No savings, no pension.....

DilbertJones

Me & the wife are both 33, have two young children and are hopefully about to move Into a larger house.

We have no savings at all, no pension at all either.

Wife has a new job which comes with LGPS and she is opting in, my company will start its pension scheme in 2014 I believe.

Question is where do we start? We will have some disposable income and I do want to aim for a good emergency fund, three months pay being my first target, but ultimately I would like 2 years pay is fairly accessible locations if needed.

Is it worth staring my pension before the company one kicks in? For savings, I have started a first direct regular saver @ 6% I will either keep this at the end of 12 months, pay off some mortgage or a bit of both.

Shall I starts an ISA now? I am interested in S&S ISA too, shall i start this before the cash ISA?

Sorry for all the questions!

atush

First you need easy access cash (and regular savers tend not to be) so fill Cash Isas for one or both of you, open a savings acct or get a 123 acct at 3%.

Then look to S&S isas once you have enough cash for your 3 month emergency fund overall between both of you. If you had an emergency, and had to cash in your S&S isa you might be forced to sell at a bad time (after a big drop) plus it can take 3-4 days to get the money.

A pension before yours starts could be a good idea, but fill the emergency funds first.

DilbertJones

Ok, as I have started the regular saver already i will continue with this. Perhaps once we have moved I will open an ISA with the aim of reaching that 3 month target?

Although the 123 account first then move that to an ISA would be better in interest earning terms would it not?

If it makes any difference I am just over the higher rate tax threshold.

xylophone

http://www.hmrc.gov.uk/incometax/relief-pension.htm

If it makes any difference I am just over the higher rate tax threshold.

Presumably your salary will increase over the next few years?

http://www.telegraph.co.uk/finance/personalfinance/consumertips/tax/9781037/Child-benefit-how-to-beat-the-tax.html

At the moment you seem to be in a somewhat precarious position - presumably you do have life insurance in place to protect the family (and repay any mortgage in full) if, heaven forbid, either or both breadwinners died?

You have both made wills and named guardians for your children if the worst should happen?

Your wife's pension will help in this respect http://www.lgps.org.uk/lge/core/page.do?pageId=125497

It would seem to me essential to get your emergency fund in place as soon as possible - as a 40% tax payer using your ISA allowance would be a good idea?

DilbertJones

Rather embarrassingly no, we have no life cover at present. This will change once we move in around 12 weeks or so.

As I am just over the higher rate threshold, does my ISA work better in my favour then? I'll be honest I am struggling to understand it fully.

planteria

DilbertJones wrote: »

Me & the wife are both 33, have two young children and are hopefully about to move Into a larger house.

We have no savings at all, no pension at all either.

Wife has a new job which comes with LGPS and she is opting in, my company will start its pension scheme in 2014 I believe.

Question is where do we start? We will have some disposable income and I do want to aim for a good emergency fund, three months pay being my first target, but ultimately I would like 2 years pay is fairly accessible locations if needed.

Is it worth staring my pension before the company one kicks in? For savings, I have started a first direct regular saver @ 6% I will either keep this at the end of 12 months, pay off some mortgage or a bit of both.

Shall I starts an ISA now? I am interested in S&S ISA too, shall i start this before the cash ISA?

Sorry for all the questions!

I would suggest that both of you utilise your employers pension schemes as best you can: get your employers to contribute as much as you can.

as next priority, and starting before your own pension scheme kicks in, i would focus on building up S&S ISA funds.

if you still have spare after using those i would then think about alternative pension arrangements.

and, with cash rates being so poor at the moment, i would use any Cash ISAs and (and i realise many will suggest different) if you have access to cash with a credit card, for example, i wouldnt worry too much about the 'emergency fund'....id rather have as much of my money as possible working hard for me than sitting in a poorly-paying savings account.

alanq

About to move into a larger house and you don't at present have an emergency fund of three month's income? Perhaps you are about to spend on additional furniture, decorating/repairs, larger heating bills, increased mortgage etc. Forget pension plans for the present once cash goes into them you cannot get it out again for many years. Stocks and shares are for the long term so don't think about them until you have a sizeable accessible cash reserve-otherwise you may be forced to sell at an inopportune time. No ones jobs are 100% secure these days and there is always the risk of illness etc. so ensure that you have the means to pay bills for some months if misfortune strikes.

atush wrote: »

First you need easy access cash (and regular savers tend not to be)

I am not aware of regular savings accounts that are inaccessible. They are not the place to put funds that one expects to be dipping into but for emergency funds they seem OK. The worst that I have seen will greatly reduce the interest rate if withdrawals occur but many allow for some missed payments &/or one withdrawal per year without penalty.

innovate

First priority should be life cover (and a will each) to protect the family. Close second is a cash emergency fund (easy access account, current or savings). Then look at how to best pay off mortgage and build up pension - don't give up the contributions from your employers. Best approach might be to spread your money across all the above, with emphasis that changes over time.

atush

I don't think I can access my HSBC reg saver.

But anyway, as a HRTaxpayer you do need to use ISA for the emergency fund, and by that I mean cash at first. As you would pay 40% tax on any savings you make- is the reg saver in your name or hers? It should be in hers as she only pays basic.

And you do need LA so get a policy going asap (although if your wife is in LGPS she gets death in service?)

Then I would start a small PP with someone cheapish via cavendishonline, to pay in at least as much of your income that is over the 40% rate, and then open S&S isas for anything you want to save over that. You do need them, but 60 into a isa is just that (less the charge for investing it) and 60 into a PP for you would be 100 as you get 20 from HMRC, and then they take 20 off your tax.

custardy

DilbertJones wrote: »

Rather embarrassingly no, we have no life cover at present. This will change once we move in around 12 weeks or so.

As I am just over the higher rate threshold, does my ISA work better in my favour then? I'll be honest I am struggling to understand it fully.

You have kids
sort the life cover now
really this is a must

xylophone

Get on with the life cover - I still vividly remember when the spouse of a fellow member of a group I'd joined was killed in a freak accident, leaving behind two very young children;mercifully, provision had been made prior to his death.