Newbie

baxgttdi

Hi all,

I've spent most of my time over at the Debt-free-wannabe board previously, with good reason (see sig). But finally, I've come through the other side and hopefully learnt from past mistakes. So the question I have now if you don't mind me asking is...

Now that I've sorted everything out, I have a little money to save/store/place somewhere. I've never actually been in a stable financial position since I was 16 so this is all new to me, could anyone suggest a basic setup that might be a goer? I hear some people recommend a "slush fund" first, as a backup but what would people recommend from there?

Sorry for such a long first post, any help greatly appreciated

Linton

Yes - first thing is to set up an emergency cash fund in the best instant access savings account you can find. 6 months living expenses would be a sensible target. You will then be able to start more serious saving confident that you can tie up subsequent money for the longer term. The longer the term the higher the savings and investment returns you can achieve.

In parallel with that you need to consider a pension, if you havent already got one setup. Ideally this would be provided and subsidised by your employer.

With these two basics in place, the next step is long term savings. Perhaps initially in fixed term deposit accounts and then once you had a few £K in place you can move to real investing in shares and funds.

cydney65

Hi, I've just replied to you over on the DFW board. This and the banking board were the first places I came to after becoming debt free.

Read through both boards for a few days and get the feel of things. There are lots of amazingly well informed people on them and believe me you'll learn a lot. I contribute to the 12K in 2013 thread on this board. You don't have to save 12K, I have a £3000 target, you can join in any time and you will get lots of tips and support in saving.

More importantly enjoy being debt free and enjoy saving money. I get lots of pleasure now from saving and being in control of my budget.

xylophone

Don't forget to use your ISA allowance.
http://www.moneysavingexpert.com/savings/best-cash-isa

atush

Congrats on being Debt Free!!!!

I agree you need an emergency fund, of at least 3 months spending. More if you have a dependent family or own your home on a mtg.

then, pension. you need one, you should join a work one if you can, and open your own if they don't have one (although if you have an employer they will have to soon.

Then, are you saving to buy a home or something else in the near term? 3-5 years or less, you need to save in cash. Always use ISAs if you pay tax, then on to regualr savers, 123 acts and the like.

Then longer term savings, like your pension should be in some sort of equities. using your S&S isa allowance is a good idea, as is paying enough into pensions (if you had to start on a smaller amt.

Always look at increasing all regular savings/investments such as pensions and others when you get a pay rise- it is the easiest way to do it.

baxgttdi

Hi all,

Thanks for the replies. Just to answer a few questions. I've got enough put aside to cover about 4 months if anything ever happened so that's hopefully ok, it's just stored in an easy saver at the moment.

As for a pension I've always been in one since my late teens, even when I was struggling at my worst points I kept it up. It's a council final salary one so again hopefully quite well covered there.

ISA's are a different story, I've never had one are they all much of a muchness? I know advice is a no no but in someone's considered opinion, is a S&S ISA always risky? I'm happy to leave my slush fund in an easy saver but don't really want to leave everything else there. Thanks in advance to anyone who answers

atush

If you pay tax, you might consider a Cash ISA, as you won't have to pay tax on the interest (as you are doing in your easy saver). You get a 5760 allowance each year, and can use a spouse's allowance too

It can still be easy access.

S&S isas can be 'risky' or not so risky. But cash has risk too, shortfall risk (in that it will not grow to what you want/need it to be) and inflation risk (which means inflation will eat away at the buying power of your money which it does at the moment as rates are lower than inflation). 10K today (stored somewhere with no interest like under tha mattress etc), will in ten years of 3% inflation (which could be double or triple that) will mean your 10K would be worth only 7K in today's money. 5% inflation would mean it was worth 5K. 7% inflation would mean it would be worth only 3K etc.

Shares and funds can rise and fall. But over periods of ten years or more, outperform cash.