How much is enough? Please help!

[whentoatopa]

A few years ago I was left in an awful situation. It made me very panicked about life as I had one dc at the time, only a few months old. Two years have now passed and I have managed to save 18k. I have 3k credit card debt that I also pay off each month interest free.

When I hit 18k last month I felt relieved. I have never shared finances with friends but I did tell my best friend that I had reached my safety net goal and I was pleased… to which she said a safety net is only more than 50k (!) so she hoped it was at least that??

I feel REALLY disheartened and now also worried that I haven’t given any real protection to me and DD. I could continue saving as I have but it’s been a miserable frugal two years and I was hoping to do more things this summer with Dd. Am I deluded? I have no good financial background/don’t come from money so perhaps this isn’t the big amount I felt it was? I feel like the wind is out of my sails a bit. For context my mortgage is 850 a month so it is quite high I guess.

Me, too!

OP, your friend's a twat and you're doing great.

Work out your expenses and put your numbers into this calculator and see if you are still worried.

https://www.hsbc.co.uk/financial-fitness/emergency-fund-calculator/

I think it’s a great achievement! As it’s your safety net, I’d definitely not invest it. Investing is always with a longer-term view, not for money that might need to be accessed at short notice. Assuming you’re taxed at 20% you can earn £1000 interest-free before paying tax (at 40% it’s only £500) so you’d have to work out if a cash ISA is paying better returns than an easy access savings account. Bear in mind that in a lot of ISAs you cannot replace what you’ve taken out without it going against your allowance - some do offer that feature though. Any additional savings you’d be able to split between a cash ISA and S&S ISA if you wanted to, sharing your annual allowance. If you haven’t paid into an ISA this tax year you could open one now (I.e. before the new tax year) and pay in what you want so you have the full allowance next year.
I would definitely do the things you’d like to do with your DD this summer! Well done again.

£18k is a very healthy amount - it's equivalent to at least the net annual salary on min wage. It's more than enough to cover unexpected household expenses, car repairs etc. and if you were to lose your job, it would give you plenty of time to find another one. Well done, and allow yourself some treats but keep saving - the time will come when your savings could be the difference between retiring when you want to or having to work till whatever the pension age is in the future.

Savings of £18k is great - well done.

Now you've got into the habit, keeping it up will get you into an even better position - but you can definitely ease your foot off the pedal and do some fun things too.

You shouldn't think about stocks & share type investments for your emergency funds. The market is volatile, and the whole point of an emergency fund is that it's available to use immediately in an emergency - not just when the market is up. So keep that part in cash, in a high interest account - either instant access or a notice account that lets you get the money immediately but with a penalty on the interest payment. At the moment there are good rates on cash ISAs, but they only have an advantage if you'll be getting more than £1k a year interest- if not, there's usually a better rate available on an ordinary savings account.

Usually the recommended amount for an emergency fund is around 6 months spending, but you may want a bit more if your employment is at all unreliable.

Then plan for any known big spends coming up - expected car or house maintenance, fixed rate coming to an end on mortgage or 0% credit card.

What's left over after that is what you can think about investing with. Stocks and shares ISA (you can have this as well as a cash ISA, as long as you don't put more than £20k a year into the 2 combined) or pension (or both). At 38 there's still just time to open a LISA, which gives you a hefty bonus on savings of up to 4K a year (deducted from your £20k total ISA allowance), but locks the money away until you're 60.

How about taking the amount you've been saving every month up to now, and splitting it into 3? Use 1 part for pension (you save tax on money that goes into this, so the pot increases faster), 1 for other investments, and 1 part goes back into your spending pot.

The more detailed financial fitness calculator linked from that page is good, as well as the emergency fund one - gives you more detail on your current commitments and the possibilities.