How much would you put into savings with this monthly income?

[Booooot]

In a Great position after years of hardship of selling a property which means we will be mortgage free, debt free and have 50k to go straight into savings. Our combined monthly income is going to be 5000, our outgoings around 900.

I’m a “can’t take it with you! Might as well enjoy it!” Kind of person while my husband is a “No we must be sensible and not spend anything and save it all.” Kind of person. I want to meet in the middle somewhere.

what would you do?

You need to distinguish between actual savings (for the future, plus pensions) and sinking funds. You need to save a monthly amount towards numerous categories such as holidays, Christmas, annual insurances etc so that you can spread the cost. This way you can save a set amount every month instead of it being “oh next month we can only save £100 because we’re going on holiday”. If you budget properly then you should be able to save the same amount every month all year round. Look up uk personal finance flowchart and budget and/or YNAB categories and/or MSE budgets.

The £900 is gas and electric, councilntax, phones, car insurance, sky, water bill, subscriptions and food.

What?

Am I to understand that you have only just changed your circumstances and as from now your take home will be £5k per month with no mortgage or debt but that has not been the case up until now?

As you say ideally you would fall somewhere in between spending every penny and not spending anything. If you have children then saving for their future education costs or maybe a car or house deposit is sensible and you can look at JISAs for those. If you will be working for the NHS then they do have a good pension scheme but you are late joining if you are almost 30 and have no previous pension provision. As someone said further up thread you should halve your age and put that percentage into your pension so in your case 15% although defined benefit pensions are more difficult to calculate as the benefits are calculated by years of service and salary rather than monthly contributions. You can pay AVCs to try and catch up on earlier years.

I also would say that Christmas, birthdays, hair appointments, car repairs and mots and insurances etc are not one offs. You should be saving throughout the year and budgeting as you know they will happen at some point in the year. Have you ever done a budget? If you have debt by using credit cards to buy stuff this will mask your actual outgoings. I expect your expenses are a lot more than £900 if you add in everything.

Our entire monthly outgoings without a mortgage is just over £2,200, as well as what you mentioned this includes payments for things like car insurance, weddings, subscriptions etc, birthdays, Christmas, savings into a lifetime ISA, petrol, food, and holiday savings. Without all of that our monthly bill (for the basics) is £700 a month. You need to factor in every single thing you will spend each month on everything before you truly know how much you are left with to spend on fun.

I would spend a month literally writing down every thing you spend. That is yournreal budget.

There might be some one offs that are spread - for example I am spending an extra £450 this month as I am paying off the second half of the money we spent on a new washing machine plus installation costs in January. That spend is allocated to our house repair fund but goes through the current accout.

Well the savings things is why I’ve started the thread as we’ve never had enough to actually save before. I think 1k is good enough. I don’t see the point in budgeting for things like hair cuts and MOT’s I really don’t. Birthdays and Christmas are just things that get bought that month.

OK. I'm going to bite. We are older than you, with 2 older (school age) kids. But mortgage free, with a similar income. We are very fortunate.
I would start by adding up a years worth of spend - including all the little "one offs" that add up. Then you can look at what is left.
900 sounds very low averaged across everything.
Roughly, we are:
Council tax: 200
Gas&electricity: 200
Phones, water, TV licence, other small regular bills:100
Kids activities/music lessons: 200 (we are past child care - have you factored this in?)
Everything else goes on the credit card that is paid off monthly. It is usually around 2000 a month. This included all food shops (750/month), petrol (250/month), ad hoc - meals out, birthdays, weekends away, clothes, car insurance/service/mot, house insurance, bits for the kids, bits for the house/garden etc etc.

Then 700 into DHs savings, 700 into my savings (we use these for eg new car, big renovations - new bathroom right now, and a summer holiday, along with filling a stocks and shares isa). And 700 into a private pension for me - DH has a brilliant one through work, but I have a 5 year gap and now a PT job, so my pension is lacking.

I'd work out exactly what is left, on average, each month, then increase your monthly splash cash, and share the rest between shorter term (ie cash) and longer term (pension, isa's) savings. Probably a quarter for day to day, a quarter for cash, quarter for isa and quarter for pension.

We have similar pay (5.5k) but also higher outgoings (2k). We have about £500 going into OHs pension and about £1500 into savings (mix of short and long term). I have a non contributory final salary pension so anticipate retiring on about 60% of my final salary & I only save about £100/month into a work share scheme. We have 1.5x our combined annual salary in relatively easily accessible savings and always think that’s a sensible thing to go if you can afford it as it gives you a good buffer. After that you can start to spend a decent chunk of what you’ve saved though the year on fun stuff and know you still have a good amount put aside just in case. I agree you should enjoy your money but knowing you have your finances in good order actually allows you to do that. With that income & those outgoings if you are a bit sensible you’ll never be in the position of thinking about how far through the month it is or how near payday you are and that’s a really nice thing to be in the position to achieve.

If you're used to scrimping and keeping costs low (and it sounds like up until now op has been) then £900 for outgoings is an accurate amount. We're a family of 4 and without housing and credit card costs our monthly outgoings are only £1000. Shockingly different people have different circumstances, it doesn't mean they're lying or got the maths wrong.

Op with that amount of "spare" money and 50k already in savings to cover unexpected bills then personally I'd be going for £1500 in savings (£1000 for you £500 for kids), £1500 in pension and the rest disposable to enjoy life. The more you whack into pension now the earlier you can look to retire or go to part time work and enjoy life without the 9-5 drag. And if you find you're not touching the savings then up the pension a bit more.

Get rid of any credit card debt first.

The point of budgeting or saving for things you know will happen is so you do not fall into the trap of spending every penny you earn. Emergencies happen, Christmas and Birthdays happen and cars breakdown and need replacing and houses need maintaining. Saving for them is just sensible budgeting. Investing for the future is different and how you do that can have an impact on how well your children are set up for university and buying their own house and what age you retire. I agree that £1k for saving out of a £5k net monthly income sounds reasonable. Your outgoings are not £900 though as you freely admit that does not cover everything.

When my husband was still working and we had two teenagers in school we had reached a very comfortable point spending an average of £2,500 a month (mortgage paid off some time ago).

That's not "essential bills", that's everything we spent. Including holidays, instrument insurance, karate classes, haircuts, takeaways, MOT tests 🙄, bus fares...

Thinking that your "outgoings" are £900 a month is a recipe for disaster.

We have £8k a month and save about £3k

If that is really your approach to money, you should just let you DH be in charge.

I thought at first you were looking for a balanced approach to saving and having a life, but this kind of attitude just keeps a family in perpetual debt because of poor planning. Not budgeting for annual and even less frequent than annual expenses means you will end up with surprise overlaps where you can’t handle the confluence or expenses, end up incurring debt, and then waste money on interest.

I don’t really get how that can be from not planning haircuts etc. I don’t see any of those expenses as things that are important enough to have to think about every month.

They have 50k of savings and will be adding at least £1k a month to that...I don't think they'll end up in debt from an mot and haircut happening in the same month

School fees! Save it now, spend it on secondary school and uni.

I do see where you are coming from op. If one month I can't afford my hair done as my MOT was due. I wait until the next month.

Your income is so huge you are right it becomes irrelevant. Even if you spent 2k on a holiday you would still have plenty left.
I also understand how some people like to account for every penny. That isn't me though.

I am interested in how much your food shop bill is though as you must be very frugal with the prices have risen.

Then buy some vanguard or fundsmith equity and earn 7 to 18% pa on average on it.

What's vanguard equity?

The £900 is gas and electric, councilntax, phones, car insurance, sky, water bill, subscriptions and food.

what about childcare, clubs, activities, travel etc?

Pensions first.
Set a big chunk aside for school fees.
Speak to an IFA.

What do you want to spend the money on OP?

Agree with pensions but I'm not sure 5k a month is enough for school fees?

Personally I'd be speaking with an IFA. They will go through the ins and outs of your individual circumstances and finances and make a plan which suits your family.

Someone has already mentioned the fact your NHS pension will be defined benefit. Additional contributions may need to be to a private pension due to this, but although I work in financial services I specialise in protection, not pensions.