If you had a £20k-£50k pot of money, what would you do with it to improve your lifestyle over the long term?

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If you had a modest-ish sum of money available, not like a huge lottery win to completely change your life, but enough to make a real difference (let’s say between £20k and £50k), what would you do with it to maintain and improve your lifestyle over the long term?
I’m not really thinking about cutting costs, downsizing or making a one-off purchase. I mean things that could genuinely improve your life, give you more freedom, enjoyment, comfort, experiences or opportunities, and help you maintain a better quality of life going forward, even if that means some hard work initially to get it going.

Would you invest the money, start a business, or something else? Change career to something higher paid? And if so, what business or investment or career?

Interested to hear what others have done or would do — especially ideas that have a lasting impact rather than just spending the money once.

To give a bit of context in case it’s relevant, DH and I have toddler age child in our mid 40’s. Both work full time earning decent salaries, and need to continue for now at least due to high mortgage and little outside support. We don’t have an expensive lifestyle - paid for second hand cars, no expensive clothes or hobbies - but we have high childcare costs and would like more time together as a family and to be able to enjoy holidays without stressing about the costs. We want to build something so we aren’t working till we’re 70. Like many, it feels like nothing improves right now - pay rises get swallowed up in increasing costs. Promotions help but that comes with extra responsibility and time and expectations.

Also just to clarify I said a modest-ish sum of money between £20k and £50k - I know that everyone has different wants and needs financially, and that even £100 can have a huge impact. This is why I’m taking this seriously and trying to find a long-term way to secure our future and our DC’s future.

If you want to build something for the long-term, I would invest it. I would leave it invested until at least 60.

Some combination of investment/pension contributions, dropping hours to spend more time with children, and getting a cleaner to further help with time. I might also invest in some sessions with a personal trainer/nutritionist to get a bit healthier.

How much do you have in easily accessible savings? And how close are you to paying off your mortgage?

I'd allocate say 3k for each year that you will still have to pay expensive childcare, just to take off the pressure a bit, and then use the rest either to pay off some of the mortgage or in a high interest cash ISA, whichever will be more financially beneficial. I wouldn't invest in shares right now - I'd be worried about an AI crash coming - but if I didn't use it for the mortgage, I'd transfer from a cash ISA to stocks and shares ISA in due course if I felt more confident about the financial future, and use the dividend money to supplement income.

We had this and decided to do up our garden. It’s been a great investment and we now spend time enjoying it than before when we tried to avoid it.

Have you got an emergency fund already? Or an ISA?

What kind of shape are your pensions in?

I’d pay my mortgage off, then I’d be free of the monthly payment each month. I might have enough left for the basics of a loft extension, which would give us more room and storage and make day to day a bit nicer/easier

I’d pay down the mortgage which would enable me to pay it off earlier or reduce my monthly outgoings. That would have a sustainable long term benefit to my lifestyle

Google ‘The Donegans’ on YouTube. Life changing free course on savings, money and investments for dummies. No jargon, no payment, no ‘premium access’. They received in honours from the late Queen for their financial info. I’ve compounded all my pensions and switched investments to the lowest fees. In the last few years my ‘net worth’ has rocketed thanks to their advice.

You need 3 months of emergency funds. Next pay down your (non-mortgage) debts. Then stuff your tax-free pensions and ISAs.

Stockmarket is still the best long term investment. An AI crash may be coming but that’s why it’s best to do little and often with investments. If there is a massive crash, don’t run from it, buy more as your money will go further.

We stupidly paid off our mortgage a few years ago (350k) using an offset mortgage. The psychological effects didn’t last long. Especially not once we realised that we would be (low) multi millionaires had we thrown the extra money into the S&P 500 instead and paid off a more modest amount of our house.

I would either pay a chunk off the mortgage or put it all in pensions. It can quickly all be gone if you use little bits for various areas with limited impact.

Starting a business would only make sense if you have the skills for whatever you are considering and it would make you more thsn your current job. Adding the money to a pension will help you to bring down retirement age and it will have 20+ years to grow. If you want to make holidays easier now then you can use it to fund those, but it then wouldn't help you nearing retirement.

Long term the best for your circumstances (which is not necessarily what I would do with it) would likely be best putting it into a pension for the tax advantages and long term growth. But see where you are on the financial flow chart:

The UK Personal Finance Flowchart | UKPersonalFinance Wiki

I know you say you're not looking to cut costs, but depending on your current spending habits, cutting a modest amount from your spending could have a significant impact on your long term financial health.

For example, £10 less spending each weekday is £50 a week, £200 pm, nearly £2500 per year, or over £30k per decade once modest investment growth is taken into account. So a small reduction in your costs could significantly improve your financial comfort over the long term.

This is probably an unpopular opinion and I’ll get flamed for it, but I can’t see how 20-50k could be long term, day-to-day life changing except in the very worst of circumstances. If you were homeless it could get you somewhere to live and help you back on your feet. If you were on a low wage with debts, it could help you clear those and start from scratch.

In your position, looking at how much extra a month would take the pressure off? Even if it were only a few hundred a month, you’d only get a few years worth of benefit from 20k.

If you are trying to change the “now” of it, I’d set aside what you need for childcare and stick that in something like an ISA that you can draw on every month for payment. That would free up some money per month.

If you are looking for future comfort, pay off a chunk of your mortgage, or add it to your pension. According to Google, investing 50k into your pension now, over 20 years it could grow to give you 500 quid a month when you are retired. That’s not to be sniffed at.

NB: I am not a financial advisor, you should definitely not assume any of this is good financial advice!!

I would use some of it for a nice holiday though. I need that!

Well, it entirely depends on your mortgage, savings and pension status tbh. Even with those looking good I don’t see how it could make life any “better” I would just invest it.

S&S ISA for me, assuming it isn't immediately required.
Plus a DD set up to top it up monthly from now.

Indeed.

I too would be putting it in an S&S ISA - just a tracker fund.

This is probably an unpopular opinion and I’ll get flamed for it, but I can’t see how 20-50k could be long term, day-to-day life changing except in the very worst of circumstances. If you were homeless it could get you somewhere to live and help you back on your feet. If you were on a low wage with debts, it could help you clear those and start from scratch

For someone currently stuck in the 'can't afford to save a deposit so are stuck renting' it would be pretty life changing if it meant they could afford to buy - £20-50k would be a very decent deposit in many places and decent houses can be bought by most working people. That would be pretty lifechanging.

Or if your pension wasn't currently very good and you put it all into a pension, it would grow many times over 20 years once investment growth and tax relief is taken into account. Again life changing if you don't have a great pension.

Pension or shares isa to be used for early retirement for me.

You could drop a day at work and use it to fund that, more time with DC or to get the annoying stuff done giving you more leisure time.

I wouldn't pay off mortgage if its manageable, it's very cheap debt and very high likeli you'll do better investing it.

£20k new bathroom.
£50k half a new kitchen.

Depending on what rate of interest you are paying on your mortgage and whether or not there are early repayment penalties, I'd probably look to paying that off or as much as was possible. Obviously, if you had the very good fortune/timing to fix at a low long-term rate then maybe not. Hard to know without the specifics.

After that I'd look at the best ISA available and shove £20k into it probably split between cash and investments.

After that I'd look at Premium Bonds. I'd also consider seeing if you could top up your pensions with AVCs.

All rather dull and none of it "life changing" in one hit, but as a believer in "every penny counts" sensible, long-term investments and decisions can ultimately make life much easier.

I am in this position but with far less up front cash than you! A lot less! And I am using it to start an e-commerce business.

I have no idea if it will be successful or just money down the drain, but you have to speculate to accumulate. Having a little bit of cash set aside that you can afford to lose gives you the freedom to try.

Thanks this is interesting.

Pensions are decent (not huge but ok), both paying 7-8% in plus employer contributions. I have a stocks and shares ISA I contribute to each month, a LISA, and a SIPP that has my smaller pension from previous employers. Also have a junior ISA and junior SIPP for our DC.

No debts other than mortgage, but that has 25 years left. We have done an extension and complete renovation already, a few bits to finish off that we’re paying for gradually.

I get what you are saying about reducing spend and it’s definitely worth looking at, although we are already pretty careful. We have sim only phone contracts, no car payments, I get my hair cut about twice a year and dye it at home. We meal plan and cook at home, often take packed lunches on days out, buy clothes in sales. But we enjoy days out and whilst I’ll keep an eye out for discounts I don’t really hesitate to go out somewhere for the day, and don’t have a problem buying ice creams and coffees etc when we’re out.

I totally agree that paying a lump sum into a pension would be beneficial long-term, especially if it helps us retire earlier. Also the mortgage is big (we have 50% equity but 25 years left, we make small overpayments currently but also feeling like paying it off early isn’t necessarily the best option). I don’t want to use the money to make any further changes at home though, we’ve spent enough. We are working to rebuild our rainy day fund at the moment, too.

I guess I’m thinking about ideas to build something here and now, not spending it little by little and not just saving for the future. I have a friend who has a photo booth business, for example, as a side hustle. Is buying and renovating property still viable, with high costs of materials and labour (we don’t have time to do it ourselves, haven’t finished our own house)? Or is that amount enough to start a business that would eventually free us from working 40 hours a week? I appreciate that’s hard to say without knowing our skillsets but would be great to hear any success stories or ideas. I guess it’s finding a balance between the time and returns - can we find something that will give us better returns than investing it, whilst still being time efficient?

I guess I’m just a bit fed up of working, saving, but not really feeling like we’re getting anywhere. I appreciate that in reality we are not in a bad place and I’m very grateful for that, but can’t help but feel there has to be more to life, I’m just not sure what. Maybe I’m just having a midlife/perimenopause moment!

Yes!!! Good for you! How’s it going so far?