Finance advice for a 22 year old
Discussion
Alright, i've been lurking around for a fair while now and in particular this finance section. Basically I'm just looking for a bit of advice on what to do with my money... I've never been the best at saving and now at the fresh young age of 22 and while still living at home, have decided it's time to start... So, here goes...
Current wage: £42.5k(+overtime) before tax and national insurance.
Monthly bills (car+running costs, keep, phone, gym, insurance and subscriptions):£691
Usually spend around £400 per month socially with friends, girlfriend etc. and dont really spend money on clothes/shoes/gadgets.
I already pay into a pension scheme (£60p/m) and buy company shares(£50p/m) that are in a 3 year scheme.
Take home roughly £2500 as a basic wage and can make that up to £2900-£3000 per month with some overtime.
Looking for advice/ideas on what to do with my remaining cash. I know the usual 'stick money away in a bank account somewhere' advice but am looking to see if the financially savvy on here can educate me briefly in better options!
Cheers,
M94
Current wage: £42.5k(+overtime) before tax and national insurance.
Monthly bills (car+running costs, keep, phone, gym, insurance and subscriptions):£691
Usually spend around £400 per month socially with friends, girlfriend etc. and dont really spend money on clothes/shoes/gadgets.
I already pay into a pension scheme (£60p/m) and buy company shares(£50p/m) that are in a 3 year scheme.
Take home roughly £2500 as a basic wage and can make that up to £2900-£3000 per month with some overtime.
Looking for advice/ideas on what to do with my remaining cash. I know the usual 'stick money away in a bank account somewhere' advice but am looking to see if the financially savvy on here can educate me briefly in better options!
Cheers,
M94
Edited by M94 on Saturday 17th September 00:53
Edited by M94 on Saturday 17th September 00:57
It depends what your targets are imho.
Want to buy a property of your own? Save cash as quickly as you can, keep it easy access
Pension concerns? Probably not at 22 but the earlier you up payments the less it will cost you in the long run
It's good that you are thinking about it at such a young age, try not to blow all on trivial stuff, which if you aren't too fussed about gadgets & clothes.
Want to buy a property of your own? Save cash as quickly as you can, keep it easy access
Pension concerns? Probably not at 22 but the earlier you up payments the less it will cost you in the long run
It's good that you are thinking about it at such a young age, try not to blow all on trivial stuff, which if you aren't too fussed about gadgets & clothes.
Where is the other 1.5k going if you are not saving?
I don't think you are spending too much considering your age as well as your salary is very good for your age, about 2 times the average salary of others in your age group. I would be looking to speak with a financial advisor and get you on saving scheme and investments. There are a few first time buyers saving schemes available.
Put a couple of grand away each month over the year and you will have 24k savings.
I don't think you are spending too much considering your age as well as your salary is very good for your age, about 2 times the average salary of others in your age group. I would be looking to speak with a financial advisor and get you on saving scheme and investments. There are a few first time buyers saving schemes available.
Put a couple of grand away each month over the year and you will have 24k savings.
You don't actually need it at the moment but get a couple of online appraisals for life assurance. You would be surprised how cheap it is someone your age and you tie in to the rate of a 22 year old for, say, the next 40 years.
Lifetime ISA comes out next year and I would open one with £4K limit pa attracting 25% govt bonus which is paid annually next year but monthly thereafter. It can be used for retirement savings or house purchase.
You have until Nov 2019 to open a Help to Buy ISA - smaller limit but same 25% govt contribution. Use to buy a house instead of the Lifetime ISA?
Lifetime ISA comes out next year and I would open one with £4K limit pa attracting 25% govt bonus which is paid annually next year but monthly thereafter. It can be used for retirement savings or house purchase.
You have until Nov 2019 to open a Help to Buy ISA - smaller limit but same 25% govt contribution. Use to buy a house instead of the Lifetime ISA?
Jockman said:
You don't actually need it at the moment but get a couple of online appraisals for life assurance. You would be surprised how cheap it is someone your age and you tie in to the rate of a 22 year old for, say, the next 40 years.
You wouldn't believe how many young FTB's I give that advice to......but unfortunately youth blinds them.....You need to think of your short, medium, and long term goals. Eg. Are you wanting to move out soon/buy a house?
A long term goal of retiring early? Saving for a break from work in X years?
In any case I would maximise the matched company pension contributions, that free money helps! It's scary how much money you potentially need to fund retirement.
If you are keeping cash there are some ok account saving rates but they have limits and rates are still on the way down. Where is the money going at the moment?
Not that you absolutely need it but I'm guessing there could be some efficiency in subscriptions, phones etc...to reduce out goings.
A long term goal of retiring early? Saving for a break from work in X years?
In any case I would maximise the matched company pension contributions, that free money helps! It's scary how much money you potentially need to fund retirement.
If you are keeping cash there are some ok account saving rates but they have limits and rates are still on the way down. Where is the money going at the moment?
Not that you absolutely need it but I'm guessing there could be some efficiency in subscriptions, phones etc...to reduce out goings.
Good wage at a good age! I'm a few years older but have generally been a "saver" since leaving university. Something that works for me is to have a day to day account, a bills account and a savings account. Each month put your bills (£600) into the bills account and all the direct debits etc will draw on that. Leave yourself £400 in the day to day for your spends and transfer the rest into savings account. If you need more you can dip into savings, but there's a litttle mental barrier there as you have to move it out of that account.
If you're looking to move in a couple years I would focus on cash instead of stocks and shares/trackers. Something like a Santander 123 account would be a good start -although the rate is dropping down soon it will still probably be competitive once everyone else reacts.
If you're looking to move in a couple years I would focus on cash instead of stocks and shares/trackers. Something like a Santander 123 account would be a good start -although the rate is dropping down soon it will still probably be competitive once everyone else reacts.
M94 said:
Current wage: £42.5k(+overtime) before tax and national insurance.
This is very, very straightforward.- Calculate your total taxable pay (or look at last year's P60)
- Look at the threshold where 40% tax begins - namely taxable pay of £43,000
- Make sure that as much as possible of your pay over £43,000 is going into pension. Yes, the money will be tied up until you retire (from age 55) but with 30 years tax free cumulation it's incredible valuable to make contributions as early in your working life as possible. 40% tax relief up front is too good to miss and may well be withdrawn in future!
- Any remaining money that you don't NEED to retain in cash as an emergency or short term savings fund could usefully be going into a stocks and shares ISA. Again, there's excellent tax benefits albeit that investments are made out of taxed income. And the money will be accessible if/when you want to buy a house.
Ozzie Osmond said:
This is very, very straightforward.
Very sound advice from Ozzie there. I know it seems a bit mental to be putting money into your pension when you're probably 50 years away from retiring, but the chances are that at this point in your life you have a larger proportion of disposable income than you ever will. Bung it all in your pension for a couple of years and you'll thank your younger self when you're wrinkly. - Calculate your total taxable pay (or look at last year's P60)
- Look at the threshold where 40% tax begins - namely taxable pay of £43,000
- Make sure that as much as possible of your pay over £43,000 is going into pension. Yes, the money will be tied up until you retire (from age 55) but with 30 years tax free cumulation it's incredible valuable to make contributions as early in your working life as possible. 40% tax relief up front is too good to miss and may well be withdrawn in future!
- Any remaining money that you don't NEED to retain in cash as an emergency or short term savings fund could usefully be going into a stocks and shares ISA. Again, there's excellent tax benefits albeit that investments are made out of taxed income. And the money will be accessible if/when you want to buy a house.
M94 said:
Looking to move out in the next 2/3 years.
I wouldn't risk shares over such a short space of time unless you know you can wait for them to go back up if they dip. You're going to want as big as deposit as possible when you buy, so just put your money in the best savings account you can find.I would also leave the pension at £120 per month while your saving for a house deposit. Two or three more years of keeping it at that rate won't make much difference by the time you are 60+.
M94 said:
Looking to move out in the next 2/3 years.
I must be getting old, find it very weird someone earning over £40k a year at 22 years old would want to live at home. I'm 27 and was living in London on £21k as soon as I graduated. Can't imagine anyone in my social group choosing to live at home when they have the financial means to have their independence.Gassing Station | Finance | Top of Page | What's New | My Stuff