What to do with 4K?

[HowWeAre]

Unexpectedly going to receive 4K next month. I know in the grand scheme of things it’s not a huge sum of money but to us it is a significant amount and also an amount I imagine can easily be frittered away if not careful.

Some details: I’m 24, live with my boyfriend (same age) of 3 years in privately rented accommodation and have recently graduated university. Neither of us have any debts, no cars on finance and are on salaried wages (him 21k and me 25k). Both of our jobs are stable and have continued throughout lockdown as we are classed as key workers. We currently save every month into savings accounts and ISAs as we are saving for a house deposit however that will probably be far away in the future as we live in a very expensive city so we will need to increase our wages significantly between us even if we save up a very large deposit.

So I’m thinking what should I do with the money? Split it between savings and ISA? Keep some for a rainy day fund? A treat after a hard year? Suggestions welcome- I don’t think I’ve ever really received a large sum of cash I haven’t accounted for and want to make sure I’m sensible about it. AIBU to have no idea lol

[TillyTopper]

Don't let it burn a hole in your pocket - save it! You wouldn't have had it so won't miss it!

[DieSchottin93]

If I was in your position I'd definitely put it in a LISA as you'd get an extra grand. I wouldn't say no to an extra £5k towards a house deposit.

[HowWeAre]

Thanks for all of the advice so far!

I have a LISA (in my own name) and savings account of my own too and they are mainly where I save in to. We do have a joint savings account but we only save a bit into that one as we don’t really have many joint things and mainly use it for holidays etc.

I have around £2500 in easily accessible savings so I do have money to hand but obviously it’s not a lot and I do live in a high cost area so if something was to happen that wouldn’t last very long. The money is technically my own as I was paying something back for a long period of time and when the payments started I questioned them as they seemed quite high but they told me it was correct. I paid it off and thought nothing of it but they recently reached out to tell me the accounts show I actually over paid by a few quid short of 4K!!! Clearly I’m an idiot for not pushing it further but it certainly is a nice surprise.

[tiredmum2468]

@unruly336

Excellent suggestion

Don't waste it on stuff, secure it for your future - some of the part buy part rent schemes don't need a huge deposit either hat would be worth investigating

[reluctantbrit]

Save £3K, either as a rainy day fund, pension contribution or ISA. I would use £1K for a holiday, life has been difficult and I love even the week away we had last year as a break.

[kickergoes]

You weren't expecting it, you're in a stable financial situation to presumably treat yourself in other ways, get it in the bank towards your house deposit!!

[HmmmmmmInteresting]

If you don't have an emergency fund of six months savings I would start there. It's very important.

[HmmmmmmInteresting]

*six months living expenses

[Whereisthewarmth]

Op it is alot of money, many times dh and I have been hit with totally unexpected things and struggled to pay for x y z.

Well under 4k.

Credit crunch, unexpected pregnancy etc.. Job loss.. Anything could strike at any time.

What sort of saving do you have?
Do you have stocks and shares isa?
I'd start up one if not, probably with vanguard, low fees and their funds consists of a little bit of

[Cinderellashoes]

Save £3500 and keep £500 for treats!

[Badoukas]

Half towards house deposit, half in the pension.

[abstractprojection]

Save/invest or learn how to drive if you haven’t already.

I seriously regret not doing this when I was younger but I couldn’t afford to

[Whereisthewarmth]

Everything.

Ie different countries, different sectors. You could also start with larger platform like hargerves and lands Downe but still buy vanguard funds then perhaps something more risky.

Then... You will be growing two grand which you will be very thankful of in ten years time or when, if you have dc.. New home..

1000 growing nicely for the future...

And 1000 for fun

Two grand, drip feed into that ie.. Every month add 100..then.... 1000 in Lisa if still exist or... Sipp..

Self invested pension. 1000 now... Will really pay you back by pension time...

Then 1000 for fun...

[sonypony]

If I were you I would put it in a lifetime ISA to help with buying a house.

[sbhydrogen]

@Cinderellashoes

Save £3500 and keep £500 for treats!

This is what I'd do!

Or put it in a rainy day fund in case you ever lost your job. Maybe stick some in your pension orrrr a stocks and shares ISA.

[Talkwhilstyouwalk]

@BuyYourOwnBBQGlenda

Have you got an emergency fund (enough money to sustain yourself for 6-12 months should you lose your job or something) that's where I'd start. After that it'd be between house deposit and pension.

This is the best advice I have seen! I probably wouldn't spend any of it on treats to be honest, you never know when you might need it and anything you can put towards a house deposit will lower your mortgage repayments.

[Doomsdayiscoming]

You have a LISA right? Does your BF?

I’d give him £1 to open a LISA if he doesn’t have one.

Then I’d either invest the other £3999 in shares using £20k s&s ISA allowance.

Then I’d top up your LISA in last week of March next year. If yours is full for the year then either gift it to your BF if he is a keeper, or roll it into 2022/23 tax year LISA allowance.

The reason for opening your LISA with a pound is to start the 12 month countdown before you can use it, but I guess you knew that.

[SunscreenCentral]

400 (10%) treats, 90% stashed

[Doomsdayiscoming]

@Doomsdayiscoming

You have a LISA right? Does your BF?

I’d give him £1 to open a LISA if he doesn’t have one.

Then I’d either invest the other £3999 in shares using £20k s&s ISA allowance.

Then I’d top up your LISA in last week of March next year. If yours is full for the year then either gift it to your BF if he is a keeper, or roll it into 2022/23 tax year LISA allowance.

The reason for opening your LISA with a pound is to start the 12 month countdown before you can use it, but I guess you knew that.

Forgot to put the OR “or Premium Bonds but expect minimal returns, £50 if you are lucky”

[Mollymalone123]

I would maybe put £3000 in savings bond for at least 2 years and put the rest in instant access account- if you find something you really want then use that money .

[Doomsdayiscoming]

Remember with LISA if you take it out as emergency you pay effectively a 5% fine.

[chesteroo]

You can put it in my account if you want....

[greeneyedlulu]

Save 3k and stick 1k in your joint account towards a holiday, continuing to save for a really decent holiday when allowed and then enjoy it.

[flowerycurtain]

I'd LISA it. If LiSA is full already I'd isa stick and share it.

I might use £100 towards a treat.

Amazed at those telling you to spend 25% off it on. TreaTs

[kittycorner]

This is such an unexpected boost financially, I'd definitely stick the whole lot towards house deposit. For most people a house deposit is lots of saving of amounts like this. So it will make a difference in the long run.