Long term saving

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ph4t

Registered User
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What are peoples opinions on saving for the obvious costs in life?

The 3 I can identify are house deposit, children's education and retirement. I'm in my late 20's so starting to think about these things.

I'm currently renting, saving towards buying a house in a few years and contributing 15% of my salary to a PRSA.

It seems to me these would be a lot easier to manage if you started early and got used to taking the pain before spending your earnings on others things like cars and holidays...
 
Everybody has different priorities in life but I think the 3 things you've mentioned sum up what most people would save for in life. Some people have no interest in buying a house and others never get married or have children so it varies. You seem to be taking a very sensible approach to your financial situation.
 
How do these projections look?

House Deposit
€50,000 in 4 years
That's about €1,000 a month.
Short term so put it in a savings account.

Childrens Education
€220,000* in 22 years
Don't start saving until house purchasedin 4 years. Thefore have 18 years to save this amount.
That's also about €1,000 a month.
This is longer term so could put into the stock market.

Pension
Align with tax relief.



*Assuming 2 kids both doing 4 year B.A. degrees plus 1 year Masters degrees. No clue how much education will cost in the future but it’s hardly going to be any cheaper. So assuming fees are introduced and it’s €10,000 a year for a B.A and €20,000 a year for Masters, that’s €120,000 for fees. Also assuming living expenses are €10,000 a year means €100,000 for living expenses. That’s a total of €220,000. Ouch!

Not taking account of inflation here but I’m also not assuming any return on the savings. Therefore the return on the savings and inflation should hopefully cancel each other out.
 
I wouldn't worry to much about the kids going to college at this stage - you may not have any, you may have 1 or 5 you can never tell. one might spend 6 yrs in college, another 1 or none. I'd look more at this when you start having them but not before.
Save for the house ok, as you want to have a secure place for yourself and also for the pension as you want to know you'll have an income after retirement but in all fairness we never know how life pans out so do enjoy the holidays too.
 
You can't turn back the clock and wish you saved more in your early 20s. In my opinion you are still quite young and if you save well, you can have a house etc. I would be more concerned if someone was 40, renting and only starting to save.

I started saving from my early 20s. I found it easier to save when I was younger and had not got used to lots of nights out, nice hols and cars. I would only go out once or twice a week, didnt really drink. I used youth hostels on hols, drove a small car. I lived at home til I was 28. I gave up a third of my money, and I found it easier to budget than if I was renting. I paid up every week, and I knew the rest was to save/spend. If I was renting it would be harder to save as you have to pay each bill separately at different times of the month.
 
The kid related expenses start WAY before college - speaking as someone forking out 2k a month in childcare....
 
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