To aim at saving 30% of my salary?(27 Posts)
I just got a new job that could in theory allow a better lifestyle. It is a consistent salary increase from my previous job.
Yesterday night I was out with my sister, and she couldn't believe that I am not planning to use the increase in income to buy a car (I don't have one), or move into a better place, or go on a nice holidays. Instead I am planning to save 1/3 of my income for savings, investments and pension. This setup still allows me to have what I think is a good quality of life, albeit with an eye on budget.
Don't get me wrong, I am very happy with this new job and the financial increase that it brings, but I am not that interested in upping my lifestyle so that it "matches" my new salary. Instead, I am actually quite excited about the possibility of saving more money and building financial safety for my future.
I am single and 29, no DC yet. I think one day, if and when I will have a family, having a good amount of savings will be helpful for all sorts of reasons (buying a house, maternity leave, crazy expensive childcare, and so on).
So AIBU to be boring and just save what I can without "living life more" as my sister put it?
Its your money and your life. Do what you want. Your sister might be a bit jealous of the savings. Or your maturity in deciding to prioritise savings.
I would definitely prioritise buying a house.
Gingerbread my circumstances mean that I can't buy a house anytime soon (unless it is not for me to live in, but for investment). New job is abroad, in a city where property prices are crazy and where I can't legally buy until I am a permanent resident (after 5 years).
Very wise. My husband and I are both in a profession where we had a period of significant salary increases - we didn't increase our lifestyle at all, saved like mad and have a decent house to show for it now.
I think you are right to do this.
If it is a job in a low tax state then you will not find it easy to maintain the same level of outgoings as costs are higher. That apart, I think you have made the right call.
You are priotising buying a house over a holiday if you are saving your money for a deposit.
Quo yes you are absolutely right, in fact I have already budgeted for higher rent and higher cost of life.
Yes another post which really isn't an AIBU
Yes buy a house as soon as you can (or a flat). I bought in my 20s and that paid off.
Well done. I think most people would just spend it. Also, you don't have to do this forever. Doing it while you're able is fantastic.
I went through a few years of saving 50% and it really paid off. We put that money into a house and made a lot more as a result. Atm I'm saving nothing from my salary because I've cut my work hours to spend more time with DD. I miss the savings but will never get this time back so it feels like the right move for now.
I too have continued living on a previous salary after I received a significant pay increase. I didn't need a better style of living, and I didn't want to get used to it and end up with nothing to show for it except (joke example) Waitrose food packaging in the bin rather than Tesco or Lidl.
In my case it's all gone into my pension, I've never seen a penny of the raise and have never missed it.
I, seemingly randomly, save just under 15%. I'd never thought about it. I just thought it was a sum I knew I could put away. I can't wretch to 30% but thread hear motivated me to increase to 20.
A 30% savings rate is great. Having. high savings rate is something that the FIRE (Financial Independence Retire Early) community aims for to achieve the goal of being able to do whatever they want to do later on in life. You may well like to listen to the ChooseFI podcast and other podcasts about Financial Independence so that you hear from others following the same path.
Lifestyle creep is a real issue when you get a pay rise, be that from a job change or a rise from current employer, or from work you love not a J.O.B.
Of course you are right to aim for 30%, you could even aim higher. You set your goal. Those who think they can, will. Those who think they can't, won't. YOU are in charge of your financial future, you make the decisions. 30% is an excellent goal.
I put £1000 a month into my pension, £1000 a month into a savings account and £500 a month into each of my kids accounts for when they turn 16. My friends think I'm nuts and should be living it up with the money but I have plenty leftover for a good life, and will have a good inheritance so it's not a sacrifice for me. If it were a sacrifice, I don't know if I'd have the discipline to save.
well, its totally up to you. if i was taking home £2.5k net pcm and then jumped up to £3.5k net pcm, i'd probably be considering a move up the property ladder now rather than banking it for future. everyone has different needs. sorry, i dont really have a point. i doubt your sister is jealous. its probably surprise because in a lot of instances, once people earn more, they upgrade their spending to match income.
When I worked abroad I considered that experience as my 'holiday'.
Your money you call the shots.
I actually prioritise an even balance between spending and savings otherwise life can get dull.
Is your employer UK based ? It can get complicated with pensions if you aren't paying UK tax
There are differing views about house buying as an investment. This one is an interesting read: http://jlcollinsnh.com/2013/05/29/why-your-house-is-a-terrible-investment/
Renting may well give you more money to invest money in things that go up in value which are a liquid asset and means you able to work anywhere, to follow your passions, not be tied to one place.
You sound very sensible.
I’m now 36. DH and I saved like mad in our 20s and I am so grateful for that now. We have a gorgeous house and I’m about to have our first child and can afford to take the full year off, if I decide to.
My close friends are all aged between 35-40 and there is now a massive financial gap between those who saved / invested / got on the property ladder early and those who were spend spend spend. I’ve got friends who are late 30s with no savings / pension / house, despite having earnt good money in professional jobs. I wouldn’t want to be in that position when I had had the chance not to be.
DH and I lead a good lifestyle so I definitely don’t feel deprived. But the holidays we take, cars we drive, restaurants we eat at etc are all a notch down from most other people we know who know who earn our salaries. I guess in a way we are lucky that the things we get pleasure from (mainly sports and the great outdoors) don’t have to involve spending loads of cash and neither of us are very material when it comes to cars, technology, ‘bling’ etc
Didreally My employer has offices in many countries and each continent has a headquarters. There is an office in the UK, but I don't think I will legally have much to do with it? I don't think I will come back to the UK in the future, but I will most likely move around more, so I am planning to mainly rely on a private pension.
I think you can't pay into a UK (private) pension if you don't pay tax in the UK (at least that was the case around 5 years ago when my husband worked for a European group and was effectively paid and taxes in Germany). But things may have changed so I maybe wrong.
Didreally the plan is to open a private pension account in Switzerland (country I am moving to with this new job).
You sound very wise . Save as much as you can now while still enjoying life . You don’t have to spend money to do this .
I’m always surprised at people who as soon as they earn good money blow the lot on a new car , extravagant holidays , renting luxury flats etc ,then 10 years down the line kids come along and they claim poverty and talk wistfully of all the money they used to waste.
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