Planning Saving Goals
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So you want a fancy new car, a three-bedroom pad, that dream holiday to the Maldives and to put that genius business idea you have into action. You’re going to need some serious cash! To make these goals a reality, list the big ticket purchases you want to make in the next five years. Then, place them in the order you’d like to achieve them. In this guide we give you pointers on the most common saving goals.
In this guide:
Ditch Your Debt
Big red flag here: Don’t save if you’ve got debt. It’s a losing battle because you pay more interest on your debt than you receive from saving. Eliminate what you owe and you’ll be in a better position when you apply for a mortgage or any other loan you need in the future. Trust us.
Bigger is better when it comes to dogs, chocolate chip cookies and your closet storage space. Same goes for your house deposit. The bigger the deposit, the better the loan terms on your mortgage. Twenty percent is a good target to aim for however 15 or 10 percent is not uncommon. Your deposit goal will also depend on the property you can afford. It’s wise to cap this at four times your household income.
Are there any other charges when buying a property?
Unfortunately it's not only the deposit you're saving for. You also need to consider fees and stamp duty which adds thousands to your bill. Here's the lowdown:
Valuation fee… As in the amount you pay the mortgage lender to assess the property’s value so they can calculate how much they're willing to lend you. The cost ranges from £150 to £1,500. The more expensive the property, the higher the fee.
Surveyor fee… As in paying a pro (the surveyor) to check out the property so you know of any problems before you commit. Fees range from £250 to £600. This is one fee where paying more is a good thing because you’ll get a more detailed survey, which could save you a lot of moola in the long-run.
Mortgage Broker fee… As in the fee you pay to the company who finds you the best mortgage deal and sets it up. The fee is usually charged as a percentage of the mortgage value, 0.35% on average which is £350 for every £100,000 borrowed. Some may offer a fixed-fee instead.
Legal fees… As is the solicitor you'll need to do all the legal paperwork (yawn). All in, this can cost between £1,000 - £,1800.
And finally, Stamp duty… As in the tax you pay to the government.
For properties up to £300,000 first time buyers pay no stamp duty. For properties up to £500,000, 5% is paid on the portion from £300,001 to £500,000.
For example, if you buy a £400,000 property you won’t pay tax on the first £300,000 but will pay 5% on the next £100,000. That is £5,000 stamp duty to pay (before the 2017 budget this would have cost you £10,000).
If buying a property over £500,000 there is no releif, you will pay exactly as before. You can find the rates here.
However you tie the knot – in a big ol' meringue dress in a fairtytale-style castle setting or a sleek A-line sheath at the registrar’s office – it all adds up. Case in point: The average cost for a wedding with all the trimmings is a whopping £30,000. But this bank-breaking stat is a bit OTT. Other surveys reveal that 1 in 4 couples spent less than £5,000 while 1 in 3 spent between £10,000 to £20,000.
We can’t tell you how much you need but we can tell you where most of the budget goes:
Engagement ring… We feel sorry for the fellas out there (kind of…uh, not really…er, let’s just pretend we do). It’s a lot of cash to pony up on your own. On average £3,000 is spent on a ring.
Wedding dress… The more obsessed you are with lace the more it’ll cost. On average £1,800 is spent on the dress, viel and shoes.
Wedding venue and reception… A roof, food and drink can add-up if you have a large family and a million friends. Average spends are £3,000 for the wedding venue, £4,000 for the reception venue and £4,000 for catering.
Honeymoon… You only have one chance to do this (unless you plan on re-marrying) so why not? On average couples spend £4,500.
The nappies, onesies, formula, new clothes for you when your old ones get covered in spitup… it’s all part and parcel of having your newest love of your life take over your life. And it all takes money too. But the biggest cost is when you or your partner have time out of work without income, and then, the cost of childcare when you or partner decide to go back to the grind.
How much maternity pay will I get?
If you’re employed, you'll receive 90% of your salary for the first six weeks through maternity pay (as long as you've worked continuously 41 to 15 weeks before your due date) after that you'll get £140 a week for 33 weeks.
These payments are called Statutory Maternity Pay and are paid by the government via your employer. BUT you may receive more if your employer chooses to top it up (hooray for that!). A reasonable employer would top-up so you get at least three months fully paid while a generous employer would top-up for six months or more. It often depends how long you’ve been working for the company too.
Once you know the score on your maternity pay, you can begin to work out how much you need to save for the hole that’s left. So say you want nine months out of work, you’ll get full pay for three months and the statutory of around £600 a month for six months (£3,600 total). Then, you know you need to cover six months of essentials minus the £3,600.
So what are the monthly essentials?
To find out how much you spend each month start using a spending app now. We recommend Spending Tracker. But remember, your spending habits will change when the baby arrives – you can forget indulging in fancy restaurants and count on enjoying daily tea and cake instead.
How much does child care cost?
When and if you do go back to work, you’ll need to consider the cost of childcare. In London you can pay between £50 - £100 a day for a nursery and outside London £30 - £70 a day. Childminders often cost slightly less and nannies or a nanny-share will cost more.
Are your goals realistic?
MOXI’s My Money tool will show you if your saving goals are realistic. You’ll need to know how much you can save each month and when you want to make your large purchases.