I have more money than I know what to do with. What would you suggest?

doriangray23

Hello,

I'm 27 and in NW England.

I bought a house (using part of my student finance maintenance loan (21k, because household income was - and always has been - low. This is my way of saying I haven't had money from my parents)), which I haven't paid off. At present, I gain more interest having money in the bank than I would save by paying off my mortgage early.

I haven't paid off my student loan, but I'm also not earning enough to pay it (and I understand MSE lean towards not recommending paying this off except in rare circumstances).

I have almost 40k in the bank: a 12 month emergency fund, general savings, some floating in a current account, a small pot of prospective mortgage overpayments (mortgage is fixed for 10y and it's quite low, compared to many in the UK (the NW is cheaper, it's a mid-terrace, and the house needs work!) - and some set aside to pay for specific work needed on the house.

I have a job. It's enough for me to live on, with spare (because I chose a house well within my means, and I can do the necessary work gradually all whilst knowing my mortgage isn't a high one) 1/3 of my income goes on bills/mortgage. About a quarter goes into my day-to-day spending, and I've opted to put some towards doing up the house (it's a long process!). I don't always spend everything I put into the day-to-day/house account(s), but it's there. Then there's some extra left.

Have I missed something, or is it enough from a saving POV to have an emergency fund, and savings? (I pay a pension through work, but I also have several health conditions and I am loathe to put any more money into a pension when it's too soon to know whether or not I will actually reach it. I may rethink this in 15-20 years, but I'll be mortgage free by then whether I overpay or not).

So... I'm not paying off debts (mortgage, student loan), I'm not putting more into a pension, I have an emergency fund, I have savings. What else do I do?

I've lived a frugal (see also: stingy) life, at some stages out of necessity, at other stages out of fear. I'm not a risk taker, and if I look at investing... I still need an idea of what to do when any money comes in!

Should I do something wild like visit Paris (I had planned to, but Covid said no in the end and Eurostar kept my fare) without waiting for a sale on train fares? 😅 Or buy Lego (I've got my sights on a particular set, but I'm waiting until the free gift is a good one - or until they're about to retire it)? But even that's less than 1k of Big Things I'd Like To Do.

Life is short, and I'm very aware that by some sudden circumstance or other I could end up hit by a bus etc etc, so I don't want to just watch the money build up and up without doing anything with it. But equally, I don't want to spend for spending's sake.

What am I missing? What could/should I think about?

Brie

You're 27.  You should def do a bit of the go wild.  Book a few wild holidays.  It's all relative.  Some will say wild is going up and camping in Scotland and others will be doing the full Ibiza circuit.  I'd say do something that interests you.  Maybe go to Lego Paris (I assume there may be on and I do know a few 40 yos who are doing all the Disneys so it's not just a youngster thing perhaps?)

I would suggest dripping some money into ISAs and pensions somewhere.  You're in a great place now and you'll want to have that later too. 

But what you don't want is to hit 70, be infirm, have loads in the bank and no way to enjoy it.  

(64 OH has just gone to hospital with potentially life limiting issues and hasn't yet seen the northern lights which are scheduled for March.)

El_Torro

I think one big thing you’re missing is a Stocks & Shares ISA. It doesn’t have to be 100% equities, you can have some bonds in there too in order to reduce volatility. 

Sure, enjoy yourself. Take the holidays you want to take, buy that expensive Lego set. I wouldn’t spend money just because it’s there though. Think about how you can become more financially independent by making your money work for you. This doesn’t necessarily mean you should aim to retire early, it’s nice to have options though. 

Martico

Age 27, more than stable financially, I'd say travel, if you've always or ever wanted to explore somewhere new. Or spend some in any way that would bring you a new experience. Life is for living, and you're in a good enough position to live a little. That doesn't mean splurging away any long term security, but your age and finances suggest this is a great time to live a bit

theoretica

There is a target of being mortgage neutral - having enough money in savings/ISAs that if you decided you needed or wanted to you could pay your mortgage off.  That gives you the security of even lower necessary living costs if you are out of work for any reason or otherwise want the bank out of your hair.

Hoenir

How much are your saving monthly towards your pension? 

Emmia

I'd say travel, see the world - this can be short haul to Europe or long-haul further afield.

Bigwheels1111

Good for you, you have your head screwed on the right way.

I purchased my house in December 2000, I paid it off in 2011. 10y 3m later.
I had moved in with my best friend to care for them.
Rented out my house.
Between careers allowance and rent I live well but frugal like you.
What it meant was I technically retired at 43 years old.
I have since sold my house and put the majority of the money in 5 and 7 year fixed rate bonds.
I now receive a very nice income, ( I will probably not spend much if any of it ).
So I thought I was all set and all was good.

Then my friend was diagnosed with Cancer, massive shock.
World turned upside down.
Now we both have had a change of mind on what’s important in life.
Treatment is going well and we have plans afoot for travel and holidays as soon as treatment is finished.
My point is you need to live a little as you never know what’s round the corner.

Cairnpapple

One thing I remember from the classic book Your Money or Your Life is that it suggested that when you're doing a budget, you assess the categories to see if there are any places where you want to increase spend. This is based on how much value/enjoyment/fulfillment those categories provide to you. 

So maybe try a few things and make a note of how much value you felt you got for them? E.g. is travel worth the money, is a posh meal out worth the money. Evening class, driving day, games console, whatever. 

When I did my budget on this basis, I came to the conclusion that theatre tickets and art prints for my house came up with the best value in terms of enjoyment, so I started to put a little money aside each month that was dedicated to those spends and couldn't be diverted to things that were 'more sensible'. I still feel like I got great value from these spends!

francoghezzi

Stop for a second, watch a cloud in the sky and listen to yourself breathing. You have been missing on the true meaning of life

Janie2008

 Visit Paris,  its not exactly wild.  When I was 27 I spent a year working in Singapore and travelled all over South East Asia.  6 years ago when my husband was 49 he got sepsis and wasn't expected to survive.  Those days sitting in intensive care changed me.  You need to live your life and not worry so much about unimportant things. Enjoy yourself.