Money management is a skill that is necessary for everyone. But people often do not handle it properly, especially in the carefree early years of their lives.
To have a secure future and remain financially stable, you need to use your money wisely. Some of the things that you must do before turning 30 are as follows:
1. Start a pension plan
Many people in their early 20s are unaware of their private pensions.
Similarly, you may have been automatically enrolled in a pension by your employer. But unless you make adjustments, you’re probably contributing just 5% of your salary to the pension, with your company 3%.
The good thing about saving for a pension is that it’s not just you who contributes; your employer and the government also contribute. The more you put in, the more they put in, and it’s pointless to refuse free money.
You may think you don’t have enough money to invest, but even a modest gain is better than nothing, and it may quickly add up. Some businesses even provide larger contributions to employees who have worked for the company for a long period.
The amount you’ll need to save for a comfortable retirement is determined by various factors, including how long you want to work, how your earning capacity varies over time, and the quality of living you want in retirement.
While it may seem daunting, you need not worry. A little is better than nothing – even if it’s just another percentage point – and a bit more is even better. So do what you can, and you will be fine.
Check our guide : on How to minimise your pensions tax bill?
2. Educate yourself on investment
Investing, like pensions, appears to be too serious for many people in their twenties.
But as you approach your 30s, it is time to embrace investing. Being younger allows you to take greater chances with any extra cash – and at a time when savings rates are so low, stocks and shares or a simple investing platform could be worth looking into.
Starting small and seeing how you get on is a great start. There’s a risk you’ll lose money, but do your homework and study up on it; it’s not as difficult as you would imagine.
If you don’t know where to start, you can hire an accountant or consult an IFA who can advise you on investing your money in the best possible manner, considering your financial position.
3. Purchase a house
Many Britons are hesitant to purchase a home. It’s deeply ingrained in their brain.
However, it’s difficult to dispute when mortgage payments are frequently cheaper than rent — it makes you want to own rather than rent a tangible item. Many people in their twenties are likely to rent privately or live with family. The deposit is frequently the most challenging barrier to overcome.
But with mortgage rates at record lows, getting on the housing ladder may be a worthwhile endeavour, especially given the scarcity of available houses relative to demand. Mortgage rates remain low, making two-year and five-year fixed mortgages enticing to first-time buyers.
If you invest in a house, make sure that you don’t do so in a hurry. If your monthly expenditures would be lower if you rented, consider if now is the ideal moment to purchase or whether you’d be better off putting your funds aside until you had a larger deposit.
4. Make a budget
You tend to overspend your money when you don’t have a budget. Budgeting helps you to keep track of the following:
- What your income sources are
- How much money do you have flowing in
- What amount should you save regularly
- How much money you have left to spend
You can make daily, weekly, monthly or even yearly budgets. Developing a habit of budgeting while you are in your 20s only act as your saviour in your 30s.
5. Get into the habit of saving
It’s no secret that provider savings rates are at an all-time low. Many people will be discouraged from saving as a result of this.
However, saving money is an essential aspect of being in your twenties. Saving is just getting into the habit of walking before you start to run.
Saving even £10 every week may seem like a bit of amount. But through these small savings, you would end up with over £500 in a year.
This may then be utilised as a foundation to continue developing – like a rolling snowball that grows into something much larger as you approach your mid-thirties.
6. Talk about your pay with your boss
Have you gotten a raise in recent years? If not, then you should now.
Be courteous, and don’t be ashamed. Make a list of reasons you believe you deserve a raise – the backbone should be loyalty, talents you provide, and where you want to go.
Alternatively, given your likely experience, it may be time to cast your net broader and see what alternative possibilities are open to you.
Furthermore, if you are given another position, you will have significant bargaining leverage with your boss, causing him to reconsider denying a salary raise. However, only go that route if you are serious about quitting your current work.