Many young people are facing financial challenges that are out of their control, including soaring house prices, student debt and a highly competitive job market. In our latest blog, we highlight the top financial tips to ensure you have a good grasp on your finances early on in life.
1. Save money by budgeting
Setting up and sticking to a budget can help you keep track of your expenses, and you’ll be less likely to exhaust your funds.
Creating a budget is as simple as adding up your income and subtracting your expenses. Remember to include sources of income outside of your employment, such as interest, student loans and any additional financial support from family. Your expenses should include basic things like rent, food, and travel, as well as debt and entertainment expenses.
If you have any money left over, you could save up for any future goals or contribute to your pension.
Then again, your expenses may be higher than your income. If so, it may be a good idea to revise your finances and think of ways to add to your income or reduce spending.
2. Set clear objectives for your spending
After creating a budget, get into the habit of setting clear goals for any leftover funds. You may want to save up for a car or a house, or set aside some money for something smaller, like a laptop. The idea is to plan for any extra expenses ahead of time, that way you are less likely to encounter any unpleasant surprises.
3. Start an emergency fund
No matter how much money you spend in a month, it’s always a good idea to put some money aside for a rainy day. Having this ‘emergency fund’ can give you peace of mind during emergencies and it may even help you sleep better at night!
Even if you start off with a small amount every month, getting into the habit of saving that money can alleviate a lot of financial stress in the future.
4. Save into your pension plan early
Keep in mind the benefits of contributing to your pension plan from a young age. Your employer will also be paying into your pension savings – some may even offer schemes where they will match your contributions. These pension payments will benefit from tax relief which means saving more will cost even less.
5. Understand your taxes
This may not be the most exciting habit to get into, but it can really pay off in the end. When you are offered a starting salary, you should calculate how much tax you will be obligated to pay and understand if you will have enough left over to meet your financial commitments and future goals. The Government website offers a great tool to help you with this, click here.
6. Understand the language
Financial terminology can be difficult to understand – is very easy for different terms to be confused. If you are unsure of the meaning, it’s always best to double check or ask advice on anything you may need a bit of help understanding. The more you understand your finances, the easier it will be to navigate your financial future.
To summarise, planning, and therefore budgeting, is an excellent tool to help you plan for your financial future. Although planning isn’t going to stop unpleasant surprises from arising, it will help you be better prepared when facing them.
Get in touch
If you would like to discuss how you can manage your money better and achieve your long-term goals, get in touch with our financial planning team (01254 firstname.lastname@example.org) who will happily arrange a meeting.