pension vs emergency savings?

ferox666

I am 29, work full time, live alone & own my own flat (with mortgage of approx 70% LTV).

I currently have around £5,000 in my personal pension fund but at present "only" £87 gross is going in to it each month (being total of my contribution and employer contribution). Looking at what I need to put in to get a chance of a decent pension I realise this isn't enough. I have reviewed all my outgoings and could potentially increase contribution by £50 however I have zero emergency savings (actually £2k debt, on 0% c/card). My thoughts are that at this stage an emergency savings fund of a £1k - £2k would be a better priority than increasing pension though - if I were to lose my job and not find a replacement quick enough I don't want to have the risk of losing the flat which would cost me more financially in the long run (not to mention the stress and hassle) - and I'm thinking i'm already fortunate enough to own my own flat which should be paid off in my early 50s (most of my friends are renting) - as my mortgage payment goes down with inflation i could increase my pension contribution accordingly. but for now it seems to me that emergency savings makes sense in my circumstances or am i missing something?? I do have it in my mind that if I start earning more or come into money to pop more in the pension, I do realise I'm not putting away enough...it just seems having some emergency savings makes more sense than upping my "small" contribution!!

bigadaj

Yes, emergency savings fund in cash would be the first thing to do. It's all a but dependent on your current earnings and spending, rough estimate is that 15% of salary should be going in if possible, including your employers, yours and tax relief. Does your employer offer salary sacrifice as the NI savings are very useful.

Always good to do a stem ent of affairs and if you post it on the debt free wannabe boards many good people may be able to suggest savings.

atush

I agree you need an emergency fund pronto. And you need to save more, to pay off that card before interest starts. Then increase your pension.

But there is no way you can't trim more fat from your budget. Try the debt free board, and try a spending diary where you record every pound you spend (even parking, a cup of tea etc). you'll be surprised at how much you waste. I was.

hcb42

I would say your savings buffer should be six months x what you req to live on each month, before upping the pension, which definitely needs increasing as you have identified

atush

While in general I also say 6 months,

I would increase the pension (split 50% with new emergency funds) after 3 months spending has been saved. This way you have an emergency buffer which you will increase as well as increasing your pension savings.