Is this a good position? What should I work on next?

[Jugofjuice]

Couple in late 30’s (2 dc)

but speaking just for me. Earning slightly over 50k

House with mortgage- value 525k mortgage of 400k.

cash savings of approx 35k

savings of 30k for dc.

Emergency fund of 1.5k

pension is 10% by employer and 7% personal contribution

what would be your next step here? Pay off mortgage? Work on pension more?

dh has savings too and on a whole as a couple we are joint. But I want to improve on a personal level so what would you work on next/more?

If I could go back in time, (I’m mid fifties now) I’d pay more into my pension or get my savings into a stocks and shares isa sooner. Think long term.

Thank you! I definitely want to increase my pension yes. I’ll get a bonus in April and I will put that into my pension. 🙌

My thoughts are:

Your cash savings are too high and your emergency fund is too small.

Cash savings for me are my emergency fund. They are limited to a max of 6 months extremely basic living costs. Keep in high interest (4% ish) easy access acount. Only to be used in the event of job loss or illness. No point having more in cash because it barely keeps up with inflation.

I also have a "tiny emergencies" pot in my current account where I keep £600 to cover the cost/go a long way towards fixing or replacing a kitchen appliance or an unexpected car bill etc

So in your position I would learn about investing in stocks and shares ISAs and transfer £10k of your cash savings into one. I would then set up a direct debit to save a few hundred a month into it.

What is your projected pension with current contributions? Are you happy with it? Consider upping your contributions a little if you're not.

What is the interest rate on your mortgage? If it's on the lower side, eg less than 4.5%, I'd consider paying what you intend to overpay the mortgage by monthly into stocks and shares isa, where you could expect an average 8% return (based on historical averages). Then at a point in the future you could take a lump sum out of your isa to put on your house and remortgage with a lower balance outstanding. Doing this, you may well have earnt significantly more interest on investing the money rather than on saved interest payments if you were overpaying and the same capital is paid off your house in the end. There are online calculators to look at if overpaying the mortgage or investing that money is the better option for your circumstances.

You have fantastic savings for your DC. Another thought would be to open a SIPP for them both. Again have a look at online compound interest calculatiors to see how much they'd have in a pension pot at 65 if you invested £50 a month for them now. It's absolutely insane!

@WalnutsAndFigs thanks for that. Yeh to me the EF is more of a “oh shit the car broke down”or the washing machine needs replaced etc cash savings are in case of job loss etc. dh has savings too.

mortgage interest rate is 3.95

I’d definitely pay as much as you possibly can into your pension. And make sure that if and when you have children that your pension payments don’t slide if you stay at home for a while. Make sure you’re always in a strong enough financial position that you can walk away if you ever need to. Don’t let yourself get financially trapped in a relationship you don’t want to be in.

I have already had my dc. So that is not an issue. Not going back there again 😂😂

This is a useful guide to follow, you are already part way down the chart but worth checking the earlier steps. Then focus on priorities and plans - when would you plan a big holiday/next car etc, so that these are planned and a fund built up. And balance between fun now/ in future; stability of home ownership (paying off mortgage) and future income (building up ISA savings and pensions)

Not bad but lots of room to improve.

Cash savings are my emergency savings. We keep about 20k. We have another 80k which can be access within a year / invested on an annual basis.

my priority flow is max out annual pension and max out s&s ISA.
After that I do GIA and do bed&isa in years I cant max it out.

Your savings for DC are imo tactically a poor choice. It becomes money/ energy you cant use or leverage. If nothing else stop that right now.
You lose all control of an JISA at 18. Its much better for you to keep control of your cash yourself.

For context... I am a few years older our house equity, pensions and ISAs are higher (we also have the investments) and our kids have much less in JISA and JSIPPs (i also think JSIPPs are preferential to JISA... jisa is literally money they get gifted by people - both are doing spectacularly well +50% interest and kids are 1 and 3).

We plan to gift children significant amounts but will transfer wealth via directly funding life events and via an offshore trust when they are of working age (as tax free if done right)

You seem to have the bases covered. The rate on your mortgage is reasonable. You could increase the pension fund for sure, but it means the money is locked away (both a good and bad thing). I’d probably look to diversify now. Time to learn about investing in shares and probably some exchange traded funds, ETFs.

I would not have 35k as cash. Maybe move 25K to S&S and then build on that.

I’ll look into that thank you.