How much should I save?

eemor

Hi All, new to this forum, hope you can help. I am 18 years old and have just started work, earning £220 per week. Self-employed. I am hoping for my income to rise a little in the next 6 months or so.
Where do I start with how much to put past for savings, do I need to pay a NI stamp, how much do I save for pension in future, how much do I squirrel away for the tax man when I eventually start paying tax? I live way out in the countryside in Northern Ireland with a useless bus service and no trains so am trying to save for a wee run around car. I'm not a big spender, not into going out and don't drink or smoke. Sorry for so many questions, any help would be appreciated. Thank you in advance,

ryannnking

In a nutshell, just try and save as much as you can! You say you are not a big spender, so try and save as much disposable income as you can. Especially being 18, being able to save at such a young age will greatly help you going forward.

It sounds like you are saving for a goal, that goal is buying a car.
How much will this car cost?
When do you want the car by?
You can then work out how much you will need to save each month to buy this car, in X amount of months.

You earn £880 per month. Maybe you can save £200 per month, and the car costs £1000. Then you can buy the car in 5 months.

Regarding pension, there are more complicated options being self-employed, but for now I would personally suggest just putting a certain amount of money away per month in a high interest savings account. Nationwide currently offer 5% interest if you pay in £250 per month - this sounds like something you might be able to meet!

eskbanker

eemor wrote: »

Where do I start with how much to put past for savings, do I need to pay a NI stamp, how much do I save for pension in future, how much do I squirrel away for the tax man when I eventually start paying tax?

Start by planning a budget (https://www.moneysavingexpert.com/banking/Budget-planning/) that differentiates between mandatory and optional expenditure - you must pay tax and NI so should prioritise putting that money aside before thinking about how to dispose of the rest. You can use online calculators such as https://www.employedandselfemployed.co.uk/self-employed-tax-calculator to work out how much your liabilities will be.

Read up further on the finances of self-employment at the likes of https://www.simplybusiness.co.uk/knowledge/articles/2016/12/going-self-employed-in-the-UK-a-self-employment-guide-to-get-started/ and https://www.gov.uk/working-for-yourself

I'd recommend that you open a business account as well as a personal one, as the Ts & Cs of personal accounts invariably prohibit use for business purposes - https://www.starlingbank.com/business-account/ is a free one that is sometimes mentioned on here, but others are of course available.

Flobberchops

Congratulations on starting young. Try to put away as much as you can, especially if you're still living with parents.

You don't mention what the nature of your work is, but would that benefit from a cash injection? If investing in that could increase your income by 10%, that obviously beats sticking your money in a savings account paying 1%.

As you're self employed your pension options are (I believe) investing through a SIPP or else holding cash or shares in a Lifetime ISA. The LISA has the benefit of immediately boosting your savings by 25% which is very motivating, but be aware you can only withdraw penalty-free for a house purchase or after age 60.

Please do your own due diligence but at your age I believe you should be mixing things up with a range of savings and investments - regular savers, instant access cash accounts, fixed cash accounts, stocks and shares (ideally held in an Investment ISA or a Lifetime ISA), maybe even consider putting a small percentage of your overall cash into Peer to Peer lending or precious metals. Diversifying is rarely a bad idea but please go in with your eyes open to the inherent risks. Never invest more than you could afford to lose, or potentially have to hold a long time for a dip to recover.

No_6

Get MS money CD, to work on a old laptop or pc,
don't need to be connected to the web....so super SAFE.
enter ALL your data, it's a super excel spread sheet all
set up for you to use !
but if you do not enter data.... then DON'T BOTHER

6