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Useless with money.... time to change but not sure how...

Hi, 
will try and keep this short! 
DH and I have generally earned good salaries. But we have also been good at racking up debt.... never defaulted on anything though. 
Due to, I guess, lucky circumstances we have found ourselves with no debt (apart from a mortgage) no childcare fees, and a joint income of just over £100,000

We have been allocating money to different “saving pots” the past few months. But these are just in savings accounts linked to our normal bank account so the interest is rubbish. 

We would like to put money away and get it “working” for us. 

We have no clue, having never been in the position before, where to start. 
Any tips anyone could offer or areas we should research? 

Thanks 
«13

Comments

  • gary83
    gary83 Posts: 906 Forumite
    Part of the Furniture 500 Posts Name Dropper
    What are your ages? What’s your current pension provision? How long are you planning to tie your money up for?
  • Thrugelmir
    Thrugelmir Posts: 89,546 Forumite
    Part of the Furniture 10,000 Posts Name Dropper Photogenic
    There's no harm in having savings pots. Stops you resorting to credit cards or other forms of finance again. 
  • partialycloudy
    partialycloudy Posts: 311 Forumite
    Part of the Furniture 100 Posts Combo Breaker
    Thanks for replies....
    We are mid to late 30s 
    Both have work pensions that pay in 10%.... although I worked part time for 3 years and then was out of work for 2 years. DH has added an extra % I think to his, which his company match.

    so that had been one idea, for me to add to my pension contributions. 

    I think things like our holiday pot can’t really be locked up to long. But our rainy day spends could be ..... 


  • Albermarle
    Albermarle Posts: 28,976 Forumite
    10,000 Posts Seventh Anniversary Name Dropper
    With workplace pensions you should ALWAYS put in the minimum amount to get the maximum employer contribution as this is basically free money . Plus you get tax relief on the contributions and NI benefit if the contributions are via salary sacrifice ( some employers do this and some don't) 
    If either of you are higher rate taxpayers, pension then becomes almost a no brainer as the tax relief is very generous.
    You should also investigate how your pensions are invested at some point , although just simply adding more to them is more of a priority.
  • partialycloudy
    partialycloudy Posts: 311 Forumite
    Part of the Furniture 100 Posts Combo Breaker
    That makes sense. My DH is in the higher tax bracket. Will get him to find out if his company do the tax relief.
    Yes that’s one thing we do really need. I’ve been with the same company for over a decade but they constantly move pension companies so I have pensions all over the place. 

    Is there someone we could go to who will find where they all are? And look at what we have? 
  • Albermarle
    Albermarle Posts: 28,976 Forumite
    10,000 Posts Seventh Anniversary Name Dropper
    That makes sense. My DH is in the higher tax bracket. Will get him to find out if his company do the tax relief.

    Companies do not do tax relief, it comes from HMRC. However there is more than one way that companies take employee contributions from salary and it is useful to be clear how his employer does this . You still get the tax relief either way but not always in the same way.

    Is there someone we could go to who will find where they all are? 

    Each one should send you at least one update a year . Have you any idea what you have done with them, or have you maybe changed addresses and not told them ?

  • MaxiRobriguez
    MaxiRobriguez Posts: 1,783 Forumite
    Sixth Anniversary 1,000 Posts Name Dropper
    Pension contributions will come with tax relief.

    Without knowing the specifics of each of your incomes, it probably makes sense from a £ POV for your OH to increase pension provision as much as possible to get under or as close to under the HRT bracket. If there's a cash flow problem caused by doing that, then you reduce your pension contribution to give you some additional cashflow. 
  • colsten
    colsten Posts: 17,597 Forumite
    10,000 Posts Seventh Anniversary Photogenic Name Dropper
    You should put around 6-12 months worth of living costs into an emergency cash fund, such as Premium Bonds.

    Then it depends on what your plans are - house move, kids, car, travel, changing career, setting up a business etc etc etc could all be valid intentions which will require money. A pension is obviously also a valid intention, and it will need a lot of money. Put as much as you possibly can into your respective pensions but don't give up having a life whilst you are getting closer and closer to your retirement. Just don't end up only having a life and forgetting that you might live in retirement for 30 or more years .
  • steampowered
    steampowered Posts: 6,176 Forumite
    Part of the Furniture 1,000 Posts Name Dropper
    edited 4 May 2021 at 7:06PM
    These days it is really simple to put yourself in a good financial position. There are only 4 things you need to do:

    1) Open a savings account. Put 3-6 months of living expenses into it. This is your "emergency fund". Don't touch this except for emergencies (e.g. losing your job).

    2) Make sure that you and your husband are contributing a decent amount to your pensions. This is especially important for your husband as a higher rate tax payer. A good contribution level is 15% of your salary. As you say that your employers are putting in 10%, you should put in 5%. 

    3) Open a stocks & shares ISA. If you want to keep it simple, simply invest into a Vanguard fund such as the Lifestrategy 100 (https://www.vanguardinvestor.co.uk/investments/9232?intcmpgn=ls100_findmore_link). This is a diversified stock market fund that invests in thousands of different companies across the globe, so you will be putting your money to work - the average return generated historically by the stock markets is about 7.5% per year. Other funds are available.

    4) Each of you can invest up to £20k a year into your ISAs. If you are ever in a position where you want to invest more than that, you might need to open a non-ISA stocks and shares account. The advantage of using an ISA is that all returns are tax free - outside of an ISA you could have to pay income tax on dividends you receive or capital gains tax on profit made.

  • LHW99
    LHW99 Posts: 5,377 Forumite
    Part of the Furniture 1,000 Posts Photogenic Name Dropper
    And if you are in your 30's LISA's are another way to save for retirement and may be accessible before your work pensions (and state pensions) so you could retire earlier if wanted / necessary due to poor health
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