How much is a lot of savings?

[Ilovesweets123]

How much would you class as a lot of savings?

Don’t forget OP, you are buying a house which is far beyond the reach of many people, that alone is huge financial security. Do you have a secure job? As in public sector for good sick pay etc?
I wouldn’t worry too much about not having loads of savings, most people don’t once they buy the house, just concentrate on building them up again once you can.
And enjoy your new house...life is short so don’t spend too much time worrying about hoarding money at the detriment of enjoying life. Have a nice balance (and don’t judge yourself by mumsnet standards where the average poster has a million pound pension pot!!).

I have a good pension but our mortgage is big and I don't earn a massive amount (and have 2 teens!)
I try and keep £1k in my savings account but it's normally a bit less, so not exactly the £6k average!

In my view..

Three months savings of your base monthly living costs, even better six and with a perfect goal of twelve months. As an emergency fund.

On top of this continuing to look at building wealth, pension funds and other large expenditure you may decide is important (university fees for children, saving for a home or expansion/step up). Ideally making your money, make money for you over time.

If you can, overpay your mortgage every month - you'll notice a huge difference later on.

This depends on the interest rate you are paying, the type of mortgage you have, how much you are saving into your pension, how much money you need to be available for emergencies or major life events, how much spare cash you have each month out of your paycheck to put towards savings, what your plans are for the future, what's your attitude to risk. Mortgage overpayments are not always the most sensible option, it may well fit into a set of saving plans including pensions, S&S, cash etc but should not always be the top priority.

We have £8k totally set asides and our main income is as stable as any can be during covid. (NHS Dr) maybe £1-1.5k additional free cash.

However, I’m on unpaid mat leave. Pregnant with number 2 so heading to another mat leave. We have a 20 year old boiler which could need replacing any time and would easily be £4-5k due to our oil heating.

Even if it doesn’t need replacing our monthly expenses come to £2k (mortgage and utilities/bills). We are tied to a pricey area for DH work and council tax alone is £300pm

So whilst it sounds like a decent amount (and yes we are very lucky to not worry about affording food) I don’t feel we are ‘well off’.

I think we are still a few bad months away from serious issues. We do have friends who earn similar to us though and have no real savings as blew lots on big long haul holidays before covid hit. I would hate to be in their situation now.

@CountFosco

If you can, overpay your mortgage every month - you'll notice a huge difference later on.

This depends on the interest rate you are paying, the type of mortgage you have, how much you are saving into your pension, how much money you need to be available for emergencies or major life events, how much spare cash you have each month out of your paycheck to put towards savings, what your plans are for the future, what's your attitude to risk. Mortgage overpayments are not always the most sensible option, it may well fit into a set of saving plans including pensions, S&S, cash etc but should not always be the top priority.

I agree and people need to stop spouting 'overpay your mortgage, you'll save thousands' because it really isn't true any more.

Not everyone has a huge mortgage and if you get a good deal, the interest isn't that much either. It can be very very cheap borrowing.

Ours costs us under £15 per month and is at a lower rate than instant access savings account, even now, so there's no point overpaying or rushing to pay it off, even though I could pay off 80% of it today.

It's all relative as to what constitutes a lot.

We're aiming for 6 months of our household costs in savings, which is £15k. That's not pared back to the absolute essentials though. We're half way there at the moment.
To us, what we have saved isn't a "lot" as we have two professional wages (when I'm not on mat leave), but we also have a mortgage of £1k per month and two children.
It's the most we've had in savings since we brought our current house and renovated it, so I'm starting to relax knowing that we've got a safety net.

However my DHs job is precarious at the moment as the sector has taken a huge covid hit. He's so far survived two rounds of redundancies, but how long can that continue? So with considering that, it's not particularly "a lot".

I am aware that a lot of other people, could consider our current level of savings to be absolutely loads.

In your situation OP, I would say £7k after your purchase is fine, as long as your survey hasn't flagged up major areas requiring immediate work. You have some for moving costs, fees etc and if you keep saving after you move in, you'll soon save a bigger sum again.

As others have said, you are doing well to have this level of savings just after buying.

Don’t stress about it, but get into a routine of building the savings.

I have two separate savings pots. I keep £2k in an account I can dip into for things like car repairs or house repairs. Then my main savings are in a account that I don’t make withdrawals from.

In answer to your original question - it does depend.

I would classify a lot of savings as a years salary. That’s a lot.

We used all available money to buy the house with a small amount set aside for renovations
We spent all of the money set aside and more and also got married and had a baby the same year so there definitely wasn’t any chance of money left over after that

3 years later we built up our savings again in tile for 2nd baby to come along

We started that maternity leave with £13k in savings.
Trying to keep a minimum of £10k in there by the end but the cars have needed expensive repair bills this year to the tune of about £2k which doesn’t help things

Nearing the end of maternity leave and if I choose to take the 3 months unpaid at the end then this will dent it further

I must try to remember it can all be built up again

A lot of savings to me would be an amount that means if my car goes pop I could buy A nearly new car outright without finance to replace it with some in the bank left over for emergencies- £30k in total maybe?

To me having enough savings that you could manage for a year without work is the ideal.

Make sure you have enough savings for 6 months expenses plus the cost of something big like a new boiler. Anything over that is a lot. I’d be scared to only have £7k left after buying a house but only because we have large outgoings and it would take us a while to save that up again. We’ve also had big things like boiler go wrong and struggled to find the money.

A year's gross pay might be quite a lot for a lot of people (and that of course is a variable figure).

We used every last paying even the children's money when we bought this house (paid back the children in a year however). Then I got back to zero savings again as my husband got my life savings, all my shares etc as he earns less and now I am in my 50s i seem to specialise in repeatedly getting back to zero as I help each child to buy a first property and for university costs. About to go back to zero yet again but probably for the final time as final child just had an offer accepted on a house.

When you get older if you have a house in the SE if you want your children not the state to get your money when you die you do need to give the money away and in a sense actively not have savings whereas when you have little children you need to support it is wise to be the other way round - have savings in case you fall on hard times and need to feed the children.

Will you be able to start building your savings up again once you move in and start paying the mortgage?

@Ilovesweets123

Thanks for your replies. I want to put a deposit down for a house, but want to make sure I have enough savings. I have worked out that after all the fees/deposit I will have about £7,000 left. I am not sure if this is enough... My mortgage will be about £1000 a month.

Given that mortgage lenders suggest you keep a 3-6 month buffer in case you lose your job etc, £7k would only just cover this period.. I'd personally aim to build it up to around the 10k mark.

I think it is relative to your income. We have about 4k in savings. For us that is a lot.

It all depends on where you are in life. In my 20s with £4k in my account thought I was minted...

Now I think maybe 2 years net salary?