How much savings

House_seller11

Hi,

Just looking for some advice on how to get the savings/living balance correct.

What value of savings would you be comfortable with to basically allow you to stop saving and spend your money living.?

We live a reasonable lifestyle however do watch what we spend and try not to waste money.(look for deals, don't get fancy hotels for holiday etc)

We both pay into our pensions, and overpay the mortgage by 150 quid per month and have been saving 750per month, we now have 25k saved up, I have suggested to the wife we should reduce our saving to 250 per month and enjoy additional 500 pm and stop watching the pennies so much.

What are other people's thoughts? Would you reduce your monthly savings and start enjoying your money a bit more with an established 25k pot or would you continue to save as we have been? Be interested to hear people's thoughts

Thanks

trailingspouse

It depends really on what you're saving for, and what your income is.

Received wisdom is that the equivalent of 6 months' salary is a reasonable 'rainy day' fund.

I'm assuming that, other than a mortgage, you have no debts? If there are other debts (eg car loan), then start putting your monthly 'savings' into that instead, as you are saving more in interest than you would get in a savings account.

You could also look at ensuring that your £25k is in the best place (for you), balancing interest rate and accessibility.

What would you like to do that you are currently not doing? It sometimes takes a bit of time to 'get used' to having enough money to do what you want to do. My OH grew up in a family where money was extremely tight, and although we are well off now there are times when he doesn't feel able to spend money (eg buying the cheapest he can find rather then looking for something that is good quality - we've had lots of conversations about that!!).

House_seller11

Thanks trailingspouse,

That's the thing we are not saving for anything now, we have our budgets set (for car maintenance, holidays etc) so that sits outwit the money we were saving.

I guess freeing the monthly saving up would just allow us to not think about things as much, and let us book the better hotel rather than something not as nice etc.

As u say if your not used to living like that it can be hard to adjust however could get hot with a bus tomorrow so just want to make sure we are doing the right thing without being stupid about it.

bigadaj

Might be an idea to look at longer term targets.

When do you want to retire, and how much do you want to retire on, some of these savings might be better diverted into investments, whether that is isas or pensions.

Shakin_Steve

House_seller11 wrote: »

Hi,

Just looking for some advice on how to get the savings/living balance correct.

What value of savings would you be comfortable with to basically allow you to stop saving and spend your money living.?

We live a reasonable lifestyle however do watch what we spend and try not to waste money.(look for deals, don't get fancy hotels for holiday etc)

We both pay into our pensions, and overpay the mortgage by 150 quid per month and have been saving 750per month, we now have 25k saved up, I have suggested to the wife we should reduce our saving to 250 per month and enjoy additional 500 pm and stop watching the pennies so much.

What are other people's thoughts? Would you reduce your monthly savings and start enjoying your money a bit more with an established 25k pot or would you continue to save as we have been? Be interested to hear people's thoughts

Thanks

No one knows what's around the corner, and it's comforting, and prudent, to have a nice, fat cushion should the worst happen.
On the other hand, you can't take it with you.
Being careful with money is a hard habit to break, and the longer you are careful, the harder it is to change. I think the question you are asking is down to personality as much as anything.

mt99

Another way to look at it is to ask yourself what you you denying yourself - as someone said you can't take it with you. If you are sitting in the cold watching an old black and white TV then maybe the savings/spending ratio is wrong. If you have always wanted to visit Australia but don't then again, maybe you should spend it rather than save. If, however, you have and do everything you want to then by all means save a bit more.

Sea_Shell

Shakin_Steve wrote: »

No one knows what's around the corner, and it's comforting, and prudent, to have a nice, fat cushion should the worst happen.
On the other hand, you can't take it with you.
Being careful with money is a hard habit to break, and the longer you are careful, the harder it is to change. I think the question you are asking is down to personality as much as anything.

Agree 100% with this. Only you know how FAT you want your cushion to be, and when enough is enough.

When you've always been a saver, it's very hard to change. It's a balance between spending on essentials, nice to haves, and oooh I've have that!!!! Whilst keeping an eye on how long you need your pot to last.

Personally, we stepped away from the grindstone (but still do a bit), once we'd got to £200k, plus pensions, plus mortgage paid off, but then that's us.

Good Luck. :beer:

stoozie1

I know you both pay into pensions, but have you considered whether what they are likely to pay out will be enough for a comfortable retirement?