Is 75K enough? Should I lighten up on the savings?

[REDB99]

For context I am a single parent. I earn 85K in a busy, pretty stressful job but do get some time where I can work from home which means less stress at times (still work to do but no commute).

I can afford all bills. I save between 1.5K and 2K a month. No desire to move house, happy where we are. One DD who is 8.

I have saved hard in recent years and now have 75K, this is not earmarked for anything although in 2 years when my mortgage term is up I’d like to pay off maybe 20K. I am 45 and will need to work to around 65. Will have a good pension when I do retire.

Should I relax and stop putting money in the bank? I’m thinking of going to point 7 which will be just under 60K, I get £300 a month in child maintenance. We have holidays that I’m happy with, I can pay the bills, I have 75K to fall back on.
On 60K I’ll be able to put around £850 - 1K away a month but would still prioritise being able to have holidays. Spend about 5K a year on this.

Would you start to relax a bit, go part time and have more time for hobbies, actually be at the school gate rather than needing after school club every day? Or is getting more money put away for a rainy day sensible when I generally find full time work okay but have times when the pressure is very intense?

I would probably spend it on private school for secondary though

I agree get the mortgage debt down. And perhaps increase your pension contributions.

Max pension contributions
Max ISAs
Look into investment ISAs (a tracker) - for your salary level 20-30k in cash ISAs is probably enough

I agree with PPs - dint reduce your hours but take a couple days of weeks unpaid leave instead - so you maintain your earning level

What is your current mortgage interest rate vs the rate you're getting in the savings account? If the mortgage rate is higher I would prioritise that

As you’re the sole earner in your household it’s wise to continue working full-time, at least for a year, then reassess.

One thing to keep in mind are the university tuition fees for your daughter in ten years time because they won’t be £9,535 per year then. Rents in the private sector are also only ever going to go up so maybe think of helping your daughter with a property deposit.

Ok........

I'm assuming you are a public sector worker?

For what its worth

Your daughters father could be run over by a bus, have a mid life crisis etc etc so why not put her maintenance into a separate account so if it stops it wont affect your finances, if she wants to go on an expensive school trip, go to University etc then thats what its for.

Then what about a bit of financial planning, what are you likley to need to do on the house, replace the car etc why not set up savings accounts for these?

then how much do you need to have ready to hand, the recommendation is between 3-6 months salary - i'm assuming net.

I dont see interest rates going down right now so my immediate suggestion might be to pay as large a lump sum as you can/feel happy with off your mortgage to reduce the term as thats where you save money.

Then of course you can carry on saving and every year or so make a decision about what to do with a lump of it eg buy a bit of extra pension, pay off some more mortgage etc.

Another point worth making is that you can put money into an ISA where it build up tax free at which point you can do whatever you want with it whereas with a pension you get tax relief putting money in but its taxable when you take it out AND there are restrictions on when etc

So if you had (say) £100K on retirement BUT a smaller pension you can spend the 100K as and when you want as you probably wont want to be free fall parachuting at 90 (I could be wrong but you get the idea) you will probably get through a car or two in retirement, need the house maintained etc. Also of course you dont have a partner to worry about providing for after your death AND if you were to die prematurely your daughter would get the money.

My final suggestion might be to work through as many options as you can eg daughters father cant pay maintenance, you lose your job, win the Euromillions roll over etc etc and see how your choices might affect you in those circumstances

So thats my punt for what its worth other than to add make a will and I would strongly suggest setting up a trust for your daughter so if the unthinkable were to happen she wont get the money other than at the discretion of the trustees until she is I suggest 26

Not sure they'd get UC with still over £50k savings.

Savings limit in UC is £16K

I would keep saving ( but reduce the amount a bit, maybe to 850/ 1k) as you never know what will happen in the future, you can always stop when you are older or retire early, you could also speak to a financial advisor and start investing some of it
I can guarantee you when you are a bit older the thought of working till 67 is awfull, when I was in my 30s I thought I would definitely want to work to 67, now that I’m 49 the thought of doing that nearly horrifies me and I’m hoping to retire around 62 if I can, it would be earlier if I had started saving / paying into a pension earlier but alas I did not

I'd focus on reducing the mortgage. Even a bit extra reduces the term a lot.

Whilst you can work and save, I would because you never know what's around the corner and what could potentially change for you. Savings will earn you money and/or you can invest it so that you can earn more which can be used for your daughters future if you're not intending to use it for your current lifestyle. Extra unpaid leave sounds like a good idea too.

What a lovely and honest and supportive post.

OP, you're doing great. As someone who thinks a lot about this stuff and is coming out the other end of it, I'd be thinking of a longterm plan for your DD. We have put a small amount of money £50 a month then £100 a month later, into my dd's Junior ISA for some years. She's 17 and about to go to uni in September - it's grown enough that it will support her through uni and her relief knowing she has this is is immense. Any left over we will help her siphon into a Lifetime ISA for her first house deposit.

That's a good way to make the most of tax breaks and save for a purpose.

Have you saved for your dc's university?
It will cost approx £60-70k with tuition fees and accommodation. Dc can get loans but you may want to help her avoid that.

Make hay while the sun is shining IMO.

You can put £20,000 in an S&S ISA every year. Growth is tax free.

The money will still be accumulating to pay off your mortgage (if you want), but also growing as invested.

You don’t know what will happen in future, so make money while you can.

If it was me, I would definitely take the option of working less and spending more time with your children and on your hobbies. You've saved a huge amount of money, but life is for enjoying, so why work longer hours if you can possibly avoid it and spend time with your loved ones instead?

I'm the same, don't remember my mother taking me to school or picking me up once. She was in hospital the week I started school at 4 and I like to think she might have actually taken me/picked me up that week if she could but I'm not sure.

My dad did it a few times, the week I started school, when we moved house and I went to a new school, first day at grammar school which was two bus rides away.

Considering they were both born over 100 years ago I suppose the division was unusual. He was very nurturing but died when I was 12 which had a big negative impact on my life.

Yes this. Going PT is often not worth it especially if they are used to you being FT. In most orgs a senior FT employee also has lots of flexibility.

pay off your mortgage as soon as you can and then save for education (private sixth form?, university) and the teenage years.

Set an ISA up for your daughter. Ours made a world of difference to the affordability of university. You’ve still got 10 years to save for it.

I also found the older my DC1 got the more she wanted to spend time with friends and do activities outside of school. You can afford to fund some amazing hobbies and clubs and then on the weekends you can spend time together and occasionally do a mini trip.

I do think that you maybe want to consider pension if you have spare cash. You’d just about double the money instantly due to tax.

How much is your mortgage and are you carrying any other debt?

Pay off your mortgage before having more than 3 months outgoings in cash savings.

Does your employer allow you to buy extra holiday? That might be a way of increasing your time at home without sacrificing your earning power long term.

I don't think this is great advice, particularly for a single parent.

The personal finances flowchart is worth working through to check where you are:

ukpersonal.finance/flowchart/