How can I be financially savvy?

[Sunnywalkslongtalks]

Hi, hoping someone can provide some advice in how I can be more financially savvy as I’m a bit of a novice and would like to be making the most of our income.
For context, me and DH are average earners (40k & 36k).Both early 30’s. However our outgoings are relatively low - mortgage only £800pm, car paid for outright, all mortgage and bills covered within £1700 per month. This means we try to save a fair bit each month, usually minimum of £1k.
So far we have just shy of £20k saved in a savings account.
I’m just wondering what in particular I should focus on in terms of saving/ paying. Would you focus on overpaying the mortgage? Putting more into pensions? I have a decent pension (I pay 10% employer pays 16%) I also a small amount of AVC on top. DH’s pension isn’t great - minimum contributions.
We have a one year old who we are also trying to save for - should we prioritise this for future uni/house deposit costs?
Any advice would be appreciated 🙂

Bump!

With the rate things are going, i would overpay your mortage. Pensions are being raided constantly, i would get your mortage paid off & look to set up a ISA or saving bonds.

What is the interest on your savings account? If its less than 4%, shop around.

What is your mortgage debt, the interest rate and are you fixed for what number of years? Use an online calculator to find out if overpaying the mortgage or investing would be better for your circumstances

I would say you have too much money in your cash savings. Inflation eats away at its value. It would be sensible to have up to 6 months of basic living expenses as cash savings. So for your outgoings approx £10k

The other £10k you have, I would invest in a global tracker in a stocks and shares ISA. There are lots of resources online to help you learn about investing. Head to vanguard or fidelity etc and start learning if you're unsure about it.

Going forward, I would open a SIPP and a junior stocks and shares ISA for your baby (again use a low cost global tracker). Put £50 a month in the SIPP and make sure you sign up for the tax relief. Put £100 a month in their JISA

Then I would divide the rest of your savings between your pensions and S+S ISAs for each of you

Thank you both.
some really helpful ideas - off to research stocks and shares ISAs!

Do you have a company pension? Do they match your contributions?

When I was you I prioritised mortgage. Looking back I'd prioritise pension as that's a compound interest event that's got 30 years to go. But I'd probably put a bit against the mortgage too

Search for Rebel Finance School - there's a free course on YouTube and a Facebook group for support

Rebel Finance

Meaningful money is a community on Facebook and has a podcast. It covers all the basics. Get rid of debt (you don't have any) build up emergency fund (6-12 months of expenses) then fill your S&S ISA and SIPP. And enjoy the rest of the money you have.

Junior ISA for your child and if you really want to you could add £2880 to a junior SIPP for you child, then they'll get tax rebate automatically into the JSIPP to enjoy compound interest.

Vanguard is a great platform with low costs and global low cos funds

they are early 30s and you are recommending saving bonds? why?

OP - As someone else has already said the Rebel Finance school on YouTube is a brilliant resource. Everyone's individual circumstances are going to be slightly different but there are some key principles that will generally apply to many of us.

Sounds like you are starting from a decent financial foundation. You have £20k in cash which is a healthy emergency fund, some people may actually say its a little high even, but with children and not knowing what your employment industries are its likely worth holding onto! If you haven't done it already I would get that £20k within an ISA tax wrapper this financial year - actually do it now, there is all kinds of talk about the limit being reduced so get it protected while you can.

Your pension seems decent, sounds like you are taking advantage of your employer match which is great! Your partner's doesn't sound as good, they may want to consider setting up a SIPP along side it as if they are on NEST the charges and fund choices aren't very good at all.

Whether you pay additional on your mortgage or invest in a S&S ISA is a personal choice. There will be a mathematical answer and a psychological answer depending on your mortgage interest rate. Personally, my mortgage rate is 4% at the moment, I'm choosing to not overpay as I am getting slightly more than that on my cash savings and am expecting to get more long term via my S&S ISA investments.

Think about what your financial goals are and that will then better inform what the most appropriate steps are to achieve them. Remember, its not al or nothing, you could choose to take the £1k surplus you have a month and split it between investments and mortgage overpayments.