‘We’re engaged, but neither of us have any savings – how can we afford the wedding?’
Like many who have got engaged during an era of high inflation, bride-to-be Emily Stilwell is suddenly wondering how on earth she and her fiancé are going to pay for it all.
They’ve set a wedding date for three years’ time, in the hope they can save enough before 2026 comes around.
The 36-year-old bought a house with her partner back in November 2020. They were – on reflection – lucky to have got on the property ladder at this time, despite the stress of moving during a global pandemic.
They put down a £9,000 deposit on a £217,500 house in Southampton, and fixed an interest rate of 2.99pc until November 2025. The mortgage payments cost £735 a month between them.
Since then, the couple have spent all their savings on revamping the patio and paying down credit they took out when Ms Stilwell’s partner was a mature student.
Now, with a wedding on the horizon and plans to renovate the kitchen next, they need to start saving all over again.
The two jointly pay into a shared, easy-access current account with NatWest each month. Ms Stilwell, a university administrator, said she earns slightly more than her partner, who is a telecoms engineer.
After the mortgage, her £181 monthly car finance bill – 40pc of which she’s already paid off – and other outgoings, the couple leave what’s left of their salaries in their NatWest account as savings. The house is currently their only investment.
Ms Stilwell said: “Everything has gone up [in price]. We are having to cut back on our spending like everyone else. We don’t buy desserts anymore.
“We want to know where we can save and what a good savings account is. But we also want to be able to move our money around and not be penalised for spending it, as we’ll need to put down deposits for the wedding.”
Ms Stilwell has had the same bank account for several years, and is wary of moving her money elsewhere.
“We’re with NatWest because my parents worked there in the ‘70s and ‘80s. It was my bank as a kid.
“There are so many ‘This isn’t your normal bank’ adverts, but when it isn’t an old-fashioned name [like NatWest], it’s quite scary.”
Ms Stilwell is also wondering what to do with her university pensions. She began working in the higher education sector 12 years ago, and wants to know whether to keep her pensions in separate pots or consolidate them.
She had a pension with Southampton University, then moved to Warwick University, and back to Southampton. She transferred her pension from Southampton to Warwick, but since moving back to Southampton she is yet to take her old pension with her.
The pot holds 10 years’ worth of contributions, and currently sits with Scottish Widows.
Ms Stilwell said: “Pensions are another world to me. They’re so hard to know what to do with. Providers say they can’t advise you, so what are you supposed to do?
“It feels like I’ve lost control of my old pension now. I don’t even know how much is in it. It’d be good to, at the very least, find out where it is and how much is there.”
George Sweeney (DipFA), investing and pensions deputy editor at comparison site, Finder.com, says:
Although it feels frustrating being back to square one with savings, you’re not alone.
Our research showed half of people in the UK have less than £1,000 saved. However, you’ve cleared your immediate debts, managed to get on the property ladder and it sounds like your pension is on track, setting you up well for the coming years.
With your mortgage, higher rates could stick around. If the Bank Rate and home loans stay near 5pc, it could mean paying a few extra hundred pounds a month. If your fixed costs do go up, keep in mind this will impact how much you’re able to save towards the wedding and kitchen renovation.
For your savings, take an active approach instead of keeping whatever’s left. Ideally, both agree on a percentage of your salaries to save, and transfer into a separate account each payday. This keeps things fair if you both earn different amounts.
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For budgeting and saving, I’m a fan of the 50/30/20 rule. So, 50pc of your income is for living expenses and bills, the 30pc is for guilt-free spending on whatever you like, and 20pc each month is saved. If you can, increase the saving percentage while trimming living expenses and fun spending (where possible, and within reason).
Setting up a cash Isa for your saving goals allows you to pay in up to £20,000 each year and any interest is protected from being taxed.
An appealing option is the flexible Zopa Smart Isa. Reason being, unlike other Isas, you can spread your savings across easy-access and fixed-term pots. Currently, you can earn 5.08pc with the easy-access portion of this account and there’s no restrictions on the number of withdrawals, so you can dip in and out as you please.
The fixed-term Zopa Isa pots pay 5.32pc and 5.12pc for one and two years respectively. If you save up a lump sum for the wedding (or perhaps if someone gifts you money), you can lock that away at a decent rate.
For your joint account, I’d recommend Starling instead of NatWest. Starling pays 3.25pc interest on balances up to £5,000, whereas NatWest pays nothing. Although this won’t be where you primarily save, it’s good to earn something on idle cash. Other benefits include Starling’s “round-up” feature and the ability to pay bills and direct debits from separate “spaces”.
Consolidation is a good idea for your pensions, but it depends on the providers. Presumably, they’re both defined contributions, yet being from universities there may be unique benefits. Having everything under one roof makes tracking and managing your retirement pots easier.
But, it’s important to check for any costs, penalties or downsides – because these are specific to each pension plan. If you do consolidate, choose the option with the lowest fees, best investment choices and whichever gives you the most flexibility or perks.
James Corcoran, senior chartered financial planner at Lumin Wealth, says:
The first question when thinking about saving is whether to invest and take risk, or whether to utilise savings accounts that may not give as good a return, but guarantee your capital is safe.
In this case, Emily doesn’t have any savings and will need access to the funds in the short to medium term. She can’t really afford to take risks, so it is a case of maximising what she can through savings.
Thankfully at present, there are decent savings rates available. As at the time of writing, she could look at a regular saver – the best interest rate right now is 8pc variable with Nationwide, although she would need to be an existing customer, and the maximum she could pay in would be £200 per month.
Beyond that, looking at easy-access cash Isas or savings accounts you can get over 5pc – for instance, Metro Bank is currently offering 5.22pc on savings. The key thing, though, is to keep an eye on them, because once the rate term ends they will drop off and you’ll need to search for the best rate again.
In terms of the overall planning, there are a couple of options. For instance, if they were able to save £200 per month for the next five years then, based on a more reasonable growth figure of 3pc (assuming rates come back down again over the next few years), this would get them to £12,948.
Or, if they want to get married in three years and need £10,000, then we could work back from that point. So, if they saved £270 per month based on 3pc, again that would get them to £10,000.
On pensions, the first step would be for Emily to get hold of the missing information about the fund. She should be able to get that via her online account, or she can request an up-to-date statement from the pension providers.
The key things to ascertain here are the costs and charges of the plans, plus whether there are any particular benefits or restrictions in the plans. If they are relatively modern defined contribution plans, then they are unlikely to feature anything particularly unusual – such as guaranteed annuity rates – but it is worth checking.
She could also look to use the Government’s Pension Tracing Service to find any other pension plans she may have forgotten about. I would then compare the different pensions in terms of costs and charges (paying excessive fees can eat into overall returns), available funds, and whether they match her appetite for risk – ie. she may favour growth over defensive assets, or vice versa.
It may be possible to take on more risk, which means that her pension pot has greater potential for growth over the long term, if Emily can tolerate the natural ups and downs that are part of investing.
Typically, for ease of administration, cost efficiencies, and because you can sometimes qualify for fund size discounts it does make sense to consolidate, but it is worth checking your plans in detail, as you don’t want to transfer and lose out on any valuable benefits that your plans may contain.
