How much should I aim for - in Savings

YoungBusinessman

Lomcevak wrote: »

I don't have targets, as others have said if you spend less than you earn then savings build up naturally. However, I do have 'danger levels' (for want of a better phrase), and if i'm not meeting these then savings need to take greater priority in the monthly budget than other discretionary spending:

- an emergency fund capable of covering three unexpected spends in month, e.g. major car repairs, home repairs, new appliance etc. For me this is £2000 and if I ever dip into it then it needs to be built back up again immediately

- enough money to cover day-to-day expenses while looking for a new job.

The latter in particular varies a lot depending on circumstances; if you have in-demand skills and can relocate anywhere then this might be a month or potentially even nothing at all if you're confident you could find something else within your notice period. If you're settled with a house, mortgage, kids in school, specialist job etc. then it might be much larger, six months expenses or more. Better to be conservative than not.

I also hold enough in a current account to avoid living 'paycheck to paycheck' - i.e. that this month's income pays future bills, not the ones arriving this month. All annual planned bills are also saved for, and credit cards are only used for things that I could pay cash for if I wished. In total that means that the current account is rarely below about £4k to cover all that.

So for me the minimum benchmark is:

- current account £4k
- emergency fund £2k
- six months of living costs £16k

FWIW, married, three kids, mortgage, can't easily relocate for a new job, so the minimums are quite high for me. I'm currently in the phase of building everything back up after a nasty overspend on some building work that turned out to be more complicated than estimated.

This is a good way of doing it! My funds are a bit all over the shop, I'm part of save £12k in 13 thread, at £4k currently should hit £6k end may/start June. I don't think 3 months spends is enough I would go for 6. Then just as much as possible