Have I been saving well?
bp5678
Posts: 413 Forumite
I am 24. I graduated University 2 years ago. I earn £25000 per annum.
I have £8000 in my bank. It would be twice as high but I had to buy a new car (my previous car was literally on its last legs and I decided I should buy a car outright than pay more through interest on finance).
I save about £750 a month (although it's been worse recently). I pay £300 rent living at home with family.
Because I went to University I have my student loan to pay back. It was about £45000 however it's now gone up due to interest to nearly £47000.
Also on a side note, would you consider my "savings" to be £8000 as this is what I have in my account or would you consider it to be a negative number (£-39000 due to taking into account my student debt).
I was thinking about getting on the property ladder as quick as possible in order to gain future wealth (ie an investment) however part of me also thinks I should be trying to clear my student debt as quickly as possible. Where would be best to put my money into?
I have £8000 in my bank. It would be twice as high but I had to buy a new car (my previous car was literally on its last legs and I decided I should buy a car outright than pay more through interest on finance).
I save about £750 a month (although it's been worse recently). I pay £300 rent living at home with family.
Because I went to University I have my student loan to pay back. It was about £45000 however it's now gone up due to interest to nearly £47000.
Also on a side note, would you consider my "savings" to be £8000 as this is what I have in my account or would you consider it to be a negative number (£-39000 due to taking into account my student debt).
I was thinking about getting on the property ladder as quick as possible in order to gain future wealth (ie an investment) however part of me also thinks I should be trying to clear my student debt as quickly as possible. Where would be best to put my money into?
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Comments
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Yea sounds like you are doing well to me. You are saving a good proportion of your income, and whilst the new car purchase has certainly pushed you back a little, it's not a ridiculous sum of money relative to your income, you paid cash and you have no other 'consumer' debts (credit cards, loans, etc.) to worry about by the sounds of it?
You are slightly older as a recent graduate though? Did you take a year out, or was your degree 4-years?
I wouldn't worry about the student debt at all. It is best thought of as a graduate tax rather than a debt. You only pay back when you can afford to, and it doesn't stay with you forever. Hopefully you will use it to earn more than you would have had you not gone to uni, so should be a worthwhile investment, even if it does pinch a bit of your income each month for the next 10/20/30years. Presumably you have good prospects for increasing your earnings in the next 5years?
From my experience, I would get on the housing ladder ASAP. I started saving when I graduated and was living at home. I was fortunate in that I had met my partner at uni, so we both saved up for a decent deposit and bought our first place together when we were 25. Obviously the amount depends where you are looking to buy, and whether you are looking to buy with someone, but the quicker you can save and buy, the better placed you will be in the future IMO.
Keep at it
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Don't worry too much about definitions you clearly have a view on your savings, debt and resulting net worth.
I wouldn't worry too much about the student loan for now but take advantage of your employers pension and consider using a HTB ISA or more probably cash Lifetime ISA for a 25% government bonus towards the property purchase. Read the terms and conditions carefully as they are slightly complicated products.
Alex0 -
If you are saving £8000 a year out of a gross salary of £25k I would say that is good. Investigate HTB ISA if you intend buying a property at some point. I would not worry about your student loan. Just think of it as a graduate tax.I’m a Forum Ambassador and I support the Forum Team on the Debt free Wannabe, Budgeting and Banking and Savings and Investment boards. If you need any help on these boards, do let me know. Please note that Ambassadors are not moderators. Any posts you spot in breach of the Forum Rules should be reported via the report button, or by emailing forumteam@moneysavingexpert.com. All views are my own and not the official line of MoneySavingExpert.0
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"Literally on it's last legs"? surely that should be last wheels“So we beat on, boats against the current, borne back ceaselessly into the past.”0
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Sounds good to me. Look at a HTB or LISA (if you don't already have one) if you fancy jumping on the property ladder.
Keep on saving - you never know when you might need that spare cash!0 -
This seems like simply an opportunity to say 'look at me. I have £8k in the bank'....0
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Have I been saving well?
Yep, seems you are doing fairly okay. Some notes though
Don't look at the balance of your student loan, it's massively irrelevant to your day to day life, all that is really important to you is the repayment of 9% of earnings over the threshold as an extra tax in your payslips eating into your take home pay. Don't focus on paying the student debt - read Martin's guides on here where he explains the rare situations where paying more than the minimum will help. (Clue - it's not you just yet.)
Also, how's your long-term savings plan shaping up - you may think you're too young to start retirement planning, but it will be useful if you do. Are you in a company pension? Are you taking the maximum benefit from employer's contributions etc.?(Although I could be wrong, I often am.)0 -
This seems like simply an opportunity to say 'look at me. I have £8k in the bank'....
This seems like simply an opportunity to say that you don't.
I read the OP as a genuine request for general advice on basic financial planning, and I think we ought to offer the person a basic level of respect.(Although I could be wrong, I often am.)0 -
This seems like simply an opportunity to say that you don't.
I read the OP as a genuine request for general advice on basic financial planning, and I think we ought to offer the person a basic level of respect.
Well how would you know given that I wouldnt rave on about my savings?....0 -
Just in case you were not aware ,if you were looking at getting a mortgage then your student 'debt' is not taken into account , unlike any other type of debt would be . That is because it is not really a debt in the normal sense of the word, as normally it never has to be fully repaid, or not repaid at all in many cases.
If you were earning enough to start having to pay some back, then the mortgage company might take this into account when looking at affordability criteria, but they do not look at the size of the student debt at all.0
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