_Stephens

well how much should i put away each week?

Tayus,

I have a relatively small debt like you - mine is £1,393 on an RBS card - but when my debt is clear I am planning to save 10% of my gross pay each month. I would suggest that you set up a standing order for this 10% the day after payday, then you can make these regular savings without thinking about it ;D.

I have just re-read your first post, £5,040 (the amalgamation of all the money in your savings a/cs) is very impressive at 19 . I am 31 and only have £3,075 in savings, in my NS&I ISA :-[. I also have savings a/cs with Smile, ING and Halifax, but the amounts in these are currently £62, £1.06 and £1 respectively .

If you don't mind, I have a suggestion for your overdraft and credit card debt. Why don't you withdraw all but £1 from your Egg and Halifax savings (leaving £1 in each to keep them open) and withdraw £1,102 from your Halifax WebSaver without cashcard ??? Both of these amounts (£898 and £1,102 = £2,000) should be enough to clear your overdraft and your credit card, then you would still have £3,038 with the Halifax and just have your £1,300 loan .

Of course, it is entirely up to you if you follow this advice or not, but please be aware that I am not a financial advisor.

HTH

Leia

Leia_Stephens

Do other MoneySavers agree that it is financially sensible to save 10% of your take-home pay each month ???.

Leia

Tayus

i thought about oing what you say and clearing my debts with my savings, but i dont know if this is me being stupid but i want to keep the savings because there MINE! and i dont want to use them up paying off debts, does anybody else feel like this?
I used to save £80 and week but recently it has gone down to £50

Joe_Bloggs

I think that wiser council than myself is required to convince both of you that paying your debts off is advisable.
If you have the savings available and the interest rate on your debts is more that that on your savings then why not pay half of the debt off. If you can live with the new situation for few months then pay off a significant fraction again.

Money borrowed and placed in a savings account is a safety net but if the interest on it is hampering your saving ambitions then make the net smaller and see how it feels.

All this is easier said than done and it's up to you to do the arithmetic and live with the consequences of your actions.
J_B.

Pal

10% is a fairly low figure for retirement saving if you want to have a very comfortable retirement, 20% might be more reasonable.

That said many people cannot afford this as many other things take priority, but the sooner you start the better.

Tayus - the interest rates on borrow is almost always higher than the interest rate on savings, unless your debts are in 0% deals.

This means that every pound you save rather than paying off debt is costing you money each month. You should always aim to pay off debts with your savings and then start saving again with a clean slate. The fact that your debt will be lower will allow you to save even more money each month until your savings are back in place, but with much lower debt.

robnye

i dont save 10% of my monthly salary for my pension, more like 5%, but ontop, my wife has a stakeholder, now upp'd to £30 per month, i also have an old pension fund with some £60k in it (with an old firm)

we also save £95 per month, £5 each to 3 kids (£15 total), £30 to car maintenance fund, £30 to savings fund (isa) for my kids (now at £5K+), £20 to Isa for my wife,

we have 2 cars, as i work 40 miles from home,

we currently have some surplus each month, but with interest rates rising that is reducing (slowly), otherwise £50-£100 extra is paid of ccards per month, which are already on 0%, (barclaycard - long term debt - blooming previous car!!!! and mbna 0%), both are 12 month deals.

loan from family member £400 payable in £40 instalments


just come back from holiday and feeling good as other than petrol £50 (normally £90) for 2 weeks and food, didnt use credit/plastic at all, and had £175 left from holiday allowance, soon disappeared though - school uniforms/shoes etc....... still ccard balance will be lighter than other years

mortgage payments, just renewed on 0.05% tracker deal for 2 years, credit cards covered.

financially secure - now ok, future not sure, but quietly confident.

dunstonh

i dont save 10% of my monthly salary for my pension, more like 5%, but ontop, my wife has a stakeholder, now upp'd to £30 per month, i also have an old pension fund with some £60k in it (with an old firm)

Hardly worth it putting £30pm in. I dont know your age but you really need to be looking to put more money in than 5% and £30. Otherwise you will be looking to seriously downsize and/or move to a cheaper area in retirement and look forward to watching a lot of daytime tv.