How much money should i aim for on each account?

scroug

• Personal account for buying personal items

• Business account (sole trader)

• House bills account

• Tax holder account – (I'll be self employed)

• Rainy day fund

• Retirement fund ( i mean my own money i save up independently of any outside institution as i will be self employed and seeing how older generation are having their pensions ripped to shreds i don't want to join that ponzi scheme!:mad:)

• Emergency fund

So how much money do you think i should aim to have on each account? i want to put together a financial plan for my future and i need opinions as a starting point thank you for your time. could you please write the name of which account and an amount next to it so i know which is which thx

kingmonkey

Do a business plan and a household budget.

Gromitt

Well, it depends on how much you want to spend on personal items, your bills, how you live, whether you rent, purchased, house, flat, etc.

As for a pension, I don't know what you mean. Just putting money away in a 2% interest account is likely to just lose you money as inflation is higher than that.

Hominu

Business/Tax Account - depends on your business plan and current set of accounts.

Personal/Household Bills - depends on your SOA.

Rainy Day/Emergency - depends on what you can afford after taking away the above.

Retirement - whatever you can afford to put away each money that you don't want to spend.

JoeCrystal

Hominu wrote: »

Retirement - whatever you can afford to put away each money that you don't want to spend.

And have to be realistic in order to provide sufficient income if retiring as well.

Cheers,
Joe

bowlhead99

scroug wrote: »

Personal account for buying personal items

Would you like to buy a lot of personal items? How expensive are your tastes? I would like to spend a lot on personal items. I would suggest £30,000. Then you can buy several expensive items like a car and a television and a home improvement. I pulled this number out of nowhere, and as such it is probably not meaningful for you. Given the information provided, it was the best I could do. Next account:

Business account (sole trader)

Do a budget showing all the business's cash income and outgoing for the year on the projected dates they will happen. Run the company virtually for a year on paper. Presume you have a free overdraft and the cash account starts at zero. What's the largest negative balance your virtual company experienced? That's the cash you should aim to have available. If a supplier issue or customer payment delay could cause you to temporarily need more, then increase your cash target to cover the risk If you are bad at forecasting, triple it. If you are good at forecasting, add a smaller buffer. Remember you already have a tax fund and a rainy day fund which can cover unexpected shortfalls. I am going to suggest £37,436 as the amount you should aim for in the business account at any point in time. But knowing nothing about your business I just pulled this number out of my arze, and as such it is not meaningful for you. Next:

House bills account

I just paid £212.50 for some house bills. I suggest you work towards this number. Unless your bills are a different size, or you want to have enough in the account to cover more than one type of bill at once.

Tax holder account – (I'll be self employed)

Put away some money to cover the taxes payable on the profits you make. I suggest £2000. This might not be the correct amount, because I don't know what profits you make or the rate of tax you pay.

Rainy day fund

Aim for £9,378.26 in this account. If you expect to need more or less than this number to cover additional expenses on rainy days, or income shortfalls against your normal living expenses during a period of hardship, feel free to modify this number.

Retirement fund ( i mean my own money i save up independently of any outside institution as i will be self employed and seeing how older generation are having their pensions ripped to shreds i don't want to join that ponzi scheme!:mad:)

Aim for an investment value of one million pounds (in today's money, so a larger absolute figure, accounting for inflation) in your retirement account. This amount will probably allow you to live comfortably off the income generated without eroding the capital to zero before you die. If this is unrealistic given your income level or your shorter term needs or desires for housing, family etc, go for less. If you want to be wealthier in retirement, aim for more.

Emergency fund

It is difficult to guess where you draw the line between a rainy day and an emergency, and you already have a fine amount of money in your rainy day fund.

If you need to spend £2500 on life-saving surgery for your dog, maybe that's an emergency. Or maybe you let it expire.

If you need to bail your brother out of a problem with his criminal drug dealer friends, that might be a £20,000 emergency. Or maybe you let him rot, or go to the police about it and it's not really something you need to pony up 20 grand for.

Or maybe your business gets sued for £100,000 without you having adequate liability insurance in place, or maybe your business fails and closes down and the very next week your house burned down and you need to rent a hotel room and suit for a job interview before the insurance payout comes through to replace your bedroom and wardrobe.

On balance, I'd suggest £17,286.37 as the right size emergency fund for you, but I must caveat that by saying I know nothing about your circumstances or your ability to be frugal in the face of adversity.

So how much money do you think i should aim to have on each account? i want to put together a financial plan for my future and i need opinions as a starting point thank you for your time. could you please write the name of which account and an amount next to it so i know which is which thx

I trust the answers were to your satisfaction. If nothing else, they are a start. If they seem too large or too small, you could modify them. A particularly strong reaction to any of the them being too large or too small, would indicate your feelings towards them and help guide you to the numbers that you feel are more appropriate.

Unfortunately I have to leave now as my general policy is not to feed the trolls.

Hominu

I think you need to bold those figures so they can be read more easily. You never know, the OP may just aim for those figures as they currently have 10 billion in a current account somewhere. Indeed, I think you should double the business account amount and quadruple the house bills account.