No savings at 42

Minime2.5 · 01-11-2020 2:57pm #1

I've been really down about my financial situation in recent months. At 42 I have absolutely nothing to my name . No savings no house and that's despite having a permanent stable well paying job . I'm a single man with no dependents so I have no excuses really . I've just been a complete and utter idiot with my money down through the years . I've done some travelling which would have had an expense but that's no excuse for having nothing. I've basically just treated my salary like my pocket money and live from pay cheque to pay cheque without a plan. I'm not sure why I've posted here . There is nothing I can do about the past . Just some words of advice and insight. I'll be 50 in 8 years time which terrifies me being in the same predicament

Passenger · 01-11-2020 3:26pm

I would suggest you try to live by the 50/30/20 rule as I find it a great way to manage finances. If you stick to it you'll be surprised just how quickly you will accumulate savings.

Also, the Revolut app is a great way to identify where exactly you're spending your money and what you're spending it on. Once you can see where your money is going you can start to change your spending habits.

Harika · 01-11-2020 3:39pm

While far behind the curve for savings, you still can expect to live 40 years and work 25, so loads of time to turn your financial situation around.
Seek financial advice, there are tools online available to analyse your spending, define your goals and work towards them.

LegacyUser · 01-11-2020 4:50pm

Can't up the 20/30/50 system enough. Like yourself OP I had zero savings only a couple of years ago and I'm the same age as you. I tired saving through several other methods and always ended up spending the small amounts I'd saved. I started doing the 20/30/50 system and within a year I had a health savings sum and I hadn't felt my life style had changed or found myself short of money. The key is you have to put the amount to save away straight away when you get paid. Set it up as a standing order so that money is out of your account and into a savings account. Have a chat to your bank on what savings account options they have etc but the important thing is you start saving that 20% amount every month.

I have my bills money and my personal money for the month then any money left from either of these pots at the end of the month go into a different savings account for trips or big item buys so I don't go trying to dip into my main savings. If I have no money left from those two pots at the end of the month I start looking at where I'm spending money and cutting waste.

SusanC10 · 01-11-2020 5:13pm

Start a Spending Diary. Doesn't need to be fancy. But track your spending for a month starting on Pay Day. You will see very quickly where your money is going and where to cut back. Especially now during the Pandemic.
Open a dedicated Savings Account. Don't leave all your money in your Current Account.

During the last Recession, I lost my job and my Husband had more than 1 pay cut. Result was our household income was reduced by more than 60% in a short period of time.
We had no choice but to cut expenditure. It really showed how much money we had been wasting.

As others have said you have time to turn this around if you start now.

Neames · 01-11-2020 6:15pm

Passenger wrote: »

I would suggest you try to live by the 50/30/20 rule as I find it a great way to manage finances. If you stick to it you'll be surprised just how quickly you will accumulate savings.

Also, the Revolut app is a great way to identify where exactly you're spending your money and what you're spending it on. Once you can see where your money is going you can start to change your spending habits.

I'll second the 50/30/20 approach. So simple and not at all extreme unlike the approach proposed by say the FIRE movement where extreme thrift seems to be adopted as a lifestyle.

I also use Revolut for all my discretionary spending. Also there's a very good feature called a Vault where you can add spare change to a saving fund.

There's not much interest being paid by banks so maybe look at buying 10 year state saving bonds so when you turn 52 you're going to get a decent return if you start saving now.

[Deleted User] · 01-11-2020 6:16pm

You haven't been an idiot with your money - you've been living your life. You've no one to answer to.

You've gotten this far in life, so it's not like you've no idea how to survive on what you're making. But you did come here for advice, so I'll tell you what i would do. My two priorities would be:
a) emergency fund; and
b) pension.

You haven't specified about the pension; hopefully you have something in place, but if not, now's the time.

As for the emergency fund, how much is up to you. Whatever's manageable. Create a separate deposit account with whichever bank you're with. Something flexible with little to no interest on it (you wont be making much interest anyway so you might as well go for a flexible account while you're figuring out what saving style suits you best).

Ultimately, saving isn't about 'having something to your name'. It's about being prepared for emergencies and being able to long-term afford big ticket items. So really, saving is only ever for the purpose of eventually spending. You're not going to take it with you. What you've spent up til now has enhanced your life, it wasn't wasted.

araic88 · 01-11-2020 6:32pm

You might surprise yourself with how much satisfaction you can get from budgeting a bit and getting on top of this.
It could be a lot worse, you haven't mentioned being in huge debt, which a lot of people are.
Set yourself some short term goals, and stick to them. They don't have to be huge, if they're realistic it'll be easier to reach them.
I also find it helps to "pay yourself first" and to put away savings first, or have it taken directly from source, before you have a chance to spend it. If you wait til the end of the month and save what's left.. there's rarely much left!

sparksfly · 01-11-2020 6:49pm

Stop worrying. You have your health and your job. You are still young. I have a simple system of managing my finances that looks after my committments, discretionary spending and savings.
I calculate my monthly net income and the amount I need for my committments at the start of the month. From the balance I decide how to split it between spending and savings. This all takes ten minutes. I stick as much as possible to the plan without letting it distract me too much in enjoying life. I also started a pension plan.
I have gone from zero savings (due mostly to kids college expenses) to approx 60k in ten years although I did have a mortgage which I have now repaid. I'm 58.
You have plenty of time and don't regret enjoying your life while you were young.

Tork · 01-11-2020 6:56pm

I'm another fan of the 50/30/20 rule. What you could try, as a way to curb your discretionary spending, is to get a Revolut or N26 card. Then transfer a realistic amount of money onto that every week. As much as possible, try to use that card for your online/offline shopping rather than your usual one. Having to think twice about what you're buying could help here.

Tork · 01-11-2020 7:24pm

The way things are going, none of us will be retiring at 65. OP, start small and try that 50, 30, 20 thing. There's no point in living on cornflakes and beans

wildwillow · 01-11-2020 7:48pm

The only worry I would have is lack of security in not having a house, but that's an Irish attitude which is changing. Are you renting, which some people see as dead money?

Do you expect to have dependents in the near future as in children and spouse? If not, there is no need to do anything drastic. Set aside a portion every pay day as advised and be more mindful of where you could cut back spending without much pain.

Savings are earning nothing at the moment so pension contributions which are tax efficient are a good idea.

PCeeeee · 01-11-2020 7:56pm

wildwillow wrote: »

The only worry I would have is lack of security in not having a house, but that's an Irish attitude which is changing. Are you renting, which some people see as dead money?

Do you expect to have dependents in the near future as in children and spouse? If not, there is no need to do anything drastic. Set aside a portion every pay day as advised and be more mindful of where you could cut back spending without much pain.

Savings are earning nothing at the moment so pension contributions which are tax efficient are a good idea.

I'm not sure how helpful this is to the OP but in defference to them I can't but question the idea that the desire for and indeed outcome of, home ownership is somehow a uniquely 'Irish' idea. Its a very common phenomenon. Certainly more common than not throughout the OCED.

The Mighty Quinn · 01-11-2020 7:57pm

OP, I am 34. I have no savings. I know the stress of it. I got paid the other day and it looks a nice number, except I keep a spreadsheet to see what my upcoming known monthly outgoings are, and it turns out I've actually got about 180eur to get me through November after mortgage, bills, car tax and insurance etc etc.

I've been quite depressed about this too, as each month it's a similar story. I must add that I've a baby and one on the way so I despair a little about how I'm going to cope when that kicks up a notch. Hoping some other parents might swoop in and tell me it gets easier.

So, I don't know what to add except you're not alone. Hopefully you're not in much debt, best of luck sorting yourself.

I'd echo the pension call. Even if you don't do any other saving, get a pension ball rolling, even for the tax benefit alone, even if your investment grows 0% you'll have more money than if you'd saved it. And your work life seems to able to sustain you into your 40s, plan for when your work life won't exist.

awsah · 01-11-2020 8:01pm

Passenger wrote: »

I would suggest you try to live by the 50/30/20 rule as I find it a great way to manage finances. If you stick to it you'll be surprised just how quickly you will accumulate savings.

Also, the Revolut app is a great way to identify where exactly you're spending your money and what you're spending it on. Once you can see where your money is going you can start to change your spending habits.

What is the 50/30/20 rule?

fleet · 01-11-2020 8:02pm

Where does pension fit into the 50 30 20?

If OP is on the marginal (high) rate it'll be easy to start one, but his contributions will need to be 20% of his gross. A12% hit because its tax free going in, between now and 68 in order to keep a similar lifestyle.

Tork · 01-11-2020 8:03pm

awsah wrote: »

What is the 50/30/20 rule?

You quoted a post which linked to an explanation to it

Tork · 01-11-2020 8:04pm

fleet wrote: »

Where does pension fit into the 50 30 20?

If OP is on the marginal (high) rate it'll be easy to start one, but his contributions will need to be 20% of his gross. A12% hit because its tax free going in, between now and 68 in order to keep a similar lifestyle.

Maybe it's time for the OP to speak to a financial advisor?

awsah · 01-11-2020 8:24pm

Tork wrote: »

You quoted a post which linked to an explanation to it

Thanks ðŸ˜Š

Mad_maxx · 01-11-2020 10:20pm

Minime2.5 wrote: »

I've been really down about my financial situation in recent months. At 42 I have absolutely nothing to my name . No savings no house and that's despite having a permanent stable well paying job . I'm a single man with no dependents so I have no excuses really . I've just been a complete and utter idiot with my money down through the years . I've done some travelling which would have had an expense but that's no excuse for having nothing. I've basically just treated my salary like my pocket money and live from pay cheque to pay cheque without a plan. I'm not sure why I've posted here . There is nothing I can do about the past . Just some words of advice and insight. I'll be 50 in 8 years time which terrifies me being in the same predicament

you have admitted your mistakes , now dont make them anymore , start saving

you will not only get good at it but get to like to and like yourself for doing it

pwurple · 01-11-2020 10:39pm

You haven't managed to save over the last 6 months of lockdown either, when travel is gone and there is no sport, pubs, entertainment etc?

I'm 42 too, and luckily as I can work from home, was able to make some changes and build savings the last few months. Sold the car. Food, travel and entertainment budget shrank to feck all. Banks are starting to get tetchy about the amount of savings building, so I can't be the only one finding lockdown to be quite low spend

What are you spending on, as there may be a vice here that needs overcoming too... Do you gamble, drink expensive drinks, have a friendly neighborhood prostitute, perhaps a drug habit?

rtron · 02-11-2020 1:38am

Try dividing your Pay (minus rent/bills etc) by the days until your next pay cheque. That will let you know how much money you have to spend per day. Then try and minimize how much you spend each day and save any excess.

JustAThought · 02-11-2020 1:42am

One of the few good things about the covid lockdown is that it has given me a chance to appreciate all the things I did and enjoyed while the workd was a different place. Don’t look on the negatives OP - try and find the good. You have a permanent job, low required overheads, no commitments and now the desire and the capacity to save. Start a new good habit - do budget and review where you spend. Its often the small repetitive habits where you can quickly make visible savings - Daily newspapers or magazines, take aways every other night, ten quid on the lotto every week - etc. Have a good look at what gou spend and see if you can reduce it down without making life miserable so you can start a habit of saving. i always tried to have my overheads and lifestyle covered, then a monthly DO NOT TOUCH savings for emergency/crisis, and then general monthly savings that I could dip into for a long holiday or car expenses or Christmas or a ski holiday or whatever.

I think honesty is the key - seeing exactly where your money goes presently and how you spend. Then from this you can strip bad habits or wasteful spend out. It should be a lot easier now most places are shut - unless you are only eating and drinking yours which many people do & is a real longterm waste IMO.

There was a thread on this here before with lots of links to budget apps and suggestions - might be worth a scroll. But the basics were the same -
identify outgoings, establish targets and limits,
implement plan!

Ironically at the moment I would not be starting a pension plan - pensions invest in company stocks and with the world in turmoil at the moment nobody knows what industries will thrive or survive - I know I lost a huge amount of my capital during the last major recession - the shares could never recover as the companies folded . At present I’d rather have cash in the bank or savings for a deposit for a house rather than a risky share portfolio in a volatile global recession. I’d save for a house for a few years first - and then prioritise a pension plan after we are somewhat through this covid shennanigans.

The Mighty Quinn · 02-11-2020 1:05pm

pwurple wrote: »

You haven't managed to save over the last 6 months of lockdown either, when travel is gone and there is no sport, pubs, entertainment etc?

Just to throw it out there, since lockdown, my company implmented a 20% pay cut across the board. So while I'm not receiving PUP payments and I'm working from home full time, my pay is down a considerable amount. It may not be as clear cut as "why haven't you saved more money when you've less to spend it on".

fits · 02-11-2020 1:16pm

Yes I wouldn't be starting a pension plan until you have the housing sorted first as the pension will tie up your money until retirement. Start saving for a deposit. If you put your mind to it you'll be surprised at how quickly it builds up. Once you have the housing you can look at the pension.

Ive never bothered with a money diary or anything like that - it may suit some people alright but not our household. We pay into savings first. We also avoid debts and own our cars outright. One can save a hell of a lot by avoiding interest if you possibly can (except on the house obviously).

Psychiatric Patrick · 02-11-2020 1:22pm

Minime2.5 wrote: »

I've been really down about my financial situation in recent months. At 42 I have absolutely nothing to my name . No savings no house and that's despite having a permanent stable well paying job . I'm a single man with no dependents so I have no excuses really . I've just been a complete and utter idiot with my money down through the years . I've done some travelling which would have had an expense but that's no excuse for having nothing. I've basically just treated my salary like my pocket money and live from pay cheque to pay cheque without a plan. I'm not sure why I've posted here . There is nothing I can do about the past . Just some words of advice and insight. I'll be 50 in 8 years time which terrifies me being in the same predicament

Did you enjoy those travels?

I’m pretty much in the same boat but without a stable well paying job.

You had fun and the experience of travels and like others say plenty of time to rectify the financial problem.

Don’t let it get you down.

sashafierce · 02-11-2020 1:41pm

How realistic is 50% covering all of that? Groceries , bills and rent for a month? Is no one else renting in dublin

Tork · 02-11-2020 1:42pm

JustAThought wrote: »

.. Its often the small repetitive habits where you can quickly make visible savings - Daily newspapers or magazines, takeaways every other night, ten quid on the lotto every week - etc. Have a good look at what you spend and see if you can reduce it down without making life miserable so you can start a habit of saving.

This is where I started to save quite a bit of money when I took a look at my finances. Most of us pay more attention to our large expenditure: car insurance, a big grocery shop, a fill of oil in the tank to heat the house etc. It's easy to miss how much money you can fritter away without noticing it. Coffees and snacks in the local shop or filling station, rolls from the deli counter, takeaways at night, impulse purchases either in shops or online. All of these add up and I would be surprised if you didn't make significant savings here if you took steps to curb these habits. Even something as simple as planning your meals and having something ready to go into the microwave after work could save you money.

I agree with the others about trying to save for a mortgage if you can. Depending on where you live and what your outgoing are, you can still put your head down, save a deposit and buy something. If you can manage to buy your own place and have it paid off before you retire, you won't have to worry about hefty rental bills afterwards.

PokeHerKing · 02-11-2020 1:47pm

pwurple wrote: »

You haven't managed to save over the last 6 months of lockdown either, when travel is gone and there is no sport, pubs, entertainment etc?

I'm 42 too, and luckily as I can work from home, was able to make some changes and build savings the last few months. Sold the car. Food, travel and entertainment budget shrank to feck all. Banks are starting to get tetchy about the amount of savings building, so I can't be the only one finding lockdown to be quite low spend

What are you spending on, as there may be a vice here that needs overcoming too... Do you gamble, drink expensive drinks, have a friendly neighborhood prostitute, perhaps a drug habit?

Regardless of wfh and lockdown most people will not be able or want to sell their car. We looked into taking my wife's off the road as the insurance is up for renewal at the end of November but its not really worth it, 3rd party is still required and its only a 100e in the difference and its a new car so tax is peanuts anyway.

Defo saved on petrol etc but our utilities bills feel beefier as we're here 24/7 now and she's constantly freezing!:)

Ellie2008 · 02-11-2020 3:18pm

PokeHerKing wrote: »

Regardless of wfh and lockdown most people will not be able or want to sell their car. We looked into taking my wife's off the road as the insurance is up for renewal at the end of November but its not really worth it, 3rd party is still required and its only a 100e in the difference and its a new car so tax is peanuts anyway.

Defo saved on petrol etc but our utilities bills feel beefier as we're here 24/7 now and she's constantly freezing!:)

Can she not put a jumper on ðŸ˜‰

OP a lot of good advice here, I intend to use some of itself myself!

Don’t waste time beating yourself up. It’s great you’ve come to this realisation now it’s time to turn it around. You lived your life & travelled, it’s great you had some good experiences.

My mother is very good with money, luckily for her she has plenty of it but she doesn’t waste a penny. She likes the finer things in life & treats herself now that she’s older without us to spend her money. Everything is cooked from scratch, I’d say her food waste is very low. She knows where all of the best deals, she loves her Dunnes €10 vouchers. I wish I was more like that, the amount of food I throw out is a joke.

Be sure you have a roof over your head when you retire & enough money to live off. I’d start working towards that goal.

Volthar · 02-11-2020 9:20pm

You are right, there is nothing you can do about the past but the future is in your hands. I do not know your financial situation and level of income but what I'd do is to start saving. It sounds cliche but it is as simple as that. At the age of 42, I recommend setting aside a minimum of 25% of your income. Say you save €800/month and you will have nearly €77k in 8 years plus interest or profit on investment. Try to cut any unnecessary expenses too, engage in a side hustle to boost your savings even more, and most of all stay disciplined in making savings. Discipline equals Freedom

Good luck.

No savings at 42

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