Please tell me how much I should save every month?

NoveltySlippers

tcallaghan93 said:

I used to be like you, then I took an arrow to the knee.
No but seriously, the light bulb moment is only the start. Treat your finances as a project to work on. Export your monthly bank and credit card statements into Excel andreview it critically like marking a student's work, you need to be able to justify each and every item without feeling guilty that you're wasting money. Be thrifthy, be frugal, be unashamedly tight. I left uni 4 years ago with £2k saved, the same amount I started uni with, my first job was £18k for 8 months at a housing association, and for the past 3 years I've been in the Civil Service on £23-£24k. I have averaged £1k/month saved since leaving uni (yeah I'm living at home but I'm paying rent), learned about investing and index funds, I track my wealth and income/expenditure monthly, I recently passed the £50k mark. Next stop £100k.

Starting this thread has indeed been a lightbulb moment. So maybe spending my holiday feeling depressed is not a bad thing, because it made me start this thread, and has now given me great ideas and spurred me to action!

I am in awe at the thought of £50k savings at your age and on that salary. 

This is no excuse, but I had to do a lot of degrees to get to this job, and for many years lived on almost nothing that meant no savings were possible (I was on £10k for several years as a postgrad student, some of the money scholarship, some from part-time jobs). 

I think once I started earning more, I first had my student loans to pay off, then I had to save for a house deposit. Now, in my early 40s, I finally have cash to save for the future, and just hadn’t worked out that that needs to start happening now. 

AlanP_2

Agree with suggestions above re budget and "pay yourself first" approach but also as and when you get a pay rise add that to the sdavings side if you can. If not all of it at least 50% and ideally 75/80% as it is money you aren't used to having so won't miss.

NoveltySlippers

MovingForwards said:

I have a spreadsheet for all my savings accounts, each savings account represents one aspect of my life eg car insurance / repairs / MOT / Tax and home insurance, home repairs, garden costs, interior emergency repairs, replacement furniture / decorating, emergency fund to cover mortgage payments, emergency fund etc.
Again, over Christmas I check how much that year has cost me, add a bit extra on as costs rise, then divide each one by 12, that's how much I need to put away as a minimum each month.

Thanks Movingforwards - lot of useful tips there.

Do you mean you actually opened a separate savings bank account for each saving goal - so you have multiple different savings accounts with the same bank? Is that what people do to keep the money separate?

I’ve been reading about the You Need A Budget app that sounds like it does a similar thing virtually (but seems a bit confusing!).

83705628

NoveltySlippers said:

tcallaghan93 said:

I used to be like you, then I took an arrow to the knee.
No but seriously, the light bulb moment is only the start. Treat your finances as a project to work on. Export your monthly bank and credit card statements into Excel andreview it critically like marking a student's work, you need to be able to justify each and every item without feeling guilty that you're wasting money. Be thrifthy, be frugal, be unashamedly tight. I left uni 4 years ago with £2k saved, the same amount I started uni with, my first job was £18k for 8 months at a housing association, and for the past 3 years I've been in the Civil Service on £23-£24k. I have averaged £1k/month saved since leaving uni (yeah I'm living at home but I'm paying rent), learned about investing and index funds, I track my wealth and income/expenditure monthly, I recently passed the £50k mark. Next stop £100k.

Starting this thread has indeed been a lightbulb moment. So maybe spending my holiday feeling depressed is not a bad thing, because it made me start this thread, and has now given me great ideas and spurred me to action!

I am in awe at the thought of £50k savings at your age and on that salary. 

This is no excuse, but I had to do a lot of degrees to get to this job, and for many years lived on almost nothing that meant no savings were possible (I was on £10k for several years as a postgrad student, some of the money scholarship, some from part-time jobs). 

I think once I started earning more, I first had my student loans to pay off, then I had to save for a house deposit. Now, in my early 40s, I finally have cash to save for the future, and just hadn’t worked out that that needs to start happening now. 

/
A grand a month over 4 years = 48k, it's literally that simple. I look back and think, if I hadn't spent money on that, I would have that much more money now.

NoveltySlippers

Emmia said:

NoveltySlippers said:

enthusiasticsaver said:

As in everything I think a balance of spending and saving is a good idea.  Also just because your mortgage is not set to finish until you are 68 that does not mean you cannot retire early.  Saving can also mean overpaying the mortgage to get it finished earlier.  Go on to an online mortgage overpayment calculator and see how much just overpaying a small amount can make both in terms of getting it repaid earlier than term and savings on interest.  Also remember the less you spend the less income you will need in retirement.  

I agree with Barnstar that a budget is a priority when deciding on how much to save.  Divide expenses into essentials like mortgage, bills (if you share them with your partner) and food.  Work out annual expenses like Christmas, birthdays, car maintenance, holiday money and insurances and put some money aside in savings to cover these and the rest of your income divide into spending money and savings.  We always and still do half and half.  Anything left from our spends gets put into savings but the savings go into an account on payday so we get it out of the current account.  You have to make savings as much of a priority as spending to get anywhere.  

Yes, I’d really like to overpay this, as the mortgage is only just over £300 each and my husband and I earn a similar amount, we can and should overpay. He drags his feet on this though. I’ll have to have a ‘conversation’. 

I'd be careful if you have different attitudes - getting to mortgage free as quickly as possible is great - however life is also for living and one person denying holidays, scrimping and saving everywhere when the other person is not quite on the same page (by which i mean saving, but not quite as hard) can wreck a relationship.

You can't take the money with you, and its really important that both halves of a couple are in agreement on the approach - do you want to be mortgage free, but divorced as a result? Or mortgage free but you don't live long enough to do the things you plan to do when you're mortgage free?

Thank you Emmia this is also a useful tip and something to be aware of. I definitely don’t want the discussions to cause damage to our relationship.

NoveltySlippers

tcallaghan93 said:

NoveltySlippers said:

tcallaghan93 said:

I used to be like you, then I took an arrow to the knee.
No but seriously, the light bulb moment is only the start. Treat your finances as a project to work on. Export your monthly bank and credit card statements into Excel andreview it critically like marking a student's work, you need to be able to justify each and every item without feeling guilty that you're wasting money. Be thrifthy, be frugal, be unashamedly tight. I left uni 4 years ago with £2k saved, the same amount I started uni with, my first job was £18k for 8 months at a housing association, and for the past 3 years I've been in the Civil Service on £23-£24k. I have averaged £1k/month saved since leaving uni (yeah I'm living at home but I'm paying rent), learned about investing and index funds, I track my wealth and income/expenditure monthly, I recently passed the £50k mark. Next stop £100k.

Starting this thread has indeed been a lightbulb moment. So maybe spending my holiday feeling depressed is not a bad thing, because it made me start this thread, and has now given me great ideas and spurred me to action!

I am in awe at the thought of £50k savings at your age and on that salary. 

This is no excuse, but I had to do a lot of degrees to get to this job, and for many years lived on almost nothing that meant no savings were possible (I was on £10k for several years as a postgrad student, some of the money scholarship, some from part-time jobs). 

I think once I started earning more, I first had my student loans to pay off, then I had to save for a house deposit. Now, in my early 40s, I finally have cash to save for the future, and just hadn’t worked out that that needs to start happening now. 

/
A grand a month over 4 years = 48k, it's literally that simple. I look back and think, if I hadn't spent money on that, I would have that much more money now.

Yes - that’s a very appealing prospect! 

crv1963

NoveltySlippers said:

barnstar2077 said:

Don't beat yourself up about it.  You are working and have the opportunity to change your ways.  You are in a great position to be able to retire early if you want to.  As suggested above, aim to save a third of your salary to begin with and go from there.  Stuff you wasted money on before doesn't look half as inviting when you realise how much longer you would have to work to pay for it.  I posted the below on another thread earlier:

The best way I have found to save/invest my money is to work out a budget first.  Make a simple spreadsheet with your essential outgoings listed on it.  Include everything that is not for your entertainment, like phone, travel and food costs etc.  Once you have your monthly expenses worked out, that becomes your budget.  Periodically go back in and update/adjust your budget.  I have a section on my spreadsheet for bills that I pay by direct debit.  I have added a separate account onto my online banking that all of my direct debits come out of, and I have set up a transfer for the direct debit amount (with a small cushion) from my current account which goes across on the 28th of every month.  This makes it much easier to see what money you have left when you get near to the next pay day.  I then have a set entertainment amount, for buying stuff and eating out etc.  The amount you budget for entertainment should be realistic, and will probably take a few months to get right.  Whatever is left over is how much you can save every month.  So now you know in advance how much you should be able to save.

Now the important bit.  You transfer the amount you can save out of your current account on day one (but don't lock it away in a pension etc just yet.)  You can spend more on any of your budgeted categories, but you have to reduce a different category, other than your savings to pay for it.   For example, you spend £20 more on food one month, no problem, you just spend £20 less on your entertainment that month.  Try your best not to have to transfer any of the amount you saved back in again, but don't stress if you do, it takes time to get it right and you will always be off every now and then, plus saving anything is better than nothing at all.  When you get paid next time, your savings from the previous month become available to put into whatever investment / savings account you deem fit, and you start all over again.  Think of it as a game, and the prize for winning is cold hard cash!!

For me it helps to think about money as time.  So if I see a pair of shoes for £40 and a pair for £100, I ask myself would I be happy if I did three to four hours at work if all I got out of it was the £40 shoes?  Then I think, would I be happy to do a full days work if at the end of the day my manager thanked me and handed me the £100 shoes as my only payment?  If I had a choice would I have preferred the £40 shoes and four hours at the beach with my friends?  This makes most decisions about spending a lot easier.

The real motivation will come when you start to see your savings account increasing.  Satisfaction guaranteed!

You’ve raised a really interesting point though. Do you REALLY think someone like me could retire early? 

At the moment, I’m only set to pay my mortgage off when I’m 68. I always thought early retirement was completely out of reach for someone like me (pension also only started in my mid 30s). 

Yes you can retire earlier than 68!
All the previous posters have given you great ideas and suggestions. I have a couple more-
i) Your OH you say is likely to drag his feet at the suggestion of increasing his mortgage contribution so prepare for the conversation by having a few notes/ illustrations of options. Discuss when he wants to retire, look at what retirement income you may want- things you'd like to do and joint goals. Maybe be prepared to accept a lower over payment "to see how it goes/ effect on current spending".
ii) Definitely look to increase EF savings- 6 months outgoings should cover it.
iii) Look at increasing pension saving and/or S&S ISA the more options you have the better- plans can and do change as life goes on.
iv) Don't forget to live a life! I am an advocate for always have two things for pleasure booked be that holidays/ concerts/ days out that way you don't get/ reduce the post holiday/ event blues- you always have something to look forward to (Covid has scuppered 2020 plans!).

OH may turn cold at a detailed discussion- Mrs CRV listened to my plans had a few days to mull them over and then simply asked "What is the bottom line, how much does it cost now? When do we retire and how much will our income be?". I simply offer an update every now and then!