Could I be better with my money?

joeyvicks

Hi,
I'm just wondering if I'm being as good with my money as I think I am and would like to know your thoughts so I can consider changing things if need be.

I currently earn 42k a year. After house/car and usual bills etc I'm left with circa 1,400 a month. I'm usually also putting some away for future holidays/trips etc so say I'm left with 1,100. I have a 3.5 year old daughter that I put 25 a month in an isa for and I have 1k set aside for a rainy day. The rest goes on a month by month basis and we are soon going to be greeting baby no2 into the world so I've had a few bits to buy but nothing major.

The fact that I'm going month on month without adding to any savings or emergency fund or overpayment on mortgage is starting to bother me. Do I need to start being a bit more sensible and putting some more aside? I have an employers pension for which they put 6% in and I put 4% which I think is ok. It's everything else that bothers me.

Be honest with me please.

joeyvicks

I'm 29 btw and have no debt outside of my mortgage and car (car allowance from work covers this though)

jimjames

What happens to the £1100? Do you just spent it on unknown items?

Saving that would be a start. £1000 emergency fund sounds very low.

First thing is to keep a track of your spending or move that £1100 into savings every month if it is left after bills paid.

[Deleted User]

Putting £25 a month into a savings on your level of income is not going to provide any meaningful value (you'll need to save for 8 years to achieve 1 month salary...).

You need to be saving a lot more if you want to have any chance at a reasonable future and/or retirement. You're currently saving ~12% of your income which isn't terrible but it's far from where you could be.

Does that £1,000 constitute your entire Emergency Fund? You're currently spending over £2,000 per month to live, if you lose your job you have enough money to last... 2 weeks! You need to get your Emergency Fund up to at least 3 months expenditure (£6,000) or 6 months (£12,000) if you think you would have to spend some time looking for a new job.

You can't start saving properly until you identify why you're not saving right now and the problem seems to be with your £1,100 that goes missing, where does it go? For the next month track every penny and identify wastage and places you can cut back, then from there you can start making plans on how much to save.

ColdIron

joeyvicks wrote: »

I have an employers pension for which they put 6% in and I put 4% which I think is ok

Are you sure your employer is putting in 6%? With many of these arrangements your employer will match your contributions up to a limit, 6% in your case. Either way I would put in at least that much

joeyvicks

Just tracked my last months spending; starting at 1400
200 extra to house/bills as gf hours were short of normal
400 for a weekend away next weekend
150 aside for something I can't mention!
200 credit card spends from previous month
125 for new baby bits and couple of bits for little girl
65 New trainers
Leaves me with circa 350 from last months wages

joeyvicks

ColdIron wrote: »

Are you sure your employer is putting in 6%? With many of these arrangements your employer will match your contributions up to a limit, 6% in your case. Either way I would put in at least that much

Yes they put in 6% and I put 4 in

joeyvicks

citricsquid wrote: »

Putting £25 a month into a savings on your level of income is not going to provide any meaningful value (you'll need to save for 8 years to achieve 1 month salary...).

You need to be saving a lot more if you want to have any chance at a reasonable future and/or retirement. You're currently saving ~12% of your income which isn't terrible but it's far from where you could be.

Does that £1,000 constitute your entire Emergency Fund? You're currently spending over £2,000 per month to live, if you lose your job you have enough money to last... 2 weeks! You need to get your Emergency Fund up to at least 3 months expenditure (£6,000) or 6 months (£12,000) if you think you would have to spend some time looking for a new job.

You can't start saving properly until you identify why you're not saving right now and the problem seems to be with your £1,100 that goes missing, where does it go? For the next month track every penny and identify wastage and places you can cut back, then from there you can start making plans on how much to save.

My emergency fund consists of 1k yes. I know this isn't particularly good but I do have redundancy insurance that covers my mortgage payments should I be made redundant. This 1k is really just for things like boiler breakdown etc not to cover me if I was out of work. This is what I need to be saving for I know!

joeyvicks

citricsquid wrote: »

Putting £25 a month into a savings on your level of income is not going to provide any meaningful value (you'll need to save for 8 years to achieve 1 month salary...).

You need to be saving a lot more if you want to have any chance at a reasonable future and/or retirement. You're currently saving ~12% of your income which isn't terrible but it's far from where you could be.

Does that £1,000 constitute your entire Emergency Fund? You're currently spending over £2,000 per month to live, if you lose your job you have enough money to last... 2 weeks! You need to get your Emergency Fund up to at least 3 months expenditure (£6,000) or 6 months (£12,000) if you think you would have to spend some time looking for a new job.

You can't start saving properly until you identify why you're not saving right now and the problem seems to be with your £1,100 that goes missing, where does it go? For the next month track every penny and identify wastage and places you can cut back, then from there you can start making plans on how much to save.

The £25/month goes into an isa for my daughter it's not for personal savings. Is the 25/month reasonable? I worked out that by the time she's 21 it should be around 8-10k even if I remained at £25 which I won't. I also have to pay 50/month for pre-school costs as she goes there 1 morning per week.

masonic

Based on your spending breakdown from last month and the fact that you've only managed to accumulate £1000 in savings, it looks as though you're only just living within your means at the moment. It seems with the baby on the way your monthly spending is going to increase, so that coupled with an unexpected expense or two could put you in the position where you'd be struggling to make ends meet.

I'd be looking quite carefully for areas where spending could be cut back (even if you don't actually do so immediately) because your current financial situation is not very well cushioned against bumps in the road and your future situation is likely to be even more demanding.

kidmugsy

Hands up everyone who didn't look askance at the weekend expense and the trainers!

These are things you might do after you've accumulated a decent emergency fund, not before.