How do you save?

oldtractor

Money. OS style savings. I am trying to build an "emergency" pot and it has occurred to me that its probably a good idea to have enough savings for a few months eg 3 months utility bill money put away, 3 months horse costs and so on. Or would 6 months be better?
Surely in the old days people put money away for coal and wood all year round?
SO how do you organise your savings? I like to have 1 years coal and wood and oil and years supply of hay and straw in hand. My stockpile of groceries is similar, but I think 6 months is better and 1 year for toiletries and cleaning stuff. Good idea? or not?

Lazy_Liz

I am sure I have seen advice saying you shuld have about 3 months salery in an easy acess account for emegencies, redundancy etc. So this is a good place to start.
I know many people save into various accounts/tins/envelopes for things such as bills, council tax, horses cars etc. By being labelled for each thing it is easier to see where you are up to.
Regarding your stock piles, I work in an industry where we make things and store them, this costs a lot of money but to a greater extent is unavoidable. Now you may not be paying for warehousing but what would happen if you has a catastrophic fire? Would all you stock piles be covered by insurance?
Also for these stock are you losing money or will you save in the long run becuse the price is rising? eg. if the cost of fule is rising by 10% per year having a year of stock in hand is a better saving than any bank account as long as you replenish it as you use it rather than fill up after you have used it all.
As far as groceries are concerned I would only stock up on those items on special offer rather than everything I use, why act as a warehouse for any more than immediate needs and a back up.
This all supposes that you have a regular and predictable income, if your income is irregular or unpredictable then stocking up may be the best idea.

BitterAndTwisted

Stocking up has psychological benefits apart from the savings to be made because of ever-rising prices.

The old saying that everyone should have three month's worth of average outgoings in an instant-access account and more tied up in long-term savings is still very sensible. Most especially in the current economic climate.

Unfortunately for me my income barely covers the basic necessities but when I'm back in work I fully intend to squirrel away as much as I possibly can as quickly as I can. I already know all about delayed gratification so it shouldn't be that hard. The peace of mind those savings would bring is incalculable. I suspect there are far too many families whose finances are on the same knife-edge as mine at the moment. I just hope and pray that most of them will cope OK should their circumstances change as radically as mine did.

DundeeDoll

Realising our outgoings > income each month we spent a merry(?!) couple of days beginning of this year going through everything. We then allotted one salary to getting children through uni, surplus rolling over each month (just as well cos we'll have 3 there come September) and loans. The other salary covers everything else. Out of this salary we decided on amount for each of us for pocket money which goes out to personal accounts beginning of the month, £20 a day for food, toiletries, entertainment and things for the house. Whatever's left of this goes into the xmas fund. The rest of the salary is for bills including petrol, the surplus going into the RDF (rainy day fund which will hopefully run to a holiday).

We are trying to run our stocks in the house down as we live close to the shops. I think everyone has to judge their own needs and methods, but so far this is working very well for us. I suspect come September the children salary won't be sufficient so one of the loans will need to come out of my salary, but we'll cross that bridge when we get to it.

Hermia

I do have 6 months salary saved. I live on my own so think it's important that I can look after myself. I don't have much stuff stockpiled as I live in a tiny flat and there is hardly any storage space. It's therefore more sensible for me to have more money saved to pay for stuff if I lost my job.

SailorSam

I probably save just by being dead mean and not spending a penny i don't have to.

GreyQueen

oldtractor wrote: »

Money. OS style savings. I am trying to build an "emergency" pot and it has occurred to me that its probably a good idea to have enough savings for a few months eg 3 months utility bill money put away, 3 months horse costs and so on. Or would 6 months be better?
Surely in the old days people put money away for coal and wood all year round?
SO how do you organise your savings? I like to have 1 years coal and wood and oil and years supply of hay and straw in hand. My stockpile of groceries is similar, but I think 6 months is better and 1 year for toiletries and cleaning stuff. Good idea? or not?

I think a multi-strand approach is best.

I live alone and have chronic health problems which limit the amount of work I can do, and which may worsen without warning, according to my consultant. With that in mind, I err towards extreme caution. I also have thousands of contacts each year (via work) with people who have suffered sudden reversals of fortune and also know how hard this is from my own experiences, and that none of us can regard ourselves as immune.

I'd do some worse-case-scenario planning. Play the nightmare that you lose your job and can't get another for months or even years. Or that you have some inuiry or illness which stops you working, perhaps permanantly. What would you do?

Do you have a mortgage? If so, you need more money put by to pay that than if you pay rent as most lenders will start moving for repossession after 3 months' worth of arrears.

If you rent, would you be applying for assistance from housing benefit, if you lost your job? Do you know the rules for this now and the changes which have already been notified but yet to take effect, and how much help you could get? Would there be a shortfall not covered by HB and could you make this up from savings? You probably couldn't continually make up much of a shortfall from Jobseeker's Allowance or similar.

A lot of people who haven't had to rely on state benefits may be of the impression that people who are unemployed or too ill to work get more help than they do. Check the facts ahead of time and try to live on that income for a few weeks. Can you hack it and how quickly are you going thru your savings to subsidise your day-to-day costs?

Depending on how you keep warm, you may want to lay in coal, heating oil or wood, but you might leave yourself open to risk of theft. Also, if you need cash, tying to turn bulky items into spending power may be difficult or impossible. Definatley have cash put by for the utility bills.

Having some food stored is sensible, IMO, as we all have to eat. And a reserve of food for any pets. And basic toiletries keep pretty well and will always be needed.

If you keep your numbers, you should be able to make a fair estimate of how much money you'll need for a few months, but there are a lot of unexpected expenses which crop up. A few examples could be the central heating boiler keeling over, a major and necessary appliance dying of old age, a pet with a problem............. things tend to go wrong in batches and when it is least convenient.

And let's not even get started on the potential money-sapping disasters which cars and houses are prone to develop.........

I guess we each have our highly-specific costs of living (the price of hay having no bearing on my life, f'instance ) and have to make our personal emergency funds accordingly.

And BitterAndTwisted is sooooooooo right about the peace of mind in having emergency funds and a cupboard full of food.

All righty, just nipping off to count my Fray Bentos tinned pies; a true emergency food if ever there was one.:rotfl:

Living_proof

When I found myself on my own with two children to care for I made sure I have first one month, then three months equivalent of expenses put by just in case. This is over ten years ago now and I feel you would need at least six months easy-access savings in case of redundancy or drastic cuts in hours of work. There is always the boiler, car, etc. and you should have a contingency fund just in case, but you can only do so much. You can only save what you can reasonably afford, and can't accommodate a Doomsday scenario. We'd certainly all 'be in it' together then, but in dire circumstances we would just have to adapt as best we could. I have built my savings up and now try and save as much as I can for retirement, and have a ridiculous stock of foodstuff which I am slowly trying to whittle down. The Student Prince finishes in mid-May so if he is back at home then that won't take long!

charlies-aunt

I think that its essential to have reserves of money, food and toiletries for financial emergencies.

I have just had a large, unbudgeted-for vet bill and other major expenses all piled on a no-interest for 15months credit card - just over £3k so I am to getting back on the frugal living wagon to be able to make the repayments before the interest kicks in...nothing improves my MSE skills like a big bill hanging over me!

Fortunately, I have some savings to make a dent in the total, half a freezer full of food and a fairly well stocked store cupboard . . .and an allotment.

Its going to be tough but its do-able

oldtractor

Theres such a lot to think about. I'd like to accumalte £3000 for emergencies eg the boiler breaking or pet illness and also have xx months worth of money put away for day to day living in case of illness or job loss. 3 months maybe? 6 months probably better. It will be a long haul. It has transpired that the pub where my DS1 works may be closing . Not certain yet but maybe. That would mean loss of his income and DH doent have the overtime he used to get either. We have no need to worry at present but I do feel something in reserve is better than nothing.
Thanks all for the replies, they are all giving food for thought. Grey QueenI feel , is particularly wise.

Stephen_Leak

I have been lucky enough to be able to save when I was working.

I have 3 savings accounts.

Firstly, I have an ISA with well over a year's gross salary in it. This is my "rainy year fund". It's each year's best instant access cash ISA that allows transfers in and has no penalties when I "ditch & switch" again next year.

Account No.2 is the current best instant access savings account. There's a couple of grand in this. This is my "rainy day fund". Again, it'll be "ditch and switch" time when the bonus interest rate ends next year.

Account No.3 is the savings account from my current account provider. There's only a couple of hundred quid in this one. The ability to transfer it instantly to the current account is more important here than the interest rate. (Actually, it's not that bad.) I call this my "short sharp shower fund". For example, I went to pay a garage bill with my (cashback) credit card and they said that they had to pass on the CCC's charges, but a debit card would be OK. So I used my debit card, and then transferred the money as soon as I got home, so I didn't go into the red.

It works for me.

PS. If it ever happened one year that both the best saving account and ISA were also with my current account provider, I'd have the "rainy day fund" with the next best other provider. Eggs and baskets.