Not exactly as expected... this money stuff is hard work
After all the distraction of hopefully successful Degrees, Apprenticeships, finding work, finding accommodation by joining the ranks of Generation Rent, we hope things are settling down for you and the focus on the direction of your life is becoming clear. Even the most determined find their early 20s a time of significant change, with outside influences placing you where you may not have expected, and this can slow progress. Money planning might be hard work, even boring, but it needn’t be. And apologies straight away because those in financial services love jargon...so much of it! So we’ve added a ‘Jargon buster’ section in our SaidSo service to help box this off.
With employment secured or a new business started and running, life pressures may just be off for a few years before you start to think about coupling up, children, mortgages and all the usual life paraphernalia that most embrace. Yuk! you might think now, but give it a few years!
Hopefully there’s the chance to have a bit of fun at this time of life before the big responsibilities really kick in. You might even have a bit of cash to spare for socialising and holidays. It’s possibly the calm before the storm, though, so enjoy it while you can…and think about putting a bit away each month to fund your future commitments.
Keep saving – your older self will thank you
You may have built up some savings already, but if you haven’t, it’s really worth getting it going. The SaidSo team knows that if you haven’t got much spare cash, putting some money aside each month can put a bit of pressure on your finances along with trying to pay the rent and other costs. The maximum allowance is £20,000 in the current tax year (2018/2019) and it is also worth looking at the Help to Buy ISA and the Lifetime ISA, particularly if you’re starting to think about saving for a first home. You can get more information here.
If you can, though, saving now will help you build up that all-important ‘rainy day’ fund for emergencies and some additional funds for the future – maybe for a house deposit or a car upgrade.
If you’ve built up some cash savings that you know you won’t need to access in the short to medium term (5-ish years), you should think about where these should be invested – are they working hard enough for you where they are? If you’re thinking about stock market investments, have you considered your attitude to investment risk? It’s an interesting process and very important to ensure that your money is invested appropriately.
Our SaidSo.co.uk online financial planning service details investment risk within its programme. Younger generations are far more informed, which is great, and ethical issues might be a concern as to who you put your money with and how it’s used to give you a return. Have a think about this important topic when planning your personal finance.
Check your credit rating
Credit seems so easily available when you’re young, what with store cards, credit cards, loans and the like. Keeping these paid and up to date is vital. If not, you could find that your credit rating is affected, and this will have the knock-on effect of making future borrowing difficult. It could even prevent you from getting mortgage finance when you want it. Check your credit rating through one of the credit rating agencies – it shouldn’t cost much and it will give you a good idea of where you stand in the eyes of future lenders. If you’re having trouble paying off your debts, have you been to the bank of Mum and Dad for help, if this is an option? Plus there’s advice on debt management available from Citizen’s Advice – check out their website.
Start to understand mortgage types and terms
It’s probably not long before you will want to buy your first home – it’s a natural progression for many people once they’ve got secure employment and maybe a partner who’s looking to settle down. Buying a house will invariably mean getting mortgage finance and understanding the terms and options for these loans could be very useful in advance of signing on the dotted line.
A great website to help with this, including the all-important affordability, is the Money Advice Service.
They also give a great guide to buying, moving and budgeting costs here.
What benefits does your employer offer?
You’re in full time employment and your employer has probably signed you in to their auto-enrolment pension plan. Stay in the plan if your budget can stretch to it – as you probably know by now, both your employer and the Government are contributing into your plan as well and this will stop if you leave the scheme. It’s ‘free money’ in effect and great to start your pension planning early.
Bear in mind that the amount you will need to contribute into an auto-enrolment pension scheme increases in 2018 and 2019 and make sure that you have budgeted for this in advance.
It’s also good to check whether your employer offers any protection, such as death in service or ill health cover. This is particularly important if you already have dependants and mortgage providers will ask you about life cover too when you get to that stage.
If your employer doesn’t offer these kinds of benefits, the cost of life cover for non-smokers is cheap at your age, so it’s worth a review to see if you need to put something in place.
Great guidance, but what about advice for me?
We hope you have been inspired to take action for your financial planning from the notes above. This SaidSo free guide is for guidance only. SaidSo can help with your own individual independent financial advice. But what is the real value of advice to you and how can it help meet your objectives?
Why should SaidSo.co.uk online financial advice be important to you?
No one likes to be sold to, but most like to be advised. Being wise after an event is usually pointless and some would argue an exact science, detailing what you should have done had you known the outcome. So what is advice – and, in this context, financial advice?
Definition of advice: guidance or recommendations offered with regard to prudent action.
For those that want to know, the definition of selling is: persuade someone of the merits of. I suppose you could argue that we are selling you the merits of the real value of SaidSo.co.uk online financial advice...and you would be right...even if we have SaidSo!
So, what does advice mean in the context of financial advice? And most importantly what does it mean to you?
It could be:
- Saving money.
- Reaching and fulfilling a target or ambition in the future.
- Having enough money to survive.
- Saving tax.
- Managing expectations as to what your future world could look like.
- Being assured you know where you are with your wealth and cash.
- Protecting your loved ones if you are present or not.
- Having enough money to have some fun!
- Having more money than you would have had if you had been left to your own actions.
- Education to know what to do and in what order.
- Not dying at your desk because you had to work to the bitter end to make ends meet.
- Getting someone who knows what they’re doing to make it happen for you.
...and of course a combination of some or all of the above.
If you value any of the points above, then, in reality, you value financial advice. And we are not talking about buying products, although that might be part of your eventual solution, we’re talking about you planning to run your life the way you want it.
It’s almost a statement of your personal freedom. And what price would you put on that? If you think that financial advice is not for you, even at the low, transparent and fixed costs that SaidSo.co.uk charges...think about your future personal freedom...and think again.
‘Show me the advice value!’ I hear you shout! Check out how SaidSo can help below...
Our other planning services
You may wish to sort your money stuff out through your own arrangements, or, we can help through SaidSo's online financial planning service.
How SaidSo works
Check out what a SaidSo individual financial planning report might look like, or find out more about how the SaidSo service works.Example report Learn more