Savings

[UnaCorda]

It seems that very few people have a financial cushion of any sort and I'm curious as to why this is. I understand that some people are on a low/minimum wage or perhaps have unexpected outgoings, but there must be a lot of people to whom this doesn't apply.

Is it simply a matter of priorities? Is the cost of living simply too high to allow most people to save? Or do most people just spend most of their salary every month, regardless of any pay rise?

Or am I wrong and most middle-income or high earners do have a decent amount put away for the proverbial rainy day?

Disclaimer: I'm not asking this from the position of having a six-figure salary (or even a particularly high five-figure one) or a high-earning husband or a trust fund, etc.

Also, obviously people's financial situation could be completely different at the moment, so I suppose I'm referring to a pre-Covid situation.

Can you really ever imagine a time where a bank would PREVENT you cancelling mortgage overpayments because they couldn't answer the phone for 3 months

I mean that's just batshit right ?

I've got about five months' worth of salary in a super secure savings pot (not cash under the mattress) and have a more accessible day-to-day savings pot with about £5k. Or at least there will be once I get the deposit for this flat back in a couple of weeks...

Which bank couldn’t answer the phone at all for three months?

I am a saver now, because I met very financially savvy DH. We put away as much as we can, as well as overpaying our mortgage and we dont buy things we dont have the capital for.
But, I never used to be like this. My parents never saved so I never thought about it. I would just spend on things I wanted, get things on credit that I couldn't really afford. Bottom line was I just didn't understand and had never seen saving in action. My parents always had what they wanted but it is only as an adult I understand they had debt and no savings.
In answer to your question I think there are people who just dont hahe the financial education or models to see the benefit.

Another point to remember is that if you have "cash" you will always get a better deal. If you are on your uppers, then you end up having to pay more for everything.

From your TV License to your car tax. Car insurance to house insurance. If you can pay it all in one go, you pay less across the year.

Same with anything you need to buy / replace quickly - white goods for example. You need to have a few hundred ££ readily available, as - if your fridge / washing machine breaks, you need to replace it straight away. If you don't have cash to hand then you end up paying a lot more by paying on finance or interest on a credit card (if you've not got a 0% one).

Lola

Halifax

Decided for 3 months they would only answer the phone to people who needed to take mortgage holidays

Mortgage rates are so low at the moment, it makes more sense for us to save & invest. I would always make sure I had an easily accessible emergency fund before ploughing everything into the mortgage. Each to their own though.

That's my plan. Overpay massively on the mortgage – we are looking to buy soon – but also save enough cash that should either of us get into trouble we will be alright. My DH is very financially savvy also, and although I have always saved, I've been known to throw money around for fun and convenience.

I got into 3K overdraft debt at uni & struggled to pay it off (on work available was p/t).
I started saving after that even just £10/month although I've spent it on travelling / cars during this time.

DP isn't such a great saver, however managed to get in the habit with the help to buy ISA as they had a monthly standing order set.
We both managed to pay the full £200/month in although my wage is fairly low at £18K. When talking with others they always assumed we must be living really frugally but we just made sure to take lunch not buy for work, cut out a few takeaways (easily £30-40 a time!) & brought less frivolous stuff like new clothes when we don't really need them it was just a want.

I'm currently saving approximately £100/month & paying off some credit card debt so will save approx £150/month after that is paid. I aim for 3 months wages but currently only have enough for my next insurance renewal because we've not long bought a house & had doors fitted. It worries me a little but I have £3K "emergency back-up" on the credit card.

I earn 19k a year. Most months I spend every penny. Have been "saving" for a house deposit for about 10 years and not getting any closer... any leftover cash goes into the house deposit fund (usually then withdrawn for holiday money)

@Ploughingthrough came on to say the same thing- I'd only ever known debt before I met DH, my parents seemed wealthy to me but it was all on credit and badly managed. I struggle to this day to understand budgeting but I'm slowly getting better.

We are high earners (£5K savings per month) but I could spend it on rubbish. I'm working on this and have huge respect for people that manage their money well.

@LaurieFairyCake would it be possible to recoup some of that via a complaint to the bank then the ombudsman? We found it surprisingly straightforward to claim back through that route on a grey area compliant that had cost us (different scenario obvs)

My DH used to work in banking and I was a poorly paid scientist. I was the one with the larger deposit when we bought a house together! I had just always saved.

Although I do think it is harder now to save when starting out - I could never rent in central London on my salary now as I did then, saving on transport costs etc.

We bought a house a few months ago which has significantly reduced savings but we still have 1-2 years outgoings in savings.

We both save about a third of our income each month.

We managed to save pre kids but since then it's been harder. We live in an expensive area, thankfully mortgaged, but it's a big chunk of our just above average salaries. I went part time which meant a big pay cut and then the cost of childcare on top was a big hit. At one point childcare was about £14k pa just for three days a week.

Now childcare costs have gone down a bit we are able to save about £4k a year in theory, but instead we've just loosened our belts a bit and have also ended up spending on some unexpected but necessary medical things which will mean we probably won't save anything this year either.

Luckily we still have a bit left in savings, but nowhere near 6 months' earnings. More like 3.

We have a household income of about £30k/year (including DDs DLA and a small amount of tax credits) and treat savings like paying any other bill. £100 into help to save and a further £50 in premium bonds. It adds up quickly and we have ££££ in savings. No one knows though. To look at us on the outside you would think we were brassic.

Having the savings isn't all about what makes the most of the money though. I agree paying debt should be a priority, but not at the expense of having a pot for emergencies.....like not being able to contact the bank because of a national crisis.

I’m poor - I have always earned minimum wage since my divorce, never got maintenance and with 3 kids never had any money left over.

Now retraining, and hope to be earning a decent wage by sept 2021.

Have no rainy day fund. A few hundred quid, which is going to send DD off to uni in September.

We always spend what we earn but I got left an inheritance so have a fairly big financial cushion.

We have a good income, well above the national average but we also have 2 kids in full time nursery at a cost of nearly £2k per month. So our rainy day fund hasn't been contributed to for a while!

We put away ££600-£800 a month into our savings.

Our monthly bring home pay is about £4’000 but our monthly outgoings are nowhere near that amount, hence why we are able to put a good chunk of it aside.

I have a rainy day fund as do my siblings. The people I know with similar salaries who don’t have one tend to prioritize other things - multiple holidays / expensive tech or cars etc. Savings don’t magically build up you have to make an active decision to save regularly and take your savings outgoings as seriously as you would bills. I know people on minimum wage who have built up a decent nest egg because they have prioritized it.

In my 20's I spent my money traveling, now I'm my 30's and I have debts. Trying really hard to clear them now - managed to save some money during lockdown so have just paid off the car early whoop! An trying to save for things at the same time as clearing debt but it's difficult not to spread so thin neither are achieved.

Google 'money personality types'. I attended a conference session on this once & it was an eye-opener.

It made me realise while I'm a saver & panic at the thought of running out of money, I can understand, even if I can't reconcile to, that my friends & family believe money is for spending on lifestyle.

It comes down to education as well. We live frugally so we can both save & travel, most people we know don't understand that the little bits of money they waste daily adds up to so much missed opportunity.

[shocked] £4000 a month seems a heck of a lot to me.

I get around £2200 a month which supports 5 people. Managed to save up to £800 a month. I'm guessing the difference is that we have paid off our mortgage. So that's pretty good I think.

• wanted a surprised face but didn't happen - hehe