What would you do with a spare 1k a month?

[YourCake]

I am a single parent, I am not in a great financial position generally, as in life feels very precarious. While I am able to save 1k a month at the moment, I want to do it as sensibly as possible, but I am not financially savvy! What would be best to do with this?

Depends on your ideal Level of Risk you would want to take. So Stocks and Shares ISA you could get a good return over a few years.

But less risky would be a normal ISA with a bank/building society.

Check best interest rates on Money Saving Expert!

Assuming you don’t have any cash savings, I’d do that. You can get 5% return, easy access. It’s a good idea to have 3-6 months’ salary in easy access.

I would save half until you have 6 months salary saved up & put half into a pension. Once you have 6 months salary build up, I would revisit it again.

If you can afford it (and can afford not to touch it until you retire) put as much into your workplace pension (if you have one). You’ll get tax relief which boosts your savings. Failing that, out it into a cash isa.

Pay off any outstanding debts (barring student loan of applicable, it's pittance).

Save a rainy day instant access fund to cover at least 6m worth of all bills and outgoings.

Review life insurance, critical illness etc etc.

Plop a bit extra into pension.

Then invest anything else left in gold.

Do you have any savings at the moment?
If not, the first I'd do is build up a few thousand in an easy access high interest account so that there is something you can access in case of emergency,

Are you likely to need it in the future? If you’re likely to need it to pay for something in the next year or so then thats very different to having an extra £1k to save on top of emergency savings etc, as obviously you can take more of a risk with money you can afford to lose.

That's what I'd do, too. Set yourself up so any future difficulties are that much easier.

Once all the basics are done, I'd look to make a simple investment via a Stocks and Shares ISA or similar.

Thanks so much for these ideas!!

yes I have 11k saved so far

I think having 1k a month to spare is a very good financial position to be in

@pinksheetss i’m a single parent

The UK personal finance reddit flowchart is a good place to start, and takes you through step by step

https://flowchart.ukpersonal.finance/

Not sure why that matters if it's still 1k spare at the end of the month after paying everything?
Lots of couples with two incomes have way less than that left/able to save...

Not dissing, just saying it's not a bad financial position to be in.

Why does being a single parent make a difference? I'm a single parent and would consider myself to be in a great financial position if I could save 12k a year.

I'd overpay my mortgage.

@pinksheetss i suppose it feels precarious to me is all. I get what you’re saying though

@McVities99 because I have nobody else to contribute

Honestly - impossible to advise without knowing your personal circumstances. How old are you? Do you own property? Do you have a mortgage/any other debt?

Why does being a single parent make a difference?

If she loses her job, then she has no other back up than to call upon those savings at once.

YABU just for stating that you’re not in a good financial situation whilst saying in the same breath that you can save 1k a month. Im a single parent who cannot work due to my disability, and I cannot afford to save anything - so you saving 1k a month when that money is what some have to live off of is definitely a good financial situation.

I’d put £400 in Lloyd’s regular saver (6.25%), £300 in First Direct’s regular saver (7%) and £300 in Santander’s easy saver (4.2%). The latter to be used for emergencies, ie boiler, car etc.
The £11,000 you already have I’d put in an ISA (no tax).

Once your regular savers mature, I’d treat myself with the interest gained (or part of it anyway. I just had a pedicure and a haircut, £100, didn’t feel like I was wasting money, it felt well earned after a year of frugality 😆).

Pretty much what @Teapleasemilknosugar said, but I personally would tweak it a bit. In this order:

Avoid anything fancy or advertised for finances - fancy stuff is for people with more money than sense

-£1000 instant access savings account first of all to cover urgent unexpected bills (but I see you have that)
-get a pension set up
-Debts other than mortgage/student loan pay off
-some kind of life insurance - wouldn't go crazy with this, I pay just under a tenner a month and it would pay out £150k which would cover ds's needs until he's fully grown up

• incease the £1k to 6 months' salary in instant access savings
• I personally would say income protection is a better bet than critical illness cover but you may decide on both or neither - I pay £50 a month for income protection which would mean £1300 a month if I can no longer do my job (I'd still be allowed to work in some form if able)

-then use your ISA allowance of up to £20k a year savings with tax free interest - I'd say pay something like £500 a month into a stocks and shares ISA and £100 a month into a cash ISA. For a house deposit if you're going that way.

Do you own your own property? If not are you planning to?

Because you shouldn't put money into shares etc if you think you will want to use it in the next 5 years.

So it would be dependant on what your financial plans are.

If saving for a deposit, put it somewhere that is easier to access and won't risk going down in value, so a good savings account.

If this is just long term savings, for retirement, consider putting some into your pension.

Thanks, I do own my home but 50% is still mortgaged so maybe that’s the best thing to try and deal with first