What are your savings for?

[FrostedSnowdrops]

I tried doing a search but couldn't find anything that answered my question. There are plenty of 'how much have you got' threads though, this is not one of those

I struggle to understand if savings should be cumulative, or eventually spent, or a mix of both. You often see 20% of take home pay quoted as how much you should save, but is that the cumulative suggestion?

We save for Christmas/birthdays on a monthly basis but obviously that is all spent throughout the year. We also save for general rainy day things and try not to dip into that pot.

If you save regularly, what do you try to aim for? Is there a certain amount you save that must not be touched, and if so what proportion is that of everything you save?

I’m doing the 52 week challenge thingy for Christmas but otherwise just saving up to an emergency fund.

At the Moment we're saving for our house deposit,
then it will be saving to pay off the mortgage.

as Thrilling as that sounds, Sorry I don't have any exciting savings goals to bring to the thread.

Currently try and save about 500 / 600 a month and once its in the joint account there will be hell to pay if anyone takes any out! haha.

I went from "saving for a house deposit" to "never having any money to save" to "finished the mortgage, best have a couple of big holidays but otherwise put the same as was mortgage payments into ISAs".

The cash there has built up, thanks to the situation we're in now - both working, no mortgage, no kids to pay for - and been part used for cars and house repairs and holidays.

The remainder is for emergencies and if possible retirement, I guess - we're mid-40s with no intent to move house again (yet!).

We were saving to pay for a house extension. Then we did the extension, so no savings left now!

We will start building up savings again now. We don’t have a fixed percentage that we aim for, but both DH are natural savers and not big spenders so our outgoings are lower than our income. We’ll aim to help the DC out with driving lessons, uni expenses etc in the future. In the long term, we hope to be able pay off the mortgage and retire early rather than working until 67.

Good question.

I don't have specific different savings accounts but savings are made and then used:

1. short term (e.g. birthdays, Christmas, holidays, quarterly and once-yearly bills)
2. long term

The long term used to be saving for the next flat deposit. Now we're in a flat where we plan on staying for a very long time, I'm just saving randomly.

I suppose it'll go towards further education for the DC and eventually retirement but I don't have a figure in mind.

All I know is that I hate it when I can't save. Makes me feel uncomfortable. I could easily spend a lot more on meals out etc. without touching my savings. But I prefer adding to my savings.

Some savings are there for an emergency or moving costs if we decide to move house.

Some savings are for holidays.

Most of our savings are invested so we can retire early!

I have multiple different savings pots- not saying I've always had these but this is what I think is a prudent approach to savings if you have sufficient disposable income. In order of priority:

-First my pension (not everyone would count this as savings but I do). I think it's really important to save what you can towards a comfortable retirement - obviously helps if you have a good occupational pension scheme.

-Second my rainy day fund (6 months worth of mortgage payments, bills and food money). I can't say I have always maintained this amount in savings my whole life, but my aim is to do so from now on. Only to be touched if I lose my job or am seriously ill or for some other reason unable to pay the mortgage.

-Third my 'replacement fund' - our boiler and my car are both quite elderly. Still functioning so no current plans to touch this money but it's there as and when they eventually die so we can quickly replace them - we'd be screwed without either (I suppose could manage without the boiler in summer for a few weeks).

-Fourth my 'extension fund'. Saving for a kitchen extension - this will take probably a while but it's where most savings are currently being directed to. Once this is done I will probably start aiming to reduce the mortgage. In the past this pot has been used for a house deposit or funds to enable us to move to a bigger place. You could also think of starting savings accounts for any DC to fund university, weddings, house deposits, first cars? You can get children's ISAs or just keep the money in your name and mentally earmark it for them in the future.

-Fifth - 'short term' savings pot - this is for Christmas, birthdays, holidays, annual bills like car servicing and MOT, smaller house improvement projects or replacement of smaller white goods or furniture. I almost don't count this as savings as (like you) this gets spent over the course of the year.

Sounds like you have the last one down but you might want to start thinking about some of the other pots? As a minimum I'd think you should work towards having a rainy day fund, even if you are both in good health and have good employers who wouldn't deliberately screw you, sudden illness, job loss or accidents can happen and the last thing you'd want is to have money worries at such a time....

Currently my savings are being set aside for adoption leave so I can have a year off without struggling financially. If I have any left, they will be put towards a house extension. I always like to have a few £k set aside for emergencies though.

Short-medium term and pension.

The short-medium term ones have a general purpose - to cover times between jobs (I tend to work contracts), holidays, home improvements, moving house etc. They will go up and down depending on what's going on, but there is always something to need to save for!

Then anything else is added in to my pension.

Want to retire early (or just work a couple of days part time) so I save as much as I can so I can be mortgage free before I’m 50 and also have emergency funds etc.
I have a separate saving account which is for holidays too

short term for holidays and bits and bobs
short term for car savings for mot/insurance/anything that crops up
long term for deposit on a flat.

I try to keep 1k in each of the short term accounts and I'm working on getting 10k in the long term so I can contribute equally when DP and I buy (cheap area)

We're saving for the bathroom at the moment and then once that's done next month we're saving for our next house.

Very interesting question.
I save quite a lot, but have no set aims in mind other than security - short and long term.

Bookmarking so I can return later. I saw a financial counselor yesterday and we were just talking about this.

Interesting responses, thanks everyone.

I feel so guilty about dipping into savings that I think having less pots makes the guilt a bit easier, because I haven't clearly signposted what they was for anyway

We would like to do some home improvements but they're all quite minor, no extensions or new kitchens/bathrooms.

I think more savings pots are a good idea, it forces you to budget better which is what I am probably staying away from. I get stuck in the mindset of feeling like a skint student all the time and DH sometimes feels like we are still skint. We aren't, though! So it's trying to find that middle ground of saving and spending. I don't think we have found it yet.

I don't overpay on the mortgage, but our fix is up in less than two years and the 10% overpayment limit each year is more than we could afford so we figure we'll focus on cash savings and make a decision at remortgage time. If we had more cash reserves I'd do a regular overpayment.

We do both have pensions, mine is very generous and DH's is pretty rubbish...

I save fixed amounts because I don't have a lot to spare. It's quite a small figure! Some goes to dd's isa for when she's older. Some goes to my isa. My isa is emergency/school trip funds for dd. Not had to use it yet!
Some goes into short term joint savings which is for xmas birthdays day trip etc. We can only occasionally afford a holiday if we get help from parents. We have a 'work on the house' fund that is getting low and will probably run out after the next round of stuff. It will take a while to build that up again.
This year I am going to increase my pension contribution a bit and then when we have slightly less childcare to pay for the 'extra' money I'll have each month will prob end up going to savings or bills!

1. So I do not have to work till I drop
2. to help my kids have secure housing
3. to stop me spending everything right away
4. for fun things like holidays

maxelly. How do you keep track of all those pots? Do you have a lot of different savings accounts?

I keep mine essentially as three pots; shortly to become 4.

Currently it's:

Short term - holidays, Christmas, car insurance etc.

Other cash - been building up a buffer to get to 6 months comfortable living, 12 if I scrimped and stopped overpaying the morgage. It would also pay for a new car etc if mine died. That's now built up, so will top up over the next year or two with another 5k to give me buffer money plus car money, and then will also be opening a stocks and shares isa which will be my fourth pot - long term, illiquid savings that aren't my pension. These will be because I anticipate wanting to retire before I can draw a pension, and to help my overall savings pot beat inflation.

And my third current pot is my pension - currently a mix of DP and DC scheme. I need to decide what else I'm doing with my pension now my cash reserves are a better having bought the house and a car in quick succession.

I save for peace of mind.
So I don’t have to worry if the boiler breaks, or the service for the car, or a last minute break.

Whatever goes wrong first!

A combination of savings pots here. Most of our retirement savings are invested but as we are early retirees we have a cash pot too to subsidise pension income. We have a savings account for holidays, birthdays, Xmas, cars and home improvements. Plus an emergency savings account.

I cannot really say I save for holidays or to buy presents. That just comes out of our current account, which is basically what is left over at the end of the month.

I have a cash sum but it is not 6 months' worth because there are better homes for that money than to leave it in cash. If I needed cash in a hurry, I could sell/cash in my investments (those I count as savings) or remortgage the house, which has equity in it, convert my repayment mortgage into interest only or extend the term.

I see savings as a specific amount I set aside a month to invest. That would be my pension and stocks and shares ISA. Paying into a mortgage is also a form of savings and I overpay a little every month.

I am saving for my retirement, the children's university, first deposit, driving lessons/car, wedding and ultimately, their inheritance.

We have various savings accounts. We were saving for an extension, that's been done. We're now saving for a car, a wedding and a big holiday. We don't spend everything we have as we always like to have an emergency buffer, usually enough to cover several months wages should either of us become unemployed. We over pay into a bills account each month and that covers things like car/house insurance, car mot/service or repairs and any other minor household expenses like boiler break down. I have a pot for my tax as well and three accounts for ds, two locked in and one regular saver. We both have pensions too.

@Jackyjill6 good question! I guess I do have quite a few different accounts but I don't really think about or look at them on a day to day basis so it's not too hard to manage! The pension pot is obviously separate, then I have most of my rainy day fund locked up in a long-term no withdrawals savings account - which means if the shit hits the fan tomorrow and I need to withdraw the money I will incur a penalty/reduced interest, but I figure if something really bad has happened that's the least of my worries.

Then the rest of the rainy day fund, the boiler/car replacement fund and the start of the extension fund is in a stocks and shares ISA that I contribute to monthly via standing order (have to review it periodically to check on the investments but otherwise low effort for a reasonable monthly growth rate).

Then the short term fund for holidays etc is in an easy access saver linked to my current account- just to keep it separate from day to day spends really, it earns next to no interest but that's fine as it will nearly all be spent by the end of the year anyway. It needs a little bit of forward planning to access this money as need to sell shares etc. but it could theoretically all be in my account in cash in 3-5 working days...

I have a big spreadsheet that keeps track of all investments, spending, forecasted goals etc, but that's only because I'm a sad act . You could easy recreate my system by opening one cash ISA and one easy access saver really...