savings question!! views please....

[user63212]

i know it is all relative really but interested in some perspectives.

thinking of spending a chunk of money on one home improvement job (which should in theory add value to the house). it will however leave 3k savings. i try and save circa 500 a month. i also have 5k debt (interest free and at the moment manageable, paying around 150 a month back).

ive no idea what savings are average as i dont talk about money with friends or family. is 3k too small? mortgage is 600 if relevant.

You've got a tiny mortgage so 3k would give you a few months of that if you hit a crisis. I would be paying off more of your debt in your shoes though and try to clear that before starting a home project, but I don't like to be in debt.

I think rule of thumb is 3-6 months of full expenditures (mortgage, all bills, food, etc) in case of job loss.

thanks. i agree with the debt point but sadly i wouldnt have been able to buy the house had i not taken it out...needed a car for work and so spent on credit card rather than using house deposit. didnt want an old banger as drive around 65 miles a day for work.

it does make me hesitant though as i think well a new boiler for instance could easily be a grand!

Any amount of regular savings is good and £500 pcm certainly is a decent amount for anyone. Personally, I would pay down/off your £5k debt within your interest free period. I wouldn’t choose to bounce it around on 0% deals if I didn’t need to. In your shoes, I would divert the £500 pcm savings you can make now and pay the £5k debt off entirely within 10 mths.

DH & I have more than a year’s worth of expenditure simply because we are financially conservative and have experienced redundancies in past recessions including a period when we were both redundant. Needless to say, that was stressful and the longest period when our outgoings exceeded our incomings was 9 mths and our relatively healthy savings pot was depleted. It took awhile to recover from that but we did.

It’s also the main reason that we’ve never stretched ourselves mortgage wise and have paid off our mortgage by our mid 40’s (no luck or inheritances involved - just regular overpayment of our offset mortgage over the last decade of it). Building your own financial safety net gives you control of your life and nothing feels better than having the luxury of choice which it affords you.