Saving for the future - advice

pledgeX

Thanks again lokolo.

Lokolo wrote: »

You mentioned marraige - is this a prospect in the near future? Or is it a long way off?

Same with kids.

If they are a while away, I would start saving, but only a little amount, maybe £50 a month to start with, until it starts getting closer.

Marriage within a few years, kids within 5-7 at a guess, although both could be sooner.

I'd probably split my savings by the looks of it, one long term higher risk for then pensions side of things that I wouldn't touch for 45 odd years (except for dire emergencies). Then another savings ISA that may be for 'rainy day' things that I might withdraw from every now and then. This could also go towards marriage/kids.

I will aim to pay into both on a regular basis. Perhaps 100 a month in the 'pension' ISA and 50 in the rainy day fund. Although this may vary wildly when I get a house and realise how much everything costs!

At the moment I'm a bit put off by pensions. I think that unless my company is contributing then an ISA seems like a better option. Maybe when I get a new job and they offer a decent pension scheme I can reconsider.

Lokolo

Only problem with an ISA is that you will have it available. And a lot of people will spend this, then when it comes to retirement, oh dear, no funds.

If you have the willpower, then great... but if you don't....

Loughton_Monkey

You will probably do OK. A house is a brilliant investment in the long term and worth doing. But you'll find the mortgage payments hard - but just consider it as rent!

I know a lot of people recommend 'regular saving' plans either into ISA or pension etc. OK, I have nothing against doing this, but this should be the 'result' of good budgetting and not the 'driver' of saving. I found (and I swear by it) that the best way was to make the primary step of accountig for every penny and scrutinising your total income and expenditure every month. This must be less than your income and less by a very big chunk. Probably larger than you think.

So your income is £33K. Good. Well I can guarantee that any number of your workmates (plus OH) will have an income of only £30K. They can live on it. So can you. And if you make sure you do, then you will see (and be motivated by) the amount spare most months to dump into your ISA or pension.

Budgetting and spending less than you earn is the key.
Deciding where to put the surplus is important, but secondary.
And discriminate very carefully between (a) retirement saving, and (b) short term saving (provisioning) for cars/holidays.... They are two totally different things. Part (a) is usually about a Stocks & Shares ISA or a pension.

pledgeX

Lokolo wrote: »

Only problem with an ISA is that you will have it available. And a lot of people will spend this, then when it comes to retirement, oh dear, no funds.

If you have the willpower, then great... but if you don't....

I'm pretty good with saving. I've been able to save 90% odd of my income for the last couple of years while saving for a deposit without considering dipping into it.

I think if I split it so I have multiple sources of saving with regular direct debits setup it should be straightforward and I can almost forget about it. Perhaps something along the lines of:

- Stocks and share ISA - for retirement. Pay in £100 or so a month and don't touch it for the next 40 years.
- Cash ISA - for medium term term things (~5 years), e.g marriage, kids, home improvements, new car. Pay in £50 or so every month and with only a few withdrawals
- And an online savings account or something with instant access for everyday saving for 'luxury' items like the odd gadget, new bike etc.

Obviously budgetting is very important and I will definitely be keeping track of all outgoings so I can see where I'm spending money, and maybe if I need to increase/decrease the amount going into savings.

Thanks again for the help.