Savings Log of a 26yr old on low pay

bowlhead99

jem16 wrote: »

Only salary sacrifice schemes will save on NI contributions. Most pension contributions don't save anything on NI.

That's true. You save 20% tax now and pay tax instead in retirement at whatever your tax rate is then. For all we know, in 30 years time the rate for a low-rate taxpayer could be 10% or 25%, or it could be zero if you don't have enough income to get you up to the tax free allowance.

But a chunk of it can be withdrawn tax-free (currently a quarter) which is an advantage that no government is ever going to want to take away as it will discourage private pension investment.

So, the tax advantages exist and are tangible but they are not necessarily so monstrous that you have to max them out at the expense of being able to invest more flexibly outside a pension or, for example, building up a safe 'emergency fund'. The main attraction for a low rate taxpayer (in terms of percentage gain, guaranteed free money) is the company contribution which can be expensive to ignore.

atush

MoneyWaster2007 wrote: »

I agree it sounds good, but if for example it means I have to pay £50 pm, that will have a direct impact on how much I can save. I currently save £136.50 pm, which would then have to reduce to £86.50, meaning less than 10% of my wage. Or, I could try to save the same amount but adjust so that I manage with £50 less each month...

Don't look at it that way. having a home and having a pension are the two best ways to ensure you will have a comfortable life in retirement. They go hand in hand. You can't have a comfortable life in retirement w/o a pension (in addition to the state one) and you can't without a home you own (as you could be at the mercy of a landlord).

Every 100 into your pension only costs you 80.

Eponym

MoneyWaster2007 wrote: »

Eponym -



And wages are not rising, if I remember correctly. My parents were faced with a bad situation in the last recession, re interest rates; they were forced to sell at a loss, at a time when people thought there was nothing safer than houses, and have rented ever since. Things like that make me think twice about trying to obtain a mortgage in the first place. Are you trying to go it alone with getting a mortgage?

Exactly. When you get a mortgage you need to consider affordability on all fronts. For example, yes, I am buying alone (like you, I have failed to find the right person so far!). I plan to have a lodger - hopefully a friend, but a stranger if necessary - and will need to make sure that I can afford the mortgage and bills without extra money coming in from a lodger. Equally, mortgage rates are very low at the moment and could easily be more than double in 10 years time.

You're doing really well, keep it up! And definitely get the pension, you'll curse yourself later if you don't.

elantan

If it's anything like my auto enrolment scheme you'll only pay very little, I pay less than £8 a month ( woo hooo just imagine my retirement if that was all I depended on )

MoneyWaster2007

bowlhead99

But if you give up everything, that's where I get the image of you shivering over a can of beans with the heat off, ignoring all contact with social groups to save that extra one pound for the week.

I may have given the impression that I've cut back on my spending to such an extent that I cold beans (that's still funny by the way, thanks!). However, this month alone I've been on 4 nights out, been to watch Leeds United once and bought a new t-shirt, so I don't cut back that much.

So it's all about balance. If you stand back and look at it carefully, maybe you'll agree that putting away some of the money you would have paid your current self to pay your future self, is not so ridiculous.

I'm fully sold on the pension front. Thanks for info regarding this. One of my first tasks tomorrow at work is to find out the exact amounts I'll be paying and then work out how to fit that into my finances.

atush -

Every 100 into your pension only costs you 80.

I'm liking the sound of this pension scheme more and more with info such as this, thanks!

Eponym -

You're doing really well, keep it up! And definitely get the pension, you'll curse yourself later if you don't.

Thank you, I'm definitely going to get the pension. And good luck with your quest to become a home owner, it sounds you are doing very well too

elantan -

If it's anything like my auto enrolment scheme you'll only pay very little, I pay less than £8 a month ( woo hooo just imagine my retirement if that was all I depended on )

Yeah it would be wild, you would definitely be living the high life, hahaha!

I have a pension from a company I worked at 10 years ago. I don't contribute to it though, and it has roughly £250 in it. Could I transfer this one over to the new pension I will soon have?

elantan

I would ask the company if its possible ... It may not be worth your while, and although very little there may be some benefits attached to the other pension so you would need to check that out ... But at £250 being the full pot I kinda doubt it

I'm similar I have a few scattered pots

Frugalbride

Just wanted to congratulate you on all your achievements! Sounds like you are doing really well. Just wanted to add a vote for continuing renting instead of buying. It sounds as though you'd like to make career and personal changes in the next few years so why not stay flexible? I think the worst thing you could do is saddle yourself with a big debt and commit to living in one location.
I am continuing to rent and save as much as I can in the best accounts I can until I know where my partner will be working in a couple of years and whether we can have children. In order to get the same property that we live in now, we would have had to massively overextend ourselves and at a high interest rate. We would also have had to have taken on a lot of renovation work to afford a similar sized property in the area, all of which costs.
I would love to own a home for emotional reasons but I know that it is not the best time for me. I console myself with looking at compound interest calculators of what we are able to save by not owning and can see that we are still on the right track. Good luck with everything, think there are pluses to whatever you decide to do!

MoneyWaster2007

Hi all!

Having been paid on Friday last week, I'm very much skint already. I've been on 1 works do, 1 night out, and I owe £28 to my friend for the Leeds game ticket next Saturday....all of which leaves me very little left over. And with 4 weekends to go until my next pay check, it could be a tight month!!:eek:

I'm hoping to get through it, but will need to be extremely shrewd/disciplined with my spending - which I'm hoping you guys can help me with?? I'll try to post regularly for help and advice. At the moment I'm averaging £20 per week spending cash. Hopefully I can save on food shopping. Also I always copper up at month end, which should help...

MoneyWaster2007

Down to £74 surplus until 25th September! So after tomorrow, having paid for my Leeds ticket (£28), my train fare (£8), bus fare (£2), I'll have £36 left over. Actually, it'll be more like £30 as I'll need to get some food whilst out. My Mum said to spend some of my savings, then said actually no don't do that...
With 4 weekends until payday, £30 seems very little. The last thing I want to do is dip into my ISA. Any ideas?

lippy1923

Got anything you can sell? Advertise on Gumtree? I made £30 last saturday on stuff that I would normally take up the tip/ give to charity shops. Worth hunting around the house for those things that you never use.

Cook cheap pasta meals in bulk and freeze. Should keep you going for a while at very little expense to you.

If you do have to dip into savings, don't feel like it's the end of the world. That's what savings are for! Just be extra frugle next month and replace anything you take.