Saving money, but what for?

[Mrs M]

How much is enough? In my early career I probably had about three months cover at best, and occasionally zero ie no savings at all, and that really didn't change a lot until the last decade of my more gainful period of employment. I never really calculated it much until the mid 90's when I had around 6 years cover ie dead stop no income at all and money would run out in 6 years. This steadily increased to around 13 years by 2000 and to about 30 by 2004 (which is when my income peaked and when our mortgage was finally dead and buried. We now sit in the position of not ever running out and continuous growth.

I never once imagined I would ever be in this position in all my life esp' back in the mid 80's when, although I had a good income even then, mortgage rates were high plus young family etc and I remember having only £10 a month unassigned that we could spend how we wanted.

We are not really wealthy just nice and comfy but I think the big learning lesson for me was when I met someone who really managed his money properly and he inspired me to do the same. I can pinpoint the switch from being spenders to savers (although we are not stingy by any stretch) to the exact moment when I had several conversations with him about how to manage my personal finances better. Bit odd really - for a lot of my career I managed very large budgets and complex financial scenarios but had never applied my expertise to my personal circumstances.

I've used one of these little online calculators in the past but I now use a Excel spreadsheet to plot income/expenditure projections etc. Lovely wife takes the proverbial about my colourful cash flow and savings projection graphs although she does appreciate the comfort factor they provide.

This just plots impact on savings with regular monthly withdrawals but is useful nonetheless:

https://www.calcxml.com/calculators/how-long-will-my-money-last?skn=

Mr M has one of those spreadsheets, they do seen to work quite well.

 

[Piemaster]

Snap. The sooner I have enough spondoolies to last me for the rest of my life, I am stopping working. End of.

Tough to say how long that will be though, especially as the earlier you quit working the more likely you will live longer so will need a bit extra, for which you'll need to work longer....etc.
There was an old statistic that retiring that men retiring at 65 wouldn't make 70, while women retiring at 60 would make mid-70s. Was an old stat when a lot more men had a lot harder physical jobs and were pretty much just worn out by the time they got to retirement. That'll probably be me then

 

[alicat]

You're right @Piemaster. I read the other day that insurance companies are now making projections on the basis we will reach 100. '100 is the new 80'. I am working off 90 at the moment because to use a higher age is just depressing.

I'm currently culling my kitchen equipment, having made space for a dishwasher. It's depressing what I've bought and don't use. The money I spent on it could have let me retire sooner.

Saving is delayed gratification. To go back to the OP's question I'd repeat that unless you are fortunate you are likely to reach an age where you are having to be careful. Spend the money now on things or experiences you will treasure all your life. If nothing occurs to you then save it. One day you will be grateful for it.

 

[SpokeyDokey]

Surely spending money on other than essentials should be enjoyable after the drudgery of earning it. I keep an eye on my bank and CC balance but certainly don't track spending

Well we do spend what we want when we want and never fret about it - it's what its for.. We don't track spending as in worry about what's going out but we do keep an overview each month that we annualise - this enables us to keep an accurate handle on forward spending which is one of the key drivers (for us) of managing our money properly.

Our cash flow is built up from projected expenditure and projected income which in turn feeds into into our cash assets.

 

[Obsidian]

Mortgages calculation are quite complex and you usually pay off the principal at the later end of your loan tenure. So in essence in the early years you are just paying interest mainly and your equity growth is small. This type of loan is called a table loan and the most expensive and most used by the banks. If you are on a reducing rate mortgage loan which is quite few in the market and normally given to commercial and good clients on request. This is a straight line calculation and you grow equity faster. This is one that you can stretch. Then you have the revolving line or portfolio which can pay off anytime and redraw any time as it actually an open line of credit.

As mortgages are tied to properties, no matter what mortgage loan you have, the property value rise in the long run outstripping most forms of savings and investment.

Just out of curiosity, do you use a table loan or a reducing rate mortgage loan?

 

[F70100]

How much is enough?

All you have to do is decide the date of death and work back from that. Trip to Switzerland anyone?