Tips for 20-Somethings to Handle Finances

Wednesday, March 28th, 2018 Money

Young adults face a serious and harsh reality when they leave the comforts of living with ‘Mum and ‘Dad’. They are bombarded with expenses, debt and whatever else life throws at them.

With the average student loan now exceeding £21k (Which?), graduates are now leaving university somewhat disadvantaged to their predecessors. This isn’t likely to get any less affordable in the future either.


We have asked ourselves, what advice would we have given our younger-selves (if we could).


Create a bank buffer

A bank buffer is a set amount of money that you put aside in your bank account. Think of this amount as your new ‘zero’. Try not to exceed this value. Try to avoid overdrafts where possible, overdrafts are agreed amounts which allows you withdraw more money than you have. They are typically given to students ‘interest-free’ meaning there are little to no-charges for using them. Overdrafts can be useful, but if regularly used (assuming not overdrawn) could cost you around £100 a year. Additionally, getting out of an overdraft can be difficult to get out of as more money is required to be saved the following month to repay the downfall. Overdrafts can be avoided entirely with better money management / bank buffers.


Budget regularly

Budgeting is a necessity if you want to get on top of your finances. Doing this regularly and planning for the month ahead is a good way of letting you know how much disposable income you have / allowing you to save extra. Create a spreadsheet (Google Sheets is free and an excellent alternative to Microsoft Excel), and update this as often as you can. It doesn’t need to be extensive, but adding in all your major expenses including bills and debts can be a real eye-opener. There are free websites and apps that allow you to do this easily.


Save for retirement

Whilst retirement is one of the last things that someone first starting a job may think about, its an important aspect to consider. There are some key questions that you need to ask yourself. What age do you want to retire? How much do you want to live on when you retire? The answers are probably less affordable that you think if your just replying on state pensions. Please check out this useful pension calculator on the Money Advice Service’s website for more information.

The government has made it a requirement for employers to auto-enrol into. Employers contribute into this as well. You can log in to your NEST account online to see how much you have accumulated over time.

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