How much should I be saving?

ValiantSon

Money_Or_Cars wrote: »

My take home after tax and pension is £1800. I pay nothing for living at home, apart from contributing to buying food.

My current HP finance is £350. The PCP deal is £370 per month. The new car is a performance hot hatch which I think I will get a lot of enjoyment from.

I'm on here trying to figure out how to get the right balance of spending on things that make me happy, and saving enough for the future.

Like others I'll give it a go.... Don't waste your money on a depreciating asset that you will decide you want to change again in another year or two. Depreciation on cars is massive. You'll also pay a lot in insurance for your "hot hatch" because of your age and this will further erode your ability to save for a house (and also eat in to your available disposable income for other things).

If you are serious about buying a house/flat of your own then you need to commit to saving as much as possible. Your take home pay is not huge and you are currently getting an exceptionally good deal from your parents. Make the most of what they are offering you by saving properly and not frittering away your money on an outrageously expensive toy which will only ever cost you more money.

IanSt

Money_Or_Cars wrote: »

...

I currently have a really nice car, but I have been tempted to go for a brand new one on PCP.

...

Any advice/info would be much appreciated, thanks.

Hi there and welcome to the forum.

I think most people here would put saving ahead of purchasing a new car, especially when you say you already have a 'really nice car'.

However I can see that for some people switching to the new car could be too great a temptation to resist. If that is the case then does it really have to be brand new? Maybe you could consider purchasing an older version of the car instead so you don't suffer from the massive depreciation loss that a new car brings.

Money_Or_Cars

IanSt wrote: »

Hi there and welcome to the forum.

I think most people here would put saving ahead of purchasing a new car, especially when you say you already have a 'really nice car'.

However I can see that for some people switching to the new car could be too great a temptation to resist. If that is the case then does it really have to be brand new? Maybe you could consider purchasing an older version of the car instead so you don't suffer from the massive depreciation loss that a new car brings.

I have been considering that. But, due to the higher interest rate on used car loans it would mean that I would be paying £450 per month, which is substantially more - but I will be the owner of the car in the end.

No_6

You only pay for food at your home ?
so your parents are subsiding you, for a new car,
not a house deposite...so you can move out.

ValiantSon

Money_Or_Cars wrote: »

I have been considering that. But, due to the higher interest rate on used car loans it would mean that I would be paying £450 per month, which is substantially more - but I will be the owner of the car in the end.

Finance to pay for cars is generally a bad idea. Sometimes it is unavoidable, especially early in life when buying your first car. However, by constantly changing a car what someone is doing is turning a theoretical loss in the value of the asset, due to depreciation, into a real terms loss. They then compound this by buying a "new" car on finance and start the whole sorry tale again. I would strongly advise you to avoid any financing, including PCP. Taking on debt to fund your lifestyle is a sure-fire way to never really having enough money. You need to save for the things you want: it might take you a little longer to get them, but it will cost you a hell of a lot less.

You have a "nice car" already. It really doesn't make sense to buy another one. You are just throwing your money away. Save the money you would have [STRIKE]wasted [/STRIKE] spent on the PCP and, when your current "nice car" starts to become uneconomical to maintain, you will have enough to buy the next car outright (and when you do look at secondhand - the difference on a 1 year old car and new is huge in terms of cost, but not in terms of what you are actually getting).

The truth is that you don't have the kind of income needed to be throwing your money around on flash cars. Taking on debt to do so is simply stupid. You clearly aren't a stupid person, so don't make a stupid mistake.

TheShape

Save more so you can afford a property with off-road parking.

theoretica

Get out of the finance trap with your cars. Save money, and when you have enough saved to buy a car then consider if you want to do that, or keep it for a house deposit.

If you lived alone you would be paying rent or a mortgage, utilities, council tax etc. I suggest you save at least this much for a deposit. Round here it would be at the least half your take home. You really don't want to commit to any long term finances that would leave you unable to afford this. You should also be looking to save something once you move out, so I would encourage you to try saving more on to of this too - for your next car fund, or whatever.

All that said, I wonder what it would cost for you to hire a snazzy car for a day's treat now and then? But not on credit!

enthusiasticsaver

At the moment your living costs are being subsidised by your parents so you have lots of spare income. If you sign up for a PCP deal for a depreciating asset you are committing to that for usually at least 3-4 years. I think you also sometimes have to pay more if you do more mileage than expected. Would you be able to save for a house and then pay a mortgage and bills while still having this PCP deal? If not, you will be living with parents for a long time.

enthusiasticsaver

Have you looked into insurance costs for the car?

Personally I would not touch PCP with a barge pole but we all make different choices with our money.

Any debt you have will affect the amount you can borrow on a mortgage.

KeepOnKnitting

£370 per month is £4,440 per year. Do you really want to spend £13.5k over 3 years to rent a toy? Don't forget that even a £1k fiesta can do 70 on the motorway with ease.