What to do with £63.40 per month?

[losingweightandgainingconfidence]

I have a payment term coming to an end in January, which will free up £63.40 a month.

I'm torn between doing multiple things with it, and need some advice. I'm 25, renting a flat, saving for a house and just life in general.

I don’t know whether to

• send it straight to my SIPP, which is very, very sad for 25. All together my pensions total about £5k which stresses me out.

• send it to my lifetime ISA for a house, which gets about £150 per month at the moment.

• send it to my stocks and shares ISA - longer term, but still available if needed.

• save it into my sinking funds for travel, self care and gifting throughout the year.

My logic is I've not been seeing this money for the last two years, so I'm best to just divert it away instead of getting used to it being in my account and then losing it.

Any advice is welcome!

Don’t spend it on your niece!

House fund

Save it!

But where 🤣 unless I alternate each month, one month to the house, next to the stocks and shares, next to the sinking fund 🤣

Put it into your pension.

House fund.

LISA.

Up the Payments into all accounts by £15 a month

I'd probably choose the pension, since it's stressing you out. It might not be much in the scheme of things but at least you will have the comfort that you are doing something constructive towards it.

I think you have actually made the decision in the post yourself, of the four it seems it’s the pension that is worrying you so pay it into there.

Pension.

By the time you retire you'll be fucked unless you have properly provided for yourself.

LISA: Would put it in there. Just with the govt top-up, it is instantly 25% more. Housing is pricy and getting early on the housing ladder is going to free up money for building up your pension.

Have you got a decent amount in readily available short term savings? If not, I'd prioritise that, so you have an emergency fund should your car or boiler break down, or if you lose your job.
Then look at longer term savings, probably the LISA in your case.

ISA

I think I’d put it into the house isa, assuming your rent is more than what a mortgage would be. If you can buy a property quicker then you’ll be able to start saving into your pension once you’re saving money on rent.

Lifetime ISA - because (1) the govt will add £12.68 to your £63.40 so it will be worth more than the other options and (2) you can either use it towards your first house or keep it in the Lifetime ISA for your retirement.

Thanks everyone, I think the house savings will get it, now to see if they will let me set up a standing order

Do you have expensive debt? Prioritise that.
Do you have an emergency fund of 3-6m expenses? If not, build that.
Got those covered, then start investing. Assuming you’re a basic rate taxpayer, the LISA is a good shout, as you have house buying plans. Also, your decision doesn’t have to be one or the other, you can divide it.

i would also suggest some time getting your financial mindset in order. You could tap into the Rebel Finance School resources (their annual course is still online for now), to help you get all your thoughts aligned so you know your goals, and when these opportunities come along have clear strategies.

If you expect to be able to use the LISA (so many can't now in the south east due to house prices) then I think that's the best bet as you immediately get 25% guaranteed return from gov.

If you're in a career that you expect your salary to go up as your progress I wouldn't worry about your pension amount too much at 25. Mine was woeful at 25, similar or maybe less than yours. 11 years later my salary has x4 and I contribute a significant amount of each month and have a very comfortable final amount projection.

LISA because you're not currently maxxing out the government bonus.

Also at 25 I would focus more on property than pension (assuming you also have a workplace pension because that's the law!). Even if you get a massive pension, retirement would be stressful with rent or mortgage to pay so the earlier you can get your own place and start paying down the mortgage, that's also important in retirement as it means you have no housing costs to pay once you've paid it off and a secure place to live!

It's easy for people to say pension as it's tax efficient etc but bear in mind whether there are other things you NEED beforehand i.e. your own place!

Yep - house fund. You want to be clear of all housing costs by the time you retire.
You're still young so keep paying into the pension whatever you are doing now and then divert the house fund to the pension once you've bought a property - assuming the mortgage is no more than the rent.

Premium bonds ... Safe away from spending and you might win £1m.

LISA. You will not regret it.

LISA. It gets by far the best return and can be for a house or pension.

At 25, if prioritise house fund, then any future savings to pension