To Ask Realistically How Much I Need to Save

[Mummadeeze]

Am terrible with money but after reading lots of posts on here I am feeling really determined to try harder to save up and get on the property ladder before it is too late for me. All I really want is a small flat that I can live in when I am retired. I don’t even really mind where it is, I just don’t want to end up homeless! I earn 67k a year at the moment but don’t manage to save a penny. I think I can change this if I try harder though as I have read that others manage to save on a lower income than mine. I am 45 years old. So my question is, how long have I realistically got before I am too old to be able to afford a mortgage? And how much is the minimum I could get away with saving for a deposit between now and then? Hope some money savvy people have some advice. Thank you.

Before the pay rise, were you running out of money each month?
If not, the first thing to do is open a savings account, and put in whatever additional the new job brings in.
So, if your previous take home was 3500, put the extra 300/month into savings. And make sure it transfers over the day after pay day. Bonus into savings too.

Then you need a REALLY honest look at what the rest is going on. If you pay for everything in card, use your statements to identify where you spend, and what you could reasonably cut. Then add most of that amount to the standing order to your savings account.

I'd say a house in London might be stretching things, but elsewhere in the country, should be achievable.

Fair point @Boobiliboobiliboo. So key worker won't apply
Shared ownership is worth a look though.

I would definitely consider shared ownership but first need a deposit of some kind and I also need to get my DD into her secondary school so am renting in a specific catchment area at the moment. I can’t move out of it until that is all sorted (she is in Year 6 and applying now). And yes, my childcare costs will go down next year as she won’t be in after school care which is another good reason now/next year is a good time to start saving. With regards to what I spend on, honestly I don’t really notice. I will pay more attention now but it is lots of different things - make up, clothes for me and my daughter, going out (every time I go out it costs me about £60 for a sitter), birthday presents for family and friends, lunches out with friends, air fares to visit family who are abroad, cinema. I don’t know - just stuff! I realise I can cut stuff out, I have tried before but once I had a little bit saved I just blew it on a mini break or a holiday. When you work hard five days a week you feel like you deserve treats to look forward to. But Mumsnet has made me see things differently. I have been humbled by reading about how well people cope on a lot less than me and have also been a bit ashamed that I am wasting my opportunity to make my life better in the long run. It is a change of mindset. Thanks for all the advice.

Buy to let when you don't own your own property and have high outgoings and no savings is probably not one of the best ideas I have read on mums net.

For a start, higher rate of stamp duty, higher borrowing rate, agency fees, unexpected repair and maintenance costs, no money coming in during voids, risk tenants not paying or witholding rent or damaging property, possible changes in legislation etc etc.

A few months without any tenants, a boiler that needs replacing, tenants that trash the place then do a moonlight flit. You're fucked.

Well I take it you live in London!! If I was you I would try and but £7000 in a ISA every year from now till I retired then buy a flat in a much cheaper part of the country when I finished work. Or of course you could buy now in a much cheaper area and rent it out!! Then you could move in yourself once you have retired or sell it to buy somewhere else.

Definitely ignore the payrise and bonuses,. Live and budget as if they don't exist and divert thene trade into e straight into savings on payday (with a different provider if that helps as then you won't even see it)

I'm living on income from about 3 pay rises ago and it does work. I'm also lucky in that I am naturally parsimonious so I enjoy saving money. If you are not that way inclined, I suggest finding the method that works for you - make it a game or challenge if you are competitive, for example.

If you really can’t trust yourself to save in the long term and tend to spend the money on holidays etc after a few months, it’d make sense to go down the pension route.

Once you’ve put money into a pension you can’t touch it. Instead of saving £600 of post tax income, you’d be able to put £1000 into a pension given your tax bracket. Add to that your bonus of 7k every year and you’d have a big pot to buy outright when you retire.

Of course shared ownership or help to buy are good ideas is you can save enough:

And yes like others I have a standing order for savings as soon as pay goes in. It's not a huge amount but it builds up and gives a buffer when needed.

On 67k you should be easily stashing 1k per month without any pain. What the hell are you doing with it all??

Why would you end up homeless if you don't own somewhere? It's crazy, we can afford monthly mortgage repayments (it'd be a lot cheaper then private rent) but can't get a deposit together

What age do you intend to retire at?

It’s late to get a first mortgage, and you don’t want to b paying a big mortgage when you are retired.

I am a bit younger, but on a similar income. Already starting to plan for retirement, and my plan involves being mortgage free for ten years before retirement to crank up the savings.

I want to retire at 60, and with pension age going up this is more challenging than it used to be.

Although I should have obviously said, the alternate to home ownership is paying rent for the rest of your life. You would need to sure your pension could cover that if you don’t get on the property ladder.

Yes, that could actually be a good alternative. Just really up my pension contributions as I don’t really trust myself to save even though I do want to now. Once that money is committed to my pension I will just have to manage. It does feel more secure to own somewhere though as I have heard horror stories of pension rip offs etc. Hopefully all my corporate ones are fully protected. Thanks for the advice everyone.

I am happy to retire late, I love working. As long as I can still get work!

You have until November to get a Help to Buy ISA, if that helps.

set yourself a small goal first 3 months living expenses in a savings account
assuming you have no debts if you do clear all credit card etc etc every month
write down what you spend
tell DD no treats until half term apart from max of £10 at weekend you are in London there is loads of free museums parks etc day out is tube fare free stuff and an icecream or a visit to coffee shop but £5 limit so if you have a mega milkshake you can only have a biscuit with it but if you have a fruit shoot you can have a larger cake/sandwich

have a separate fund for holidays flights to family and presents

you can't change your rent or council tax you might get your heating costs down, do you really need SKY netflix etc choose one and haggle the price down
also mobile phones as soon as out of contract get SIM only deal £10-15 a month gives you masses and masses of date /minutes
£350 is a lot for bills for a 1 bed flat

don't assume you can earn as much in 15-20 years not because you are ill but because most people have less energy as they get older

encourage your daughter to save don't bail her out if she runs out of money /phone credit
if you have £1370 to live on £370 is plenty for food/ toiletries/cleaning stuff even including some takeaways/coffees and cakes
that leaves £1000 i suggest you have £250 for clothes/ days out etc £250 for your holiday present fund and £500 into savings, next year when childcare stops add it to savings

Be careful considering going down the landlord route, any problem tenant can easily wipe out any profit. I considered buying a house a few years ago and would have been one of the landlords people would like to have but there are horror stories of both landlords and tenants behaving badly.

Plus shared ownership, as much as low cost housing is needed any new development has no roots at all. If you did go down this route I would say buy somewhere already established so you can get a feel for the place.

You have at last admitted you are bad with money to yourself, that is your greatest hurdle.

Why not buy a flat in London and live in it. That way your rent money is earning you something.

Could you start saving into a help to buy ISA or bank account? The government helps top it up.

www.helptobuy.gov.uk/help-to-buy-isa/how-does-it-work/

If you go down the pension route, in addition to your work pension, you can start a SIPP. You can decide what to invest money in and manage everything online. Just like a current account only you can’t pay the money out till retirement.

You don’t need to have a pension annuity (so like an income in retirement). Instead, it can be a big saving pot that you pay out of as and when and whatever amount you please. So you could also pay out a huge amount to buy outright when you reach retirement.

A SIPP would be very efficient as it comes of of gross income so 1k instead of £600 going into an ISA.

Tbh, though, it’s probably really worth you seeing an independent financial adviser to go over your particular circumstances (current pension pot and contributions, lifetime allowance vs trying to get you to save enough for a shared ownership deposit).

Mind you, if you just stay strong for a year to save for a shared ownership deposit, you’ll then be able to just have a direct debit overpaying the mortgage and you won’t be able to spend the money on a holiday once it has gone out.

Auto transfer into a savings account that's hard to access

Thanks for all the advice and good options. I am going to spend from now until Christmas trying all the money saving advice and techniques I have been reading about and see how I get on. I will need to spend money on my DD’s birthday and Christmas and get flights to visit family at Christmas so it will be a challenge but if I am good day to day I can probably still put at least £500 a month aside. If I am still at square one after Christmas, I will go and see a financial advisor and look into getting a SIPP or increasing my pension contributions instead as having had at least 25 years of bad money management under my belt it may be very hard for me to change.

have your company pay a set portion into a savings account. most companies will do this. so you don't see it or have to transfer it or "save" it.
i suggest what would seem like a small unnoticeable yet significant amount say between 250 and 500 per pay IF what you say about 1300 disposable after bills.

Mumma if you find it hard to rein in the little spends, have a look at the Demotivator for a sobering reality of what they add up to: www.moneysavingexpert.com/shopping/demotivator/

My flat is for sale for £115k but you probably wouldn’t be able to get the same salary where it is.

I have a spreadsheet with all of my outgoings. I know exactly how much disposable income I have and how much can be saved. Could you do this to find out where you are overspending?