Third of Britons can't last a week on savings!

bristol_pilot

LeeSouthEast wrote: »

I just worked out that on a full time minimum wage income (£733), I can (if I get rid of the car, which I won't need), still save £850 a year. And that's living in one of the most expensive cities in the south east of England (albeit not alone). To do this I stopped my regular share trading investment, cut back on my food spending (down from £100 to £50), and that was about it.

The secret as always is live according to your means, not up to your expectations.

And who pays your housing costs? Your partner perhaps or maybe the taxpayer? My rent alone is more than £733. Even a houseshare round my area costs £450+. Cutting back on food by £50 or so is trival in comparison with fixed costs like rent and council tax.

vaporate

£733 in rent?!!

lol crazy

Primrose

I do find it horrifying because we all know that life always throws up unexpected emergencies. I would have thought that after the credit crunch a couple of years ago more people would have taken notice and decided they needed to put themselves in a more secure position financially.
I'm trying to think back to an era before credit cards existed. In many ways they have been a bad thing for the financially irresponsible because whilst people could still borrow money from the banks, at least they had to go and ask for it and there was a chance that borrowing could be kept within reasonable limits. Credit cards are a marvellous money spinner for the banks. I'd like to see very low limits put on credit cards and an insistence that they are paid off completely before any further advances are given.

I still think a lot of young people haven't got the savings message at all. They've grown up in an era where it's quite normal to have debt. Apart from a mortgage I've never owned money. I even saved up for a car and bought it for cash rather than taking out a loan.

ceridwen

lilac_lady wrote: »

Savings = independence- something some people will never understand. If you're young, save a bit and spend a bit enjoying your life.

Well - it certainly does to me too.

The thing is though there is one obstacle to saving if one is retired - ie not being able to get a rate of interest on savings sufficient to at least keep pace with inflation (thus savings losing a bit of their value each year).

If one still needs a job (and is therefore at risk of being put onto benefit - from losing that job) then there is a further obstacle as well. That being the £6,000 maximum allowable amount of capital (including previous months salary and any redundancy payoff on losing the job). If you're on benefit long enough to go onto means-tested benefit (ie longer than 6 months) then the DWP start "tapping into" those savings by cutting benefit payable accordingly.

My personal best way I can manage to deal with those two problems is to have enough savings to be able to manage on for 6 months at a basic level - no more, no less. That way - there is as little savings as possible to lose value with the passing of time. Also - that way one makes sure that the savings that would be taken into account by the Benefit Office are as low as possible - just in case of unemployment lasting more than 6 months.

I shall be glad when I get to retirement age AND its possible to get at least an inflation rise on savings again - then I will be able to save to my hearts content without worrying that some of it might get taken away from me by inflation/the Benefits Office....:cool:

One can only assume that the reason the Benefit Office only allows a comparatively low level of savings (including that redundancy money if....) is in order that people HAVE to take a job pretty soon (however poor the pay/conditions) - rather than being able to live off their savings until a suitable one comes along.

Its a very fine balance to draw as to just how much to have in the way of savings for all of us who do have the chance to save of ourselves.

ceridwen

vaporate wrote: »

£733 in rent?!!

lol crazy

Very true - but if I rented my house out I'd be charging rather more than that.....as downright expensive IS the going rate in some areas - and its nothing special...

vaporate

ceridwen wrote: »

Well - it certainly does to me too.

The thing is though there is one obstacle to saving if one is retired - ie not being able to get a rate of interest on savings sufficient to at least keep pace with inflation (thus savings losing a bit of their value each year).

If one still needs a job (and is therefore at risk of being put onto benefit - from losing that job) then there is a further obstacle as well. That being the £6,000 maximum allowable amount of capital (including previous months salary and any redundancy payoff on losing the job). If you're on benefit long enough to go onto means-tested benefit (ie longer than 6 months) then the DWP start "tapping into" those savings by cutting benefit payable accordingly.

My personal best way I can manage to deal with those two problems is to have enough savings to be able to manage on for 6 months at a basic level - no more, no less. That way - there is as little savings as possible to lose value with the passing of time. Also - that way one makes sure that the savings that would be taken into account by the Benefit Office are as low as possible - just in case of unemployment lasting more than 6 months.

I shall be glad when I get to retirement age AND its possible to get at least an inflation rise on savings again - then I will be able to save to my hearts content without worrying that some of it might get taken away from me by inflation/the Benefits Office....:cool:

One can only assume that the reason the Benefit Office only allows a comparatively low level of savings (including that redundancy money if....) is in order that people HAVE to take a job pretty soon (however poor the pay/conditions) - rather than being able to live off their savings until a suitable one comes along.

Its a very fine balance to draw as to just how much to have in the way of savings for all of us who do have the chance to save of ourselves.

If you have more than 8k in savings you lose a partial mount of benefits I think.

16k or more and you get nothing as far as I know.

Keep it under the bed lol

Coeus

A very informative thread!

Saving is a necessity for the young these days, of whom I fit into. Well I say a necessity but I think for some ignorance is bliss. I would say you generally fall under one of two categories:

1. The long term planner saving for deposit usually living with parents and significant savings.

2. The living for day individual privately renting with little or no savings.

Each is justifiable depending on ones viewpoint. I fall into (1) as I don't see any return on money lost to rent (might as well be paying a mortgage). However my best friend falls under (2) who currently works part-time earning enough for the weekly nights out. To each is there own.

As for saving for the future I'm writing off all pension schemes - self select ISA's and rental property is the way to go!

bristol_pilot

Coeus wrote: »

As for saving for the future I'm writing off all pension schemes - self select ISA's and rental property is the way to go!

If I were a young person starting out today, I'd do the same. But you need to be aware of some potential pitfalls. In the event of bankruptcy pensions are protected, but ISAs and property are not so you could lose the lot. In practice, this may mean that you can never start your own business as failure would be too much of a risk. Also, you cannot access pensions until retirement age but the same is not true of property/ISAs - you need to be financially disciplined so as not to spend the capital before retirement. This may not be as easy as it sounds, especially if you get married. Try telling a wife that you cannot afford £20k for a new kitchen when there is £800k or whatever in your ISA/property portfolio.

rictus123

lilac_lady wrote: »

Savings = independence- something some people will never understand. If you're young, save a bit and spend a bit enjoying your life.

Brilliant post, i approve.

Coeus

bristol_pilot wrote: »

If I were a young person starting out today, I'd do the same. But you need to be aware of some potential pitfalls. In the event of bankruptcy pensions are protected, but ISAs and property are not so you could lose the lot. In practice, this may mean that you can never start your own business as failure would be too much of a risk. Also, you cannot access pensions until retirement age but the same is not true of property/ISAs - you need to be financially disciplined so as not to spend the capital before retirement. This may not be as easy as it sounds, especially if you get married. Try telling a wife that you cannot afford £20k for a new kitchen when there is £800k or whatever in your ISA/property portfolio.

Good points! For me it's not so much of a risk. I'm a part-qualified accountant so managing finance is what I do best. Personally as you may have gathered from my original post I am very disciplined.

I very much hate the idea of saving into a pension pot and dying early with nothing passed onto family from that investment. At least with ISA's the dividend/interest stream (and the investments themselves) will entirely pass on in event of my death (subject to IHT).

Also, the wife will do as she is told.