Normal savings for 30-40yo?

[Daffodils234]

I was having a discussion with some friends about savings. A few people said that now we have all had our weddings / got young children / bought houses or in rentals / have careers etc, so, "technically" we should all have a fair amount of savings. The others were in agreement, that £20k+ was the normal cash value to have in savings.

My question is, what would you class as a "normal" amount of savings for a 30-40yo? I mean, I own a decent car outright, I have an OK house in an OK area (still have 30 years left on the mortgage) and DC to clothe and feed, but I would say I have quite paltry rainy day savings. We don't splurge but if something suddenly cropped up, I would be able to pay X amount from savings if I had to.

my husband and I are 36, with 2 kids. We have about 2k in savings and if we needed emergency money we could sell my car for about 5k.

Ime it’s so hard to save when you have childcare costs hammering you each month. I dream of having 20k in savings.

Each time I get any savings at all, there’s seems to be an emergency requiring me to spend all of the savings (boiler, £800 at dentist this month alone, new front door etc). It’s relentless.

I don't really have much/anything in savings however do have a car and house (with mortgage). We pay out of our monthly incomes 3x school fees, mortgage, car other expenses ect and put all of our savings into house deposit and improvements.

I have 6k overdraft and 6k unused credit card for any "emergency".

If you have a mortgage / car finance / overdraft and the interest rate on that is higher than what you will receive on savings it makes more sense to borrow less and not save so I would overpay on my mortgage instead of putting money aside for savings

@goldcheese The people who have lots of savings have acquired them by spending less than they earn. They might earn more than average, but they might also just spend less than average.

For example £20k in ten years is £2000 per year or less than £40 per week or about a fiver a day, or under a tenner a day if you're talking about a working week. All ignoring compound interest, which would make the amount per day even less.

That's a couple fewer coffees a day, not buying lunch every day, a slightly cheaper mobile phone package, spending less on those things really adds up and that's before you start looking at whether or not your paying for
having your hair coloured in a salon, having your nails done, waxing, going out for meals or cocktails regularly. Not even starting on buying clothes all the time or always having an expensive car on lease.

There's an awful lot of spending that can vary by huge amounts, and the people who don't spend a lot on these sorts of things can build up thousands of pounds a year in savings. Like they did in 2020 because suddenly a lot of these sorts of businesses closed.

Of course that doesn't apply to everyone, and many are on a low income and don't have money to spend on those things, but if you have a decent income but no savings, it really pays to look at what you're spending and whether you value it more than having a savings cushion to fall back on.

Yeah, I never spent much money on all those things, but I just worked out that my average salary over the last 13 years was only £23k and living alone. That would explain it! It's only in the last 2 years I have had a decent salary. Took time to build to a decent salary, then retrain and build a better career after returning to the UK and kids had grown up. In my early 50s and a lot of catching up to do!
😭

@AccountantMum your advice contradicts what most finance experts would advise. Almost all advocate for having 3-6 months of expenses in savings. A credit card is fine for emergencies but you need to have some way of paying that off at some point. Overpaying your mortgage is good (although anyone whose mortgage was taken out more than a year ago will be able to get a higher rate in savings than the mortgage, our mortgage is under 2% and I have a regular savers account that offers 7% interest) BUT your house is an illiquid asset. If you lose your job or the roof caves in or the boiler dies or whatever, you cannot extract value from your house to pay those bills unless you have an offset mortgage. Hence why Martin Lewis et al do advise that you first pay off any high interest debt like credit cards but the next priority should be an emergency fund before you even start to overpay the mortgage or even pay student loans.

DS is 27 and a teacher. Own house with 27 years left on mortgage. He has £5k of easy access rainy day savings and £35k in s&s ISAs plus a bit in a SIPP. He's single and quite frugal.

People have their money in different places. I have a fairly hefty final salary pension-with my state pension factored in I will retire on what I earn now (index linked). I also have lots of property equity and a BTL.

I don’t have much cash though, less than £20k right now as moved house and we are renovating. But will likely inherit £500k or more one day.

Other people might rent but have £100k in cash. It doesn’t tell you much overall.

Between us DH and I have around £30k in accessible savings and another £40kish in investments. Probably could have more, but we're currently choosing to overpay our mortgage to the maximum allowed to reduce the term.

Same here, saved as I knew there were more expensive times to come (had a baby relatively recently).

I often read posts on Mumsnet and think the same. I'm 40, have 17 years left on mortgage, about 6k in loans used to renovate our house and not a penny in savings.
Our 'rainy day' plan would be to use a credit card and hope for the best.

I'm 45 so older than your question but I built up a pot of £20k over time before DH and I met so I had that (premium bonds) at 35. I frittered away so many bonuses though and could have saved more. Hindsight is wonderful. Now I still have that pot but focus on hammering spare cash into the pension. Hoping that at 57 I can take the 25% tax free sum to repay mortgage. I also overpay the mortgage if I can. So arguably don't have loads in accessible savings but that's due to priorities. Having credit cards for emergencies is always good too.

@AccountantMum mm t mortgage rate is 2%. My savings accounts are all 5% or higher.
Are you an accountant ?

*my

We had £50k (late 30’s) however have just used it all to have building work done on the house. We decided to do this rather than finance through remortgage due to the interest rates. Very uneasy about having no emergency fund, but hoping to build it back up next year.

Jointly we have about £45k cash/PBS, £10k of that is earmarked for next years holidays and about £80k in S&S ISAs which well use to pay down mortgage when our fix ends. We also have decent pension pots

We started really focussing on saving after youngest started school and we’re fortunate to be both high earners so we save a lot each month.

im a spender though, constantly battling that urge.

also we’ll have nothing in way of inheritance so whilst we’re saving loads that will be eclipsed by many of our friends who will inherit substantial sums.

About £20,000 but currently we are eating into it every month due to col and husbands earning decreasing post covid and brexit.

We do have a decent amount of equity in the house though and considering selling to release.

I didn’t have savings as I was in debt from enjoying my twenties, once I cleared that I did build small savings but cleared a chunk when buying our house.

At 44 I have emergency savings which would cover . I have good sick pay so don’t need to worry too much there. But the emergency would help too. Also good pension for the last 18 years.

Im on 25k so im never going to have the savings amounts mentioned here. We are slowly refurbing our house. This is saved for no credit so managing one job a year ish. I do save but it gets used up for these. I also won’t forgo life experiences to save even more. I have friends and close family that have died young.

The mortgage is about 26% LTV and overpaid. So if I’m lucky enough to have that paid off I will be able to save more then. I think we do ok to be honest.

I've named changed for this as its very outing.

I'm 48 and a high earner (should clear just under £200k this year) and spend a lot of time in London on business. If you met me, you'd probably assume I live in some 4 bed house in the home counties, with a huge mortgage, driving a fancy leased car and go on multiple holidays.

In reality, we are currently renovating and extending a tiny end of terrace house to meet our needs (2 bed to 3 bed for a family of 4). Its very, very small but in an amazing location right by the sea. Once done we can live in it mortgage free. Most people would turn their nose up at it for a family home (very desirable retirement home though!).

What people don't know is we have nearly £500k in savings and 4 pensions, a couple of which are already paying out. It means we can comfortably put our kids through private school and Uni, and hopefully get them onto the housing ladder.

I went through a financial rollercoaster in my 20s/30s chasing the big house, big mortgage and the stress was unbelievable. I got caught up in the 'keeping up with the Jones' cult instead of keeping things in control. Lost a lot of money in bad investments and had very high debts. Was really at a low ebb and looking at IVAs. Then penny dropped and realised, start with manageable goals and don't rely on debt.

If you can only afford a smaller a house, have a smaller house and resist the noise from other people that you should have this or that. If you can sleep at night you're doing well. Friends can seem like they want the best for you, but actually misery loves company! Sometimes it seemed to me that others wanted you to want what they were chasing to validate their struggle.

Having savings in the bank is so important to me now, more important than having a big house, car or fancy holidays. It's a great comfort blanket when things are tough.

We have about £50k in savings, late 30's. No debt. Household income £70k ish but dh is self employed so variable. 3 dc.

However, we rent. And we live in a very lovely but expensive area that we don't want to move from but can't afford to buy in (first world problems, I know).

Our current rent is £950 a month but the house we live in is probably worth £450k and everything within a 5 mile radius is similar. It's beyond us, even with our £50k deposit we'd need a £400k mortgage for a house big enough for the 5 of us which just isn't doable.

At the moment we have our money invested wisely and are adding to it at about £500 a month. And we're just waiting, not quite sure what our next step will be.

We're considering trying to buy a two bed in our area to rent out, with a long term view that dh and I will move there when the dc are grown up and moved out, but continue to rent until that time. We're not sure though! Maybe if property prices plummet then interest rates come down we'll be able to buy a 3/4 bed in our area in a couple of years. Who knows.

Savings alone don't mean a huge amount though. I'd rather have £2k savings in the bank and a mortgage tbh.

I don't think there is any normal amount of savings/ investments, it's all personal circumstances and who has had opportunities to save/ invest.

We were lucky and had lots of opportunities and not hugely expensive lives in our 20s coupled with big wage increases but not saved much in our 30s (currently 33) since we had a baby.
Before our lives became expensive we managed to accumulate, and still have - £20k instant access savings; £85,000 stocks and shares ISA; £50,000 company shares; mortgage free buy to let along with our company pensions.

Very happy we decided to save in our younger years when we could more easily.

@Monkeynolongeronmyback can I ask (without derailing the thread) what your ultimately goal is? I suspect you’re a few years ahead of me but I’m at a similar pivot point of working out what’s really important to us. We have a lovely house but it’s in a fairly cheap location so we bought at just over 2xcombined income. I’ve no desire to upsize or move in medium term. But we have regular debates about what we’re saving for… and the balance of living/saving/retirement which is ultimately not guaranteed.

@Isyesterdaytomorrowtoday

Short term (5-7 years)

Our plan is to focus on important short-term goals, which is to grow our savings through further investment/bonds. Whilst I'm working my wages will pay school fees (secondary school phase only). Anything left over will go on holidays/experiences/luxuries. If I ever have to give up work (redundancy or health) I know we can cover school and Uni fees no problem (have factored % increase into figures). Day-to-day living expenses will be covered by pensions.

I have the potential to start my own business as well, so because of the above I'm in a good position to take more risks in my career/work life. I'm not constantly on edge so actually can perform better. When I was carrying a big mortgage and debt I was regularly having palpations about losing my job.

Long Term (8 years +)

If we get through school/Uni without dipping into savings too much, we have a few ideas, such as spilt the savings into 2 pots and buy each child a property mortgage free. I'd like to give them their inheritance whilst we're around. Then DH and I will use our monthly income to travel more and enjoy life, with a smaller savings pot.

For us, there's no desire to upsize or take on bigger bills. We're positioning ourselves so we can start the kids on the same path as us. Small property but paid off, so they can save and take risks with their career as they see fit. Providing that stability for them is the biggest priority for us.

What do you see your priorities as? have you thought about what retirement looks like?

I'm being moved to universal credit soon, I will be limited as to how much I can save. This is quite a big divide in society and designed that way.

34 and 36 one child. We have around £20k in the bank. We paid off our mortgage at the start of the year. We have two cars which we both bought a few years ago. We also have the child's money which is around £5k.

33 and 37, with 2 kids one in full time nursery.

£6k in savings, own two cars outright (Worth about £8k now not much) and have a mortgage. A few grand on interest free credit card to pay for a holiday but no other debt.

SMP for maternity leave and paying childcare has made it hard to save. Also no handouts from parents or no inheritance (we will never get this)