How much savings in cash do you need to hold?

Ash1982

Hi,

Just wondering what peoples thoughts on this are? I know the guide says 3 months salary or should this be living expenses?

I think I'm going to try fill my cash ISA but I'm tempted to put more into my Stocks and Shares ISA instead......

Ash

Linton

IMHO 6 months living expenses.

CKhalvashi

Ash1982 wrote: »

Hi,

Just wondering what peoples thoughts on this are? I know the guide says 3 months salary or should this be living expenses?

I think I'm going to try fill my cash ISA but I'm tempted to put more into my Stocks and Shares ISA instead......

Ash

Hey Ash,

3 months expenses should be enough for emergency use.

We keep around £20k due to the nature of us both being company directors, BTL’ers and the industry we’re in, but it’s mainly dependent on your risk profile.

I don’t know any of your circumstances, but the key is that if you’re working for a company taking on staff and plenty of work, you’ll be better putting in S&S, whereas if you think there’s a risk of redundancy, more in cash.

The stock market’s at the top of a zig-zag at this time, so it’s also worth bearing that in mind, not to invest until prices come down, according to Martin’s blog (I am NOT a financial expert and this does not constitute financial advice etc etc)

CK

Derivative

Completely up to you.
If you lost your main source of income tomorrow, how much breathing room do you want to recover that in?

I keep around 6 months' worth, but I plan to expand that as time goes on (I don't want to hold a high percentage of my wealth in instant access cash due to the low return).

I would ignore salary completely and go for living expenses. And real living expenses - not the ideal ones that you think you could live on. Include everything you currently pay for.

jimjames

At least 3 months in cash (or overpayment on mortgage in our case) but even shares can be accessed if you really need to. Timing might not be right but if they've been held for a while you could well still be sitting on a tidy profit even selling at a low point.

Ash1982

Thanks for the responses people.

I think I will try and fill my cash ISA this year. I have only recently set up my stocks and shares ISA with HL but only as a £50 pcm regular saver into a risky emerging markets fund.... I think I will just let this go out for now and think about maybe upping it when the markets get worse.... if that makes sense!

I work for the government and I'm hopeful going to be a Chartered Surveyor in the spring, I'm pretty confortable in my job (although I am current 'acting' up to a higher payscale covering maternity leave at the moment) so I think I should review what I do with my additional income in the summer as I will probably have a healthy cash amount by then (I'm currently budgeting savings of circa £900 pcm whilst I'm on my higher salary, £500 on my basic rate).

Thanks for your comments, anymore welcome

atush

This is flexible from 3-12 months of salary or spending (which is hopefully lower but may not be) depending on personal circumstances. Each determinng factor will mean you go higher and lower in that range of 3-12.

3 months salary for a single person w/o mtg, increasing if you are a couple and have dependant children. If you have a non working spouse and children and a mtg go higher. If you have a working spouse and no children go lower. If you are self employed go higher. Each single factor means you will need more or less money in reserve.

sabretoothtigger

10 percent

brewerdave

Because of age (I've already taken early retirement) we keep 9 months equivalent of my wife's salary in easy access accounts, as much as possible of that in a cash ISA - the nearer my wife gets to "retirement age" the more difficult it will be to get another job so therefore the more we will be saving in short term cash accounts.

middlepuss

A few months of living expenses plus cash for any large expenditures you're pretty sure will come along in the next few years. EG house deposit.