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RESPONSE: “Getting financially prepared for the future” – Kirsty D

Hi Phillippina, 

I was wondering if you could help me. I’m a 23-year-old graduate with a new job and I know absolutely nothing about finances and I’m terrible at saving money. But I want to have a secure future, what can I do or what should I start putting in place now to set me up for the future? 

Thank you,

Kirsty D


Let me start by congratulating you on your graduation and new job! Now that you are employed and have a regular income you may want to think of your financial goals and ambitions. Is becoming a homeowner a financial goal? If so, attaining a mortgage for a dream home you will one day own, requires conscious effort and planning. It’s a wise idea to start monitoring your savings and expenditures from now. A good way to monitor both savings and expenditure is via online banking. I would definitely advise that you set up an account with alerts to your phone where you can see your spending habits in real time. 

You mentioned being terrible at saving money, to avoid spending before you save why not automate your account. You can set up a standing order to transfer funds into an online savings account as soon as you are paid. This way you won’t be hugely affected or put off by saving for your future goal. Having an online app means you can also monitor the progress of your savings and perhaps set personal milestones. Set SMART financial goals, where do you see yourself in five- or ten-years’ time? Or by the time you are 30? What do you want to achieve by a certain time, more than likely it will incur cost, the aim should be to start planning for the future now.

Creating a monthly budget is essentially creating a blueprint for yourself, checking in frequently and being the boss over your finances. You can create personal sheets on excel or purchase budget sheets online. 

Savings accounts are typically free so consult your banking provider for options. Unfortunately, interest rates have been at an all time low due to the Bank of England base rate and therefore returns on savings accounts are not as competitive as they once were. An Individual Savings Account (ISA) is worth taking advantage of, it’s free to obtain and is tax efficient because you won’t pay tax on interest or returns you make. You can pay into a cash ISA or Investment (stocks and shares) ISA yearly. Unlike, other savings account there is a limit to the amount of money you can save in your ISA, this is called the ISA allowance. The ISA allowance is renewed each year with only one cash and investment ISA account allowed per person, per year.  You can consider using your ISA allowance for your long-term savings and continuing any excess into your online web saving accounts.

Although you are in employment now, have you thought about what life would look like if you were suddenly unemployed and how that would affect your lifestyle? In a world of uncertainty, it’s a good idea to have an emergency fund organised to support unexpected expenses, supposing your car was to breakdown or you couldn’t pay your rent or afford that fortnightly shop in Sainsbury’s how would you get by? This is where the emergency savings fund is helpful. Sometimes life happens and you may be off work due to serious illness or injury, it is also useful to check in with your workplace benefits to confirm if any insurances are in place and what the terms are if any. Alternatively, you can secure your future privately by seeking cover for Income Protection or Life Insurance especially if you have dependents. Income Protection pays out a monthly income for either two years minimum or for the full duration of time spent off work, depending on the type of cover you have in place. You won’t have to worry about bills and rent and can focus on getting better. This is also a good time to familiarise yourself with your workplace pension. Most employers provide a pension plan and its in your best interest to know where it is being paid and how much of your salary is being deducted. You may want to increase the contributions to your pension fund and reviewing your income and expenditure will provide clarity on whether it’s feasible to do now or further down the line. So, to recap it’s advisable to have banking alerts set up to your phone in real-time, create a monthly budget, utilise an ISA allowance, set financial goals, set aside an emergency fund, consider insurance and lastly monitor your credit score. It’s your financial credibility.

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