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?

Another thought @REDB99, and my dc are grown up now, is that if you can reduce to part-time, keep it up your sleeve for when you might really need it. Often DC can be at their most vulnerable 14/17 and that's when a bit more parental presence is more helpful for a period, or at the start of Y7 with secondary transition.

Good luck.

Some great suggestions here and food for thought for you, OP, depending on what you want to prioritise.

My thoughts are (or what I would do if I woke up in your shoes with this issue) is to allocate the £65K into an account or pots. I think you feel unsure at the moment as it is just a big pile of ‘unlabelled money’ at the moment, making you feel twitchy, whereas if you have it allocated, it would help focus your thinking.

So, immediately, separate off an amount equal to 3-6 months of your net income. As you are a single parent, with the responsibility of a daughter and a mortgage, I would go for the full 6 months.

Next, separate off the amount you want to pay off your mortgage. If the amount you have decided is £20K, then fine. But I would spend a bit more time researching this, as paying down/off your mortgage quickly is great for security (especially as a single parent), lowers your monthly expenses overall (so perhaps you could reduce your hours or take say 3 weeks unpaid leave a year in extra holidays), and it means you could have less in the bank as an Emergency Fund.

Next, I would start a Self Care Fund and a holiday fund, with the aim that these are not for saving, but to be spent. The self care is on things to make your life easier, buy back time for you and therefore make the time you do have with your daughter better. This might be labour saving things - a cleaner, a dishwasher if you don’t have one - or things that give you back your sparkle - massage for tired muscles, more frequent hairdresser appt etc. As you already have holidays you are happy with, the holiday fund is more for weekly/fortnightly adventures. Depending on the age of your daughter, maybe Friday nights are cinema and meal out nights with Mum, or Saturday mornings are brunch or morning tea/high tea somewhere, or trips to zoos etc. Just an activity every week or fortnight that is special and will give you both lovely memories. Soon she’ll want to be with her friends all the time and these will be lovely memories to look back on.

Finally I would start a fund for my daughter for either university or house deposit. No need to decide which now, but knowing you have the money to help her in future if needed will be nice. But I would keep it under your own name for now, as something may happen to you and you need it to secure your own future, or alternatively circumstances may mean you may not want your daughter to have access to such a sum of money in maturity! So keep your options open.

If it were me, I would give that set up a go for 12 months (or up to when your rate expires and you are paying more of the mortgage) and then reassess how I feel and my priorities then.

You ever heard of the saying make hay while the sun shines. You are a single parent, it's all down to you. Don't drive yourself into the ground, so pick your promotions and assignements carefully but I would keep going with what you have while its there to be had.

Question - why are you not overpaying your mortage? Unless you have a wonderful mortgage deal, it must be costing you more than your savings can earn? It's good to have a safety net but we cleared our mortgage when we were in our early 40's.

If I was you I'd be paying off the mortgage as fast as I could, whilst still having the nice things in life like holidays etc.
When we paid off our mortgage it was such a relief and a weight off our shoulders. Fantastic feeling.

Can you buy holiday time so you can take more time in the holidays with your child?

I'd look at paying off the mortgage next, leaving the savings as they are for now (but ensuring you are getting the best possible return/high interest on them)
Once you're free of the debt then I would look at easing back on work so long as your pension pot is looking healthy.

15 years left on mortgage and no other debt.

I currently buy 5 additional as this is the max that I can but I do get 6 1/2 weeks plus bank holidays plus the 5 additional so I do actually find that I can make this work.

This is terrible advice.

A few thoughts.

Your daughter is 8 and at primary where wrap round care and holiday clubs are readily available. When they get to high school there tends to be much less choice. I found my children needed me more between 11-14 than at any other stage. You may want to take more time off when she is older and needs more parental input.

At 45 I was fit, healthy and vibrant. Working full time to 65 seemed plausible. Now at 55 I am tired, fed up and irritable. Thankfully having savings gave me options and I now work part time in a role I can cope with.

I would maximize your earnings and savings whilst you have the physical and mental ability to do so and whilst childcare is avaliable. Money gives you choices and security.

However, no one knows what lies ahead so taking some unpaid parental leave to spend more holiday time with your daughter sounds like a lovely idea.

I think it’s hard for me to really know what I would do because my husband & I also have our “emergency” savings which we don’t touch and so we are at a point with those where rather than continuing we’re doing more living, I’m reducing my hours after my mat leave for time with baby, but I appreciate it’s a different situation for me because being a 2 income household means there is less risk there, if I lost my job tomorrow or if an unexpected big expense came up then it would still be fine and those savings wouldn’t really be needed, it is different I imagine knowing it’s only your income to support the household so the risk is higher

Thanks all, the consensus seems to be to earn while I can and to think about how best to make the money work. I am conscious of money for support if DD goes to uni. And as I don’t hate full time and generally find it okay I’m likely to stick with it for the foreseeable future. I might plough less money into the bank and enjoy it a bit more though!

You don't mean you're literally putting money in a savings account right? Your money should be more diversified than that. If you don't plan to do anything with it for the next 5 years you'd be better off properly investing it.

Also have you planned out how much more you'll be paying on your mortgage in 2 years, interest rate will still be at least 3.5% then if not 4%+?

Some ideas
If you don't want to drop any hours then use the money to buy more holidays or pay for a cleaner, something that buys you time
Assume you are maxing put ISAs etc? And paying well into your pension
Agree you would want a got pot fir yourself as a single parent plus savings for child's education and housing boost
And paying off/ down the mortgage would be great
Finally, even more into your pension!

It’s spread around but I do think it could work better for me. Paying off 20 - 25K when the term ends in approx 2 years will bring my mortgage down by about 100 a month (assuming rates are around 4%).

@REDB99 this is not an all or nothing decision.
Pension - are you sure parental leave won’t impact? In a final salary scheme you would loose reckonable service in a career average it’s your earnings not salary that is used. In both cases the impact is negligible.

Savings - you have a healthy cushion and are still planning to save so no issue.

life cycle - your DC are only young once, you won’t get this time back. As your DC grow up, go to uni etc, you can then go back full time if you want. It’s about doing what is right for you now with an eye on the long term (retirement).

I would go part time, enjoy your time with your DC.

I’d stick it all in your mortgage (at a point where you can) and enjoy the benefit of another £300 a month. This should allow you to save roughly £25k a year which you can then do the same with. You’ll storm through your mortgage in this way while maintaining your present standard of living. With luck you could be very well placed in 7-10 years time just as dd finishes education.

@REDB99 I'm not quite in your position but been thinking myself about this.
I'm planning to write down all my life goals and plans and review my finances on that basis.
I've got a few things house wise that I need to replace and I'm wondering if I can do something like get a cleaner and then I'll have more 'fun time'. So following with interest!

Why is it terrible advice t pay off some of the mortgage? If have 3 months wages saved.

Others are saying pay the mortgage down.

Mortgage are really expensive at the moment. So this makes sense to do to me.

Genuinely confused.

It depends what rate you're getting on savings.

I get 15-20% on my stocks and shares ISA - it makes no sense to take money from that to avoid 4% interest on my mortgage

@kiraric
Oh wow who is that with if don't mind me asking. My Vanguard fste one wasn't anywhere near that. Looking to move because of the nee fee structure.

As a single parent, I’d want more than 3 months expenses put aside. Also as a PP says, you can earn more from investing. I’m getting 14% interest on my S&S ISA at the moment, so am not too worried about my small 4% mortgage.

I use Vanguard - need to figure out if it's still a good place with the new fees but I think I have enough in the account that it's still worth it

I have a range of funds - North American equities have done amazingly over the last few years but who knows if that will continue, emerging markets, EU, UK. The UK funds have done less well of late but I like to spread my funds so I still have some.

I'd use the extra money you are paying off to reduce the term of the mortgage not reduce the monthly payments, if you are comfortable with the amount you are already paying. Reducing the term will knock thousands of the amount you would pay pack. Certainly more than saving £100 a month on repayments.

You sound like you have your head screwed though if you've managed to save that amount of money as a single parent. I'm in a similar position salary wise and being a SP and also struggle to spend on myself. My local health club has a 2 hours for £20 for non members and that feels like a treat to myself every few months. I don't use the gym, I just sit in the sauna, steam room and lie on the hot stone beds for a couple of hours. 😂

Thank you.

I had emerging markets too. I just don't seem to have anywhere near 12 percent.

I need to do some more research.

This issue why I don't lay off my student loan either as actually my mortgage costs more.

Suppose its a balance of risk too. I may feel more secure having my house gone. Over 25 years the 4 percent can make it a huge amount to pay off.