Savings Pot

[dirtyfries]

Looking for some advice about how you all keep savings for different purposes seperate

All of mine & DP's savings over the last 4 years have been towards a house and our wedding so there's always been a specific purpose.
We bought our house 2 years ago and the the wedding is booked for August.
We're in the fortunate position that by the end of the year when after everything's paid off we'll have the equivalent of a year's HH income in savings.
We're happy with this as our 'rainy day' pot.

Going forward, we're looking to continue to 'save' the same amount per month but split between eg long term savings/mortgage overpyament/christmas pot/holiday pot etc

My question is, how do you go about keeping these seperate?
What things would you prioritise?
Any advice about how you split your savings would be much appreciated

To avoid drip feeding - combined savings per month £1,000
Mortage has 33yrs left on term
Both pay into company pensions seperate to this

No one to ask in RL as our family/friends are NOT savers

I have a couple of different accounts, an instant access current account linked saver, a fixed term no withdrawals saver, a traditional ISA and a stocks and shares ISA. But to be honest I chose these based on best available rates rather than deliberately to keep different pots.

I have roughly 4 savings pots, a 'rainy day' never to be touched except in dire emergencies pot, a 'long term goals' pot for house improvements, car replacement etc., a 'medium term' pot for holidays etc. and an 'annual bills' pot for insurances and other bills which have to be paid annually. I keep track of these with goals, withdrawals and how much is currently in each 'pot' using a simple excel spreadsheet rather than using any one account for a separate pot, if you see what I mean?

Money as it leaves/enters my current account is just sent/taken from whichever account makes sense at the time. So e.g. with made up numbers I have total savings of £10k, split between 2k in the long term account, £4k in the stocks and shares , £3k in the ISA and £1k in the instant access. This is made up of £4k 'rainy day', £3k long term, £2k medium term and £1k annual bills. If I have £1000 to save, I'll send it to whatever account pays best and log it to whatever pot on my spreadsheet. If I then need to withdraw £500 to pay a bill I will take it from whichever pot doesn't penalise me, probably the instant access (or more likely I would simply not have sent all of the £1000 out of my current account in the first place knowing I had the bill to pay, but you get my drift).

I don't find this particularly hard to manage, but I suppose it does take a small amount of effort to keep the spreadsheet up to date, and some discipline e.g. if we are booking a holiday to stick to the amount in the defined holiday pot rather than looking at the amount of savings you have in total. To keep things simple you could open as many accounts as you want to have pots, perhaps a regular saver fixed term one for your longer term goals, and an instant access one for more immediate needs - opening accounts is not too hard esp if you do it with your current provider. Use moneysavingexpert to find the best deals though!

Also, you asked about how you split our savings. Like you I am happy/fortunate we have enough in our rainy day pot to cover us for emergencies and we pay into good work pensions aside from our regular 'savings' so no need to add to that, just maintain it. So how I work out our other savings is:

-First I worked out our total annual bills for e.g. car insurance, contents insurance etc. and then divided that by 12. This is the amount that goes every month to the annual bills pot.
-Then I set (in agreement with the rest of the family of course!) a reasonable amount to budget for holidays, Christmas and other annual luxuries such as hobby bills that are paid intermittently e.g. club memberships. Again divide by 12 and this goes to the 'medium term' pot monthly.
-Whatever is left goes to the 'long term goals' pot.

We might vary this a bit depending on circumstances. E.g. when we were saving to move house, make major house improvements or where we know the car needs replacing, we cut our cloth accordingly and had cheaper holidays etc., meaning the 'medium term' pot is smaller. This year we didn't have any particular long term goals to save for so had a slightly more extravagant holiday. But we still put something towards the longer term pot as we knew there's always unexpected things such as boiler or household appliances breaking so I'd never go as far as spending 100% on holidays and other extravagances (DH would but then he's a spender not a saver hence me being in charge of the budget!)

Also, sorry I promise I'll shut up in a minute, as you have quite a long term left on your mortgage, you might want to consider as part of your 'long term' savings, overpaying on the mortgage rather than putting in into a savings account or investments. There is an interesting thread on here about it, conclusion is that you can usually make more money via judicious investments but overpaying the mortgage if you can do so without penalty is still not a bad idea, will save you some money (how much depends on your interest rate) and certainly better than leaving the money sat in a low rate savings account, plus there's no temptation to blow it on frivolities if you've sent it off to your mortgage company! Moneysavingexpert again has a useful calculator to show how much you can save by doing this...

thanks @maxelly
very helpful
I'm thinking a spreadsheet is the way to go, i just know DP will the see the pot as a whole & his eyes will light up thinking of all the ways he can spend it!

I'm with Yorkshire bank and you can actually have "savings pots" with them under your savings account. So I could have £500 in there, and when you view your account online it would break it down as £100 holiday, £100 repairs, £100 XYZ etc. Worth seeing if your bank have something similar.

I have started paying 10% extra off of our mortgage every year. We do this via monthly direct debit. It is the amount we can pay off without getting fees (check your own mortgage) It is astounding how much difference this makes. The amount of interest that you will end up paying on a long mortgage is so much. Once you have a rainy day pot (for us this is a years salary) I would pay off mortgage. I am 44 and I wish we had done this earlier. My husband is approaching 50 and has a high pressured job and had we done this sooner it would have allowed us more flexibility in our life decisions because we wouldn't rely on his wage (hope this makes sense!!) so much of our life is dictated by our mortgage payment.

For the short term stuff, eg holidays, we just have the money in a high interest current account (ours is with Santander and pays 3% annually).

In terms of priorities, it’s important to build up your pension pot so make sure you put aside a good sum there (it comes out of gross income so is very tax efficient). Another option is to get a Lifetime ISA: you get a top up from the government (up to 1k a year) and you can use the money in retirement.

In terms of deciding whether it’s better to overpay your mortgage or put money into ISAs depends on your mortgage interest rate and how well you can invest your ISA money.

If you’ve only recently bought then perhaps you only had a small deposit? If so, you could as well pay down the mortgage: when your LTV improves, you can change to a better product with low interest. As the interest is calculated on the whole of the loan, paying down 10% of the outstanding amount and changing products could save you thousands in interest annually. But you need to sit down and do the numbers for your specific situation.

I have multiple accounts, isa for long term, a linked internet savings account for short term and a couple of rainy day ones in other banks that h doesn't know about (turned out to be more necessary than I imagined).

Just a tip, whilst you need rainy day money for boiler breaking, car exploding etc. concentrate on getting that mortgage down, that's a really long term so the interest will be massive over the term, just because rates are low now doesn't mean they will be later, if you remortgage every 5 years, try to reduce by 5 years each time