How should I go about saving? I really don't know the differences or where to start.

ManInWetherby

Hi, I've been extremely poor at financial planning my whole life, but luckily have never really been impacted by it, but I need to start saving and planning ahead before it really is too late, and I simply don't know where to start with understanding why you would save in one way versus another.

I recently switched banks to a Santander Edge account to benefit from the switching fee, and have this week opened a Santander Edge Saver and put £4k into it, which I understand to be the max I can put in to get 7% interest for 1 year. Above which I get 0% (I'm not sure if that's 0% on the whole amount or 0% on the bit higher than £4k, I'm hoping the latter otherwise surely the first time I get paid interest the whole thing is pointless).

I have a work pension but also moved previous work pension lump sum into an investment portfolio managed by an St James Place. I need to speak to my advisor to see what that's doing.

I will receive a bonus of around £4k (after tax) in my next pay, and should get the same again in December. and I have sufficient monthly incomings that I could afford to save approx £100-£150 per month without it impacting on my day to day.

I have quite a significant mortgage, costing me £1100 per month, but on a good fixed rate for 3 more years.

I have an 11 year old daughter who starts high school next year, and I expect will go to university (her current career ambition is physiotherapy, so likely a 4 year degree) but that could change to medicine, and so I need to be saving with that in mind, but I also need to keep money accessible for home repairs and holidays, etc.

I'm a single parent father.

Any thoughts and help would be massively appreciated.

Exodi

To go through the motions, what is your pension situation like? Is your pension on track to deliver the retirement lifestyle you desire? This should usually be peoples first priorities as it can be the most tax efficient.

Secondly comes investing. This is more suitable for people with longer time horizons (talking decades) that do not require the money at short notice. While a lot of people are scared off investments as they view them as complicated, once you dip your toes into it they are surprisingly simple; the biggest lesson is usually having a sensible attitude to risk (and not liquidating your total portfolio at a loss during your first red day) and to diversify and not go all in on Tesla.

Lastly you have savings, which come in many different forms. You can tie the money up in fixed savings products (could be for 1 year, 2 years, etc), you can put the money in a notice account (where you have to give a certain period of notice to withdraw), regular savers (where you can put in a regular amount and are incentivised not to withdraw for a year) or easy access savers (where you can put money in and withdraw when you want).

As you mention being able to save a regular amount while also possibly needing access to your savings, I'd encourage a regular saver and an easy access account (with a few thousands emergency fund).

First Direct and Nationwide have great regular savers, while Trading 212 has a fantastic Cash ISA (which is effectively an easy access account but also is an ISA meaning you don't pay tax on the interest (which you may not need to regardless, depends on your situation)).

I would say that it is common that people on this forum over-egg the amount they need in their rainy day/emergency fund. I can understand a few grand, say £3k or £5k or something to pay for a holiday and cover a big repair like a boiler replacement, but it is very common to see people on these forums with emergency funds of £10k, £20k, etc... basically end of the world situations. This can be very wasteful as you'll generally achieve a better return investing the surplus cash or saving it in fixed savings products (though maybe not at this particular moment as the general expectation is for interest rates to go down in the near future) than keeping it all in an easy access savings account.

xylophone

I recently switched banks to a Santander Edge account to benefit from the switching fee, and have this week opened a Santander Edge Saver and put £4k into it, which I understand to be the max I can put in to get 7% interest for 1 year. Above which I get 0% (I'm not sure if that's 0% on the whole amount or 0% on the bit higher than £4k, I'm hoping the latter otherwise surely the first time I get paid interest the whole thing is pointless).

Interest is not paid on any amount over £4000 -  I move the monthly interest from the Edge saver to another account.

Does your daughter have a JISA?

ManInWetherby

I'm about to open her first bank account up with her, but other than that she doesn't have anything.

Brie

Isn't SJP being investigated or something?  In any case there are those that don't think highly of it so you might want to look in to that when you're talking to them.

I'd be going for some easy wins.  Setting up extra money into your work pension as many employers will allow you to do that automatically so you don't have to think about it.  Also check if they have any share purchase or save schemes - another great way to put money aside without any effort.  Regular savings accounts are good too.  

Albermarle

Have a look through this link.

Savings - All Guides - MoneySavingExpert

Flugelhorn

while there are bigger scale savings ideas there are also smaller scale eg  roundups - where the difference between what you spend on your debit  card and the next £ is send to a savings account, in some cases you can double the roundups - can add up in time

xylophone

https://www.gov.uk/junior-individual-savings-accounts

https://www.thisismoney.co.uk/money/saving/article-1583863/Best-savings-rates-Junior-Isas-children-s-accounts.html

VNX

Exodi said:

To go through the motions, what is your pension situation like? Is your pension on track to deliver the retirement lifestyle you desire? This should usually be peoples first priorities as it can be the most tax efficient.

Secondly comes investing. This is more suitable for people with longer time horizons (talking decades) that do not require the money at short notice. While a lot of people are scared off investments as they view them as complicated, once you dip your toes into it they are surprisingly simple; the biggest lesson is usually having a sensible attitude to risk (and not liquidating your total portfolio at a loss during your first red day) and to diversify and not go all in on Tesla.

Lastly you have savings, which come in many different forms. You can tie the money up in fixed savings products (could be for 1 year, 2 years, etc), you can put the money in a notice account (where you have to give a certain period of notice to withdraw), regular savers (where you can put in a regular amount and are incentivised not to withdraw for a year) or easy access savers (where you can put money in and withdraw when you want).

As you mention being able to save a regular amount while also possibly needing access to your savings, I'd encourage a regular saver and an easy access account (with a few thousands emergency fund).

First Direct and Nationwide have great regular savers, while Trading 212 has a fantastic Cash ISA (which is effectively an easy access account but also is an ISA meaning you don't pay tax on the interest (which you may not need to regardless, depends on your situation)).

I would say that it is common that people on this forum over-egg the amount they need in their rainy day/emergency fund. I can understand a few grand, say £3k or £5k or something to pay for a holiday and cover a big repair like a boiler replacement, but it is very common to see people on these forums with emergency funds of £10k, £20k, etc... basically end of the world situations. This can be very wasteful as you'll generally achieve a better return investing the surplus cash or saving it in fixed savings products (though maybe not at this particular moment as the general expectation is for interest rates to go down in the near future) than keeping it all in an easy access savings account.

All good advice, regards emergency fund, it’s difficult I agree yiu don’t want too much in it but say a new boiler or SH I g to change your car or losing your job could very quickly eat into those funds.