No Savings at 42

LegacyUser

Its only dawned me recently and I have started to panic about it but I turned 42 recently and have been absolutely terrible with money. I have lived from ay cheque to pay cheque and have no savings despite earning a good wage . I really need to cop on to myself or ill have nothing when I'm old. I am single and don't have any dependants , I also don't have a mortgage . I have thought about buying a house but I'm unsure. I'm sick of my current job and don't want to be tied to where I am . I would appreciate some advice on how to become good with money

Most people live within what they perceive their means to be. Some people are used to living in debt and will continually use debt to finance their lifestyle, and would never worry about it. Other people get their pay check each month and treat it like a target to spend before the next. Other people perceive their disposable income as minimal and therefore spend less.

As such, standing orders can be your best friend sometimes. If you make sure your rent/mortgage, savings, and any other regular spending comes out of your account after your payroll comes in, it will help you reassess what you see as your disposable income. When there's less cash in your account, you'll probably find it easier to manage discretionary spending.

Every so often I download my bank transactions as an excel file, and go through my spending (most online banking platforms allow you to do this). Then I make a budget that's based around what my spending shows, and I assess how realistic it is and whether or not I'm managing my money the way I hope to. I use that budget to make sure I'm successfully saving the amount that I want to, and to pinpoint any overall changes I need to make in my spending habits. I don't actually use the budget as an ongoing measurement tool, I'd find that too much work and unless you're seriously strapped for cash I don't think it's helpful to micromanage yourself.

You don't mention a pension - have you anything set up? Your job might have automatically started one for you, but it's important to understand it and get up to speed on how it works.

Buying a house is a big commitment - I don't think it would be wise to go through it unless you know it's something you want.

Pablo_Flox

It doesn't sound like you have any debt, so the first thing is to acknowledge that the situation is not catastrophic,you are doing better than a lot of people. You are still young, you have time to build up savings. Do you have a pension? First thing to do is to pay into your pension up to the max that your company will match. With tax incentives and the company match is the best return you will get on any savings.

Next set up a savings account, and arrange a standing order to fund this account on the day that you get paid. Start small and see how you get on. Then when you get comfortable with it after a few months increase it a little. Keep going until you are happy that you are saving a good proportion of your net salary.

Also take a look at where your money is going and do your best to cut out non essential costs. Do you need a sky subscription when you spend 90% of the time watching RTE and BBC? Do you need a gym membership if you only go occasionally and just run on the treadmill. Do you need to order food / eat out 5 nights a week? Have a good luck and see where you can trim down. Then put all that savings into the savings account.

After that give it time. Keep it up and the money will build up. Before you know it your balance will start to grow.

Finally - resist the urge to blow it all once you have it saved. Just because you have €10k saved doesn't mean you have to buy a new car. Once its saved enjoy it, but don't piss it away for no reason.

Good luck

HildaOgdenx

Sounds like you are thinking about, and evaluating life in general, as many of us are, in the current climate. But it sounds like you are in a good position, with no debt and a regular income.

There's a good Money Makeover section on askaboutmoney.com which you might find helpful in getting started on budgeting and saving.

baby and crumble

I have found using revolut as a way to budget to be very helpful. My pay comes in to my normal BOI account every month, my mortgage and bills money gets transferred to the joint household account and my loan payment for college fees and pension and credit union savings comes out then too. Once it all comes out on the day I get paid I don't even think about it.

I put an amount into my revolut card which I can spend on whatever but once that's gone it's gone. I've found it much easier to track my spending on revolut as transactions show up immediately rather than a few days later or doubled as happens on my BOI statement until it settles. That was annoying me because I could never be confident in how much I had at my disposal.

I also save using the vaults feature in Revolut. Obviously I'm not saving thousands in there but I've used revolut for nearly 2 years now and I love it. It has helped me get better habits for saving and budgetting.

The Black Oil

My pay goes into my current account, then on a set date each month a slice goes into a savings account (AIB). It's quite handy and was easy to set this up. I can monitor it online too.

Tommybojangles

The Black Oil wrote: »

My pay goes into my current account, then on a set date each month a slice goes into a savings account (AIB). It's quite handy and was easy to set this up. I can monitor it online too.

I had a similar chat with myself about a year ago, like someone said above Revolut is a great crutch. The AIB online saver is great as well if you want to test the water, set up a monthly direct debit and you can transfer it back in a second if you need it. The first few months I was constantly emptying the savings account towards the end of the month but you eventually learn to budget a bit better, mainly because it pains you to take money out of the savings, so you think a bit more about what you spend.

ztoical

Had a similar thought several years ago OP and I started doing the very simple 50/30/20 rule - 20% savings, 30% personal, 50% bills. I started transferring 20% of my salary the moment I got paid into a savings account and made sure not to dip into it. I had a few times where I was tempted but I stuck to it and very quickly had a nice chunk of savings.

It made me really look at my out going expenses and cut things out or change providers for some things to keep it below 50% each month. The 30% for personal stuff ended up being more then I needed and I could spend it on what ever without feeling guilty.

I did break it up once in a while were I'd save 10% to savings account and 10% towards something else for a couple of months but the key is to get into the habit of saving and keeping those savings, not saving for 6 months then blowing it all on a car or something.

TheW1zard

My advice to you is to start a pension asap.

Having no mortgage means you have less debt than anyone with one.

To save money start by not buying crap, and have a weekly shopping list.

If youve no real debt youre halfway there ;-)

Best of luck to you!

Aseth

Financial Future worried wrote: »

Its only dawned me recently and I have started to panic about it but I turned 42 recently and have been absolutely terrible with money.

Hi OP. I can totally relate to this being the exact same age and being in your shoes until recently.
First of all it is really good you have realized that. I used to spend my money without realizing this - coffee to go few times a week, take away whenever I felt like it, shopping for clothes I didn't really need and I could sadly go on for a while.
Go through your spendings and notice where do the money goes. Pay necessities first. Do you really need to buy X or is it an impulse buy to make you feel better? Maybe buy cheaper versions of X instead of the most expensive item. Try saving, maybe 50 or 100 euro (whatever your means are really) per week. See if it's possible.
I don't really have a good advice as this is something my new bf pointed out and taught me how to save. I improved a lot and now have a bit of savings thanks to him. Best of luck, OP.

screamer

If you want to save money but haven’t managed it yet, you need to look at what you spend your money on, decide what’s important get rid of the not so important, set some budgets for the necessities and some for a few nice things and then save the rest. Setup another account you can put your savings into and move it every month/ week. It becomes a habit and you’ll see the money building. A house is a big expense but it’s also peace of mind to own the roof over your head when you’re older so give that some thought, it may be something you want to do, it may not. Good luck, saving is a habit.

Airyfairy12

So start saving, you have 25 years before retirement, that's allot of time to save a decent amount of money.

radiotrickster

I’m gonna second the posters here.

The 50/30/20 method is a great way to start off. You just need to be persistent with it. Once you’re paid, send 20% straight to your savings and don’t touch it. Mine goes to the Credit Union so I don’t even see it or get tempted to touch it.

Revolut has changed the way I save and spend.

I get paid into my BOI. At the start of every month, I transfer €450 to Revolut for spending and that does me for everything – shopping, takeaways, travel to work, etc. If I need more, I transfer money from my BOI in but other than that, I don’t touch my BOI account and anything left over by the next payday is sent straight to my savings as well.

I tend to have two or three saving goals outside of my rainy day fund too, so I have vaults with goals and target dates set up. It gives you a bit of motivation to save when you see how close you are to having enough for a new game, car, holiday, etc.

Revolut is definitely worth a look into. It’ll show you how quickly you spend in real-time and help keep you on track for the month.

Xterminator

Lots of good ideas here.

But a pension is by far the most efficient vehicle to save, because its tax efficient. Pension contributions are deducted before tax is calculated.
If your employer has a pension scheme join that - and investigate about employer contributions. Often they will match your contribution.

Assuming employer contributions & you are on the higher rate of tax this roughly means you surrender 55c (net income) and save €2. you really cannot beat this and that is why it should your first choice.

Tork

There's some really good advice here. Especially that 50/30/20 rule which I hadn't heard of before. You're going to have to learn how to say "No" to yourself and to ask if you really need X or Y. And if so, does it have to be now or can it wait? It's hard to break the habit of impulse buying, especially if shopping makes you feel happier.

Try setting yourself a self-imposed budget for the week. The easiest way to do this is to get a Revolut or N26 card and load your week's money onto it. Then try to spend everything entirely from that, without having to use your normal bank card.

Johnny_BravoIII

50/30/20 is great, plus multiple bank accounts.

BOI current a/c - salary paid into this account. Top up Revolut from here €150 per week.
Rent & Bills a/c - x amount auto transfers from the current a/c for rent bills etc. All bills leave this account automatically
Long-Term Savings a/c - x amount auto- transfers to credit union (hard to access )
Save-to-Spend a/c - €50 per week put aside for accessible savings, holidays, new bike,
..etc I'm usually saving to buy some big ticket item. Tried the Vaults in Revolut fot this but doesnt work as I just spend!

The idea is to organise your money into 'pots' and manage the 'pots' of money.
Otherwise, you end up focusing on money everytime you walk into a shop. It's easier to know you are hitting your savings targets and can spend whatever is on the Revolut card.

I was terrible with money until I was mid 30's. Using the above I've sorted myself out moneywise. Also, it takes months/years to change habits. You set things up, tweak, adjust etc. This takes time.

Lastly, yes there is more bank fees. A €100 per year across a number of bank accounts with limited transactions is money well spent to sort ones personal finances IMO

Sheep Shagger

All good ideas here.

Am in a slightly different situation as have mortgage and kids etc but broadly follow the ideas posted here already.

Used to be one for gadgets and still am a bit, this can apply to clothes or a gadget. Apply the 30 day rule.

If you want to buy a new shirt or a gadget or whatever, any non essential item that say costs €30 or more (set your own limit).

DON'T

Wait when you see it and if you still want it after the 30 days then go for it. You'll be suprised at what you realise you do not really want.

Learned this about 6 years ago, has saved me a small fortune on crap!

Re bank fees, the BOI savings accounts you can open via banking 365 don't seem to attract fees. There's also the vaults or wallets on Revolut and N26.

ztoical

Johnny_BravoIII wrote: »

it takes months/years to change habits. You set things up, tweak, adjust etc. This takes time.

This is something you need to take away from this OP. To create habits takes time so make sure not to get discouraged at the start. I found the key is to set up those automatic transfers so the money goes straight to savings the moment you get paid. when I first tired saving I decided I would wait till the end of the month to transfer thinking I would transfer what ever was left from my last pay day and it would end up being more than 20% - it never was, I'd always end spending way more and was lucky if I saved anything.

Be organized, move the money straight away and if there is extra leftover at the end of the month great, stick it in as well but you have to get into the habit of doing it straight away when you get paid.

dory

Johnny_BravoIII wrote: »

Lastly, yes there is more bank fees. A €100 per year across a number of bank accounts with limited transactions is money well spent to sort ones personal finances IMO

I made an effort a few years ago to avoid all fees and it's worked so far. I use EBS as my current account and main savings account. There's no app, it's all very simple. But I transfer €150 a week to Revolut and have all the benefits of a great app with that.

I'm the same as most here - I get paid into EBS. My savings and all bills come out of that. And then my Revolut gets €150 for fun and groceries. I have three vaults on there too for short term savings.

Redser87

I heard a really good tip from a money expert recently - give your savings account an emotive name, so that if you're tempted to dip into it you know you're taking money away from something that's important to you.

Teach30

Redser87 wrote: »

I heard a really good tip from a money expert recently - give your savings account an emotive name, so that if you're tempted to dip into it you know you're taking money away from something that's important to you.

I tried this and It doesn’t work for me! I find the only way for me to save is to have it transferred straight away into savings. I will spend it if it’s in my current a/c.
The wait 30 days thing doesn’t work for me either as more than likely for clothes or shoes it’ll be sold out so I just buy it to get it out of my system.
It’s definitely a habit to get into. Some people love seeing the savings build up and up - unfortunately not everyone is like that - me included.

Wish I was better but it does take time to get into good habits.

Curlysue76

Teach30 wrote: »

I tried this and It doesn’t work for me! I find the only way for me to save is to have it transferred straight away into savings. I will spend it if it’s in my current a/c.
The wait 30 days thing doesn’t work for me either as more than likely for clothes or shoes it’ll be sold out so I just buy it to get it out of my system.
It’s definitely a habit to get into. Some people love seeing the savings build up and up - unfortunately not everyone is like that - me included.

Wish I was better but it does take time to get into good habits.

Re the clothes and shoes, keep the receipt and don’t use them for 2-3 weeks, then decide if you really want them or return them for full refund. Very few places don’t give refund, even though they’re not obliged to.

Teach30

Curlysue76 wrote: »

Re the clothes and shoes, keep the receipt and don’t use them for 2-3 weeks, then decide if you really want them or return them for full refund. Very few places don’t give refund, even though they’re not obliged to.

Good idea thanks. Usually I wear things straight away for work but I’ll give this a go. I find staying away from the likes of Zara useful too as the clothing is very much on a trend basis. As I’ve gotten older I tend to spend more for better quality fabrics, shoes etc.

Online shopping is the worst for wasting money as posting items back can be costly. Often I’ll forget to send things back too. So avoid if trying to save.

JustAThought

i have my emergency money savings go into a separate account that dosn’t have online banking nor an ATM card so if I have an emergency I have to queue and go into the bank with ID to withdraw from it -which I rarely do.

You’d be surprised how much unnecessary cashless transctions you spend money or use a credit card on. Decide to
use the credit
for for X or Y treats only or essentials
like household /car bills. I decide a spending budget for weekly everyday incidentals and use cash for this - you really see it go if it is cash and are less likely to blow money if you are parting with fifties from a half empty wallet rather than tapping from an invisible bank account. e150-e200 a week for petrol, pints, take aways,
lunches and bits & pieces should keep
you happy after yiur allowance for rent and bills and savings is accounted for.

Get a government job - you won’t ever have to worry about paying your way or becoming unemployed or having to save for a pension other than a possible paltry 10 or 12% - the working poor and taxpayer will pick up the tab for you for the rest of your life regardless of your work
ethic or performance. This is the best money saving thing you can do and secures your future even if you take a pay cut. Index linked defined benefit pensions paid out until you die are impossible to ever save for now or match unless you win very very big on the lotto.

Are you on a really low salary (ie close to minimum wage) or do you get into rounds in pubs - if either address the root cause - both are rocky roads to financial ruin!

Don’t worry about getting a mortgage - if you are 42 with a good job, no dependents and zero savings the banks will never loan to you so you will never have to worry about it. If you want to crack the 10% - say 15% deposit within the next 3 years while you are still considered young enough to be worth loaning a lode of money to set a monthly deposit saving target - say a thousand euro - and stick yo it. Within 2 1/2 years of discipline you will be in a position to approach a bank - if not and you don’t inherit ir win on a horse you will be too old to ever get a mortgage and be renting in ever increasing rents for the rest of your
life. If thats not incentive I don’t know what is. A twenty year mortgage is the hest you could hope for - and achievable - but inly if you start now on in the next month or two - otherwise you are right to panic - it is already almost too late for you for a (city) mortgage of 250-300k. Unless you change radically and soon.

bilbot79

The main thing is to put away a bit the minute you get paid

Aside from that I think a good exercise to start with is to go a single day without spending one red cent. You'll need to prepare your lunch, maybe walk or cycle to work etc. It will show you what can be done to be a bit more frugal.

Sometimes I front load the frugality to the first 2 weeks of my paycheck and then enjoy stuff in the latter half