Balance between discretionary money and savings

[sophi1995]

When you have all bills and living expenses paid for, how do you divide whats left over between savings and just casual spending money?

I'm starting a new job that will pay me roughly an extra £550 a month, I've never had money to save before - always lived week to week, but would like to start putting some away now. Thinking about saving £250 a month and enjoying the rest! I'm 25 and single, no dependents.

Just curious to hear what other people do and what kind of amounts other people have to play with!

That sounds like a good balance! You're young and it's important to enjoy life too. Is there anything in particular that you're saving for?

Congrats on the new job!

Have you got a personal pension? As if not, now is the time to start.

You could do 1/3 savings, 1/3 pension & 1/3 spends.

To answer your question my husband and I have €4800 a month left over after all bills, mortgage, groceries etc paid for. Euros because we live in Ireland.

We save €3000 and keep €1800 for spending money (unless its a 5 week month which happens 4 times a year - then we spend €2200 and save €2600). I find this is a good balance to let us spend freely without worrying too much about money and still managing to save a lot. We also save bonuses.

We're 33, we had a lot less money at 25.

I've used the 50/20/30 rule for a few years now. How manageable this rule is of course depends on your income and expenses, but it works well for me. This is based on my take home pay so after my pension contributions.

50% on needs. Rent etc, things that you HAVE to pay to live. Groceries count but not eating out, for example.

20% savings.

30% for anything else I want. If there's anything left from this category at the end of the month I put it in savings too.

If I'm trying to save extra hard, I swap the 20% and 30% for a while.

We save around £1000 per month and have around £900 a month discretionary split equally between DH and I, days out, things for DS etc are all accounted for as part of outgoings before we look at saving/spends. If income dips we would cut spends before savings

@Morechocolatethanbarbara

Have you got a personal pension? As if not, now is the time to start.

You could do 1/3 savings, 1/3 pension & 1/3 spends.

This is how I used to treat any extra money (payrise, bonus, tax rebate etc) - 1/3 to spend, 1/3 for savings (short to medium term)/ 1/3 into pension.

It worked really well actually (and is something I really should look at doing again).

It's good to have some goals, we just finished paying off all our debts, now we are saving 3-6 months of expenses in an emergency fund, £1000 a month going towards that. You could work on your emergency fund too.

I squirrel everything away but my partner says I am tight. I have more than enough for my house deposit now but I still keep giving everything off I can because I feel like I will be able to get more stuff...I say I will stop when we are in the house but I probably won’t. I always ask myself what feels better, a Chinese takeaway or an extra £30 in savings and I always choose the savings!

I would save it all for a house or overpay your mortgage if you have one. You won’t miss money you never had and will appreciate it later.

When you say 'all bills and living expenses paid for' do you include annual and irregular expenses like insurance, Christmas, holidays, car repairs, new white goods etc?

Are you putting a decent amount into a pension? Do you own property yet or are you saving for a deposit? Could you make big purchases like a car without borrowing money or taking out an expensive lease plan? Do you have savings in case you are too ill to work, or lose your job?

It's fine to have some money to enjoy yourself, and what you've said is probably a good balance, but if you haven't thought about the things I've mentioned, you might not have as much money as you've said, so might have to think again about how much money you have for truely free spending you really have.

It really depends on your stage in life. do you have your own property?

With £550 per month 'extra' you could really start making a decent dent on saving for a house deposit for example. If I were you I'd attempt to put the full amount away each month but maybe do one nice thing let month. For example one month might be hair cut and colour month, the month after that might be fancy meal with a friend. By having one decent thing per month to look forward to but also saving the large majority of the 550 will really allow you to start racking up the savings.
Once you start getting close to the goal of house deposit you'll start to fall in love with savings!

Thanks for all the replies! I'm living in a houseshare with 4 of my best friends so don't put away any money for insurance, white goods etc. Also, I live in the city and don't have a car. No pension either, I'll look in to that but I don't think any of my friends my age have one.

Hoping to move to Australia next year or the year after, thats the only real long term goal I'm thinking about at the moment.

+1 to all the pension comments. If you start now you’ll be so grateful later. Even if your mates don’t have one, doesn’t mean you can’t! Good luck with the Australia plan too.

No pension either, I'll look in to that but I don't think any of my friends my age have one

If they're working, they might do, but whether they do or they don't, it's something that's very important to think about.

Have you at least got the pension that your employer is legally required to provide? They have to put money in, and you get tax relief, so if you don't have a pension, you're giving up free money. And at your age, it's got about 40 years to grow, so will be a really valuable start that you could regret in later life if you don't start one now.

Get a pension. If you have one with your job your contribution goes out before tax, so you really don’t notice it.

If you move to Oz for years that will affect your eligibility for a UK state pension when you’re older. 25 is actually quite late not to have looked in to this.

Look on the DWP website about state pension entitlement, and ring the Money and Pension advisory service to ask them about private pensions if you don’t get much info about it at work.

Do not go to Oz and put nothing in to a pension there or in the UK, all while renting for years- these are precious years for pension saving and buying a house. Do not put it off.

I've just calculated and I pay
-40% of my salary into joint costs
-45% into savings

• 13% into personal spending

-2% unaccounted for :)

That's probably a weird weighting though! I had a similar payrise to you recently and just added it all to what I was saving.

Congratulations on your new job!

I have money automatically transferred into a savings account on the same day all my other bills are paid. Anything left over at the end of the month also goes into savings as well.

Agree with PPs, definitely put a decent chunk into your pension.

Around 50% of my income is ‘needs’ (bills, mortgage, food, etc)

30% savings

20% spending

This feels like a pretty good balance to me

Well whenever i get a promotion I treat it as extra savings!

I pay myself savings first and then spends is what is left. Off the top of my head I think I spend maybe £250 a month and that feels like plenty x

We sort all bills first ect and get rid then.. Have loads of saving pots for everything.

Work out what to put away for Xmas, bdays going out at the weekend... Petrol or travel each week.. Holidays.. Then put into those pots each month and take what you need weekly eg our petrol is 80 per month..