Finance advice for a 22 year old
Discussion
M94 said:
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
You earn almost double the national average. That is the first thing you should be proud of (and well done!!)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
Stay with your parents as long as you like (but understand they will want their space back as mush as you want your space moving forward).
Save everything you can whilst living with your parents. If you have any money left over at the end of the month then save it.
Use a mixture of cash and Stocks & Shares ISA, These cost nothing and save tax.
Also consider a SIPP/Pension for long term savings. as these offer even better tax treatment.
My general advice would be to imagine you are on half the salary you are, and save the rest. This way you can't go wrong. The plus side is there will always be money there for you if the future is not kind.
Julian
Remember having the same thoughts myself at a similar age, albeit a few years on.
I moved out at 26, on the basis I was working a lot of shifts and had dollar signs in my eyes resulting in me not seeing the Mrs that much. At this point it was appropriate for us then to have our own space as it wasn't exactly feasible her coming over at 10pm+ or vice versa. Had this not been the case, I would of stayed at home for as long as possible to save up as much of a deposit as I could, which I had already taken advantage of years prior... just maybe would of liked a few years more!
Don't feel pressured to move out until you're ready (unless parents are pushing, legitimate reason) especially don't move out to rent. As it's been said, you're in a fantastic position on your wage at your age, take FULL advantage of it and use it to make hay and get ahead.
Make the most of living at home, scrimp & save as much as you can and budget to make sure you're saving a set amount of cash per month. Cut down on silly outgoings, impulse purchases. Budget allocate for monthly expenditure and then trim the fat off monthly payments (find a cheaper phone contracts, subscriptions, insurance etc) Consolidate/pay off any loans/credit cards and in general minimise spending whilst enjoying life and still getting hammered at the weekends (contradiction - not included with silly expenses). Work at it until it becomes addictive to see the cash piling up. It's easier when you have a goal/figure in mind so set one and aim for it.
In your situation I would be fully focused on a deposit for a house right now in the short term. A house is an appreciating long term asset that eventually you'll need so it pays dividends to start saving for what will be the biggest purchase you'll ever make. The larger amount you can save up, the smaller your mortgage payments are going to be/bigger house you'll be able to afford. If you're sensible when purchasing said house it will allow you to continue to live the life you do now. I.e Half decent car, meals out, holidays, clothes etc, along with being able to kit it out/renovate to your tastes. A lot of people find that when they do get on the ladder they then struggle to do much else due to the vast difference in 'living costs' and/or mortgage payments that you don't have to worry about when living at home.
During my deposit saving stage I just hoarded money in a 123 account and made use of the other high interest accounts around at the time, lloyds and TSB etc. Interest paid wasn't huge but short term I didn't really want to be messing about in shares. I think this was enforced to me by the famous fund manager Peter Lynch who said don't invest in stocks until you have a house.
Once you're in the house, your saving habits change drastically. You're now looking to a more long term goal. Use the money you were using to save for a deposit to either max/heavily contribute to a stocks/shares ISA, max out any company shares in the share scheme (if the deals good) and pension contributions (again, if the deals good). Keep some cash back every month for a safety net and if you've got anything left over or interest rates start climbing back up, look at starting to overpay the mortgage to reduce the term.
Obviously this last bit goes down the s
t pan if you then decide after your settled in your house that you the only thing you're missing is a V8 on the drive and life's too short & that saving can go on hold for a few years 
My 2p - Good Luck Pal
I moved out at 26, on the basis I was working a lot of shifts and had dollar signs in my eyes resulting in me not seeing the Mrs that much. At this point it was appropriate for us then to have our own space as it wasn't exactly feasible her coming over at 10pm+ or vice versa. Had this not been the case, I would of stayed at home for as long as possible to save up as much of a deposit as I could, which I had already taken advantage of years prior... just maybe would of liked a few years more!
Don't feel pressured to move out until you're ready (unless parents are pushing, legitimate reason) especially don't move out to rent. As it's been said, you're in a fantastic position on your wage at your age, take FULL advantage of it and use it to make hay and get ahead.
Make the most of living at home, scrimp & save as much as you can and budget to make sure you're saving a set amount of cash per month. Cut down on silly outgoings, impulse purchases. Budget allocate for monthly expenditure and then trim the fat off monthly payments (find a cheaper phone contracts, subscriptions, insurance etc) Consolidate/pay off any loans/credit cards and in general minimise spending whilst enjoying life and still getting hammered at the weekends (contradiction - not included with silly expenses). Work at it until it becomes addictive to see the cash piling up. It's easier when you have a goal/figure in mind so set one and aim for it.
In your situation I would be fully focused on a deposit for a house right now in the short term. A house is an appreciating long term asset that eventually you'll need so it pays dividends to start saving for what will be the biggest purchase you'll ever make. The larger amount you can save up, the smaller your mortgage payments are going to be/bigger house you'll be able to afford. If you're sensible when purchasing said house it will allow you to continue to live the life you do now. I.e Half decent car, meals out, holidays, clothes etc, along with being able to kit it out/renovate to your tastes. A lot of people find that when they do get on the ladder they then struggle to do much else due to the vast difference in 'living costs' and/or mortgage payments that you don't have to worry about when living at home.
During my deposit saving stage I just hoarded money in a 123 account and made use of the other high interest accounts around at the time, lloyds and TSB etc. Interest paid wasn't huge but short term I didn't really want to be messing about in shares. I think this was enforced to me by the famous fund manager Peter Lynch who said don't invest in stocks until you have a house.
Once you're in the house, your saving habits change drastically. You're now looking to a more long term goal. Use the money you were using to save for a deposit to either max/heavily contribute to a stocks/shares ISA, max out any company shares in the share scheme (if the deals good) and pension contributions (again, if the deals good). Keep some cash back every month for a safety net and if you've got anything left over or interest rates start climbing back up, look at starting to overpay the mortgage to reduce the term.
Obviously this last bit goes down the s
t pan if you then decide after your settled in your house that you the only thing you're missing is a V8 on the drive and life's too short & that saving can go on hold for a few years My 2p - Good Luck Pal
JulianPH said:
You earn almost double the national average. That is the first thing you should be proud of (and well done!!)
Stay with your parents as long as you like (but understand they will want their space back as mush as you want your space moving forward).
Save everything you can whilst living with your parents. If you have any money left over at the end of the month then save it.
Use a mixture of cash and Stocks & Shares ISA, These cost nothing and save tax.
Also consider a SIPP/Pension for long term savings. as these offer even better tax treatment.
My general advice would be to imagine you are on half the salary you are, and save the rest. This way you can't go wrong. The plus side is there will always be money there for you if the future is not kind.
Julian
Thanks for taking the time to write this Julian. Gonna have a look into a SIPP.Stay with your parents as long as you like (but understand they will want their space back as mush as you want your space moving forward).
Save everything you can whilst living with your parents. If you have any money left over at the end of the month then save it.
Use a mixture of cash and Stocks & Shares ISA, These cost nothing and save tax.
Also consider a SIPP/Pension for long term savings. as these offer even better tax treatment.
My general advice would be to imagine you are on half the salary you are, and save the rest. This way you can't go wrong. The plus side is there will always be money there for you if the future is not kind.
Julian
Classy6 said:
Remember having the same thoughts myself at a similar age, albeit a few years on.
I moved out at 26, on the basis I was working a lot of shifts and had dollar signs in my eyes resulting in me not seeing the Mrs that much. At this point it was appropriate for us then to have our own space as it wasn't exactly feasible her coming over at 10pm+ or vice versa. Had this not been the case, I would of stayed at home for as long as possible to save up as much of a deposit as I could, which I had already taken advantage of years prior... just maybe would of liked a few years more!
Don't feel pressured to move out until you're ready (unless parents are pushing, legitimate reason) especially don't move out to rent. As it's been said, you're in a fantastic position on your wage at your age, take FULL advantage of it and use it to make hay and get ahead.
Make the most of living at home, scrimp & save as much as you can and budget to make sure you're saving a set amount of cash per month. Cut down on silly outgoings, impulse purchases. Budget allocate for monthly expenditure and then trim the fat off monthly payments (find a cheaper phone contracts, subscriptions, insurance etc) Consolidate/pay off any loans/credit cards and in general minimise spending whilst enjoying life and still getting hammered at the weekends (contradiction - not included with silly expenses). Work at it until it becomes addictive to see the cash piling up. It's easier when you have a goal/figure in mind so set one and aim for it.
In your situation I would be fully focused on a deposit for a house right now in the short term. A house is an appreciating long term asset that eventually you'll need so it pays dividends to start saving for what will be the biggest purchase you'll ever make. The larger amount you can save up, the smaller your mortgage payments are going to be/bigger house you'll be able to afford. If you're sensible when purchasing said house it will allow you to continue to live the life you do now. I.e Half decent car, meals out, holidays, clothes etc, along with being able to kit it out/renovate to your tastes. A lot of people find that when they do get on the ladder they then struggle to do much else due to the vast difference in 'living costs' and/or mortgage payments that you don't have to worry about when living at home.
During my deposit saving stage I just hoarded money in a 123 account and made use of the other high interest accounts around at the time, lloyds and TSB etc. Interest paid wasn't huge but short term I didn't really want to be messing about in shares. I think this was enforced to me by the famous fund manager Peter Lynch who said don't invest in stocks until you have a house.
Once you're in the house, your saving habits change drastically. You're now looking to a more long term goal. Use the money you were using to save for a deposit to either max/heavily contribute to a stocks/shares ISA, max out any company shares in the share scheme (if the deals good) and pension contributions (again, if the deals good). Keep some cash back every month for a safety net and if you've got anything left over or interest rates start climbing back up, look at starting to overpay the mortgage to reduce the term.
Obviously this last bit goes down the st pan if you then decide after your settled in your house that you the only thing you're missing is a V8 on the drive and life's too short & that saving can go on hold for a few years
My 2p - Good Luck Pal
Loving this one! Might get it printed onto a canvas and stick it above my bed so I can read it over and over again every night/morning. I work two shifts and don't see the Mrs that often either. Sounds very similar!I moved out at 26, on the basis I was working a lot of shifts and had dollar signs in my eyes resulting in me not seeing the Mrs that much. At this point it was appropriate for us then to have our own space as it wasn't exactly feasible her coming over at 10pm+ or vice versa. Had this not been the case, I would of stayed at home for as long as possible to save up as much of a deposit as I could, which I had already taken advantage of years prior... just maybe would of liked a few years more!
Don't feel pressured to move out until you're ready (unless parents are pushing, legitimate reason) especially don't move out to rent. As it's been said, you're in a fantastic position on your wage at your age, take FULL advantage of it and use it to make hay and get ahead.
Make the most of living at home, scrimp & save as much as you can and budget to make sure you're saving a set amount of cash per month. Cut down on silly outgoings, impulse purchases. Budget allocate for monthly expenditure and then trim the fat off monthly payments (find a cheaper phone contracts, subscriptions, insurance etc) Consolidate/pay off any loans/credit cards and in general minimise spending whilst enjoying life and still getting hammered at the weekends (contradiction - not included with silly expenses). Work at it until it becomes addictive to see the cash piling up. It's easier when you have a goal/figure in mind so set one and aim for it.
In your situation I would be fully focused on a deposit for a house right now in the short term. A house is an appreciating long term asset that eventually you'll need so it pays dividends to start saving for what will be the biggest purchase you'll ever make. The larger amount you can save up, the smaller your mortgage payments are going to be/bigger house you'll be able to afford. If you're sensible when purchasing said house it will allow you to continue to live the life you do now. I.e Half decent car, meals out, holidays, clothes etc, along with being able to kit it out/renovate to your tastes. A lot of people find that when they do get on the ladder they then struggle to do much else due to the vast difference in 'living costs' and/or mortgage payments that you don't have to worry about when living at home.
During my deposit saving stage I just hoarded money in a 123 account and made use of the other high interest accounts around at the time, lloyds and TSB etc. Interest paid wasn't huge but short term I didn't really want to be messing about in shares. I think this was enforced to me by the famous fund manager Peter Lynch who said don't invest in stocks until you have a house.
Once you're in the house, your saving habits change drastically. You're now looking to a more long term goal. Use the money you were using to save for a deposit to either max/heavily contribute to a stocks/shares ISA, max out any company shares in the share scheme (if the deals good) and pension contributions (again, if the deals good). Keep some cash back every month for a safety net and if you've got anything left over or interest rates start climbing back up, look at starting to overpay the mortgage to reduce the term.
Obviously this last bit goes down the s
t pan if you then decide after your settled in your house that you the only thing you're missing is a V8 on the drive and life's too short & that saving can go on hold for a few years My 2p - Good Luck Pal
Thanks for this mate
lukefreeman said:
Sounds like the lads who come out their time at our place.
19, on £30k basic with 48% uplift for shifts, pissing it against a wall.
Aerospace pays stupid money for kids off the street with an apprenticeship.
I never got anywhere close to that with an apprenticeship at BAe.19, on £30k basic with 48% uplift for shifts, pissing it against a wall.
Aerospace pays stupid money for kids off the street with an apprenticeship.
M94 said:
Loving this one! Might get it printed onto a canvas and stick it above my bed so I can read it over and over again every night/morning. I work two shifts and don't see the Mrs that often either. Sounds very similar!
Thanks for this mate
Glad I could help mate, it worked pretty well for me Thanks for this mate
Obvious one is pension contributions, especially if your employer matches it or contributes. It also 'forces' you to save because you cant get at it even if you want to.
Personally I'd look to move out, but then I did so at 18 and never really looked back. Having your own space is great, and the rate house prices have gone up its been the best investment over the time.
Other than that, you're on a good wage and tbh some of it should be pissed up the wall on women, cars, beer and mind bending substances if that is your want.
Personally I'd look to move out, but then I did so at 18 and never really looked back. Having your own space is great, and the rate house prices have gone up its been the best investment over the time.
Other than that, you're on a good wage and tbh some of it should be pissed up the wall on women, cars, beer and mind bending substances if that is your want.
BJG1 said:
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.I think the OP has a huge opportunity in front of him and unlike so many he has awoke to it at 22 instead of years later when he's propping up the bar of some s
tty pub or driving a minicab telling anyone who'll listen he once owned £200 jeans. If you can face living at home then do so to accelerate your life prospects. If someone is doing it so that they can do more shopping and make-up then they haven't understood that the thing between their legs means they can't run around looking pretty, spend all they earn and then hope to bag a bloke to keep it all running and supply the next free home once the parents lob her out. The first decision a bloke needs to make when he starts working is whether he is going to spend his life as a consumer, dependent on others for ever or whether they will be a grown up.
My personal view is that the OP has a phenomenal salary and he should absolutely stay at home if that is the cheapest accommodation deal so long as the saved money is not spent on coffee with the girls but slapped into the bank. And so long as there is a sensible supply of 22 year old girls who have their own room.
I agree with Ozzie re slapping all the 50% income into a pension wrapper. The fact the OP can earn over time is a huge bonus as not only is it extra cash but it's also less time spent spending the basic income. Ozzie's latter statement re an ISA is also sensible. I'd shy away from non cash just because the pension will be non cash and the OP has a 2/3 horizon for building a deposit so you don't want the risk of equities for such a short term requirement.
But, if your parents have the space and are near to where is best for your career then I'd absolutely advocate using your old room to accelerate your initial savings. But obviously, not at the expense of their location impacting in your career opportunities or if you're going to piss the savings away on being pretty.
Edited by DonkeyApple on Tuesday 20th September 08:47
It's all well and good planning for the future but don't forget to enjoy yourself !!!
I stayed at home until 25 (28 now, just.. ) and moved out when I bought my second house, I now rent (where I am working) and rent my two houses out.
I put 4% into my pension, employer puts 12.5% or 14.5%. Earn circa 100k (Euro) and get my house paid for, plus rental income in the UK, we don't live in an amazing house, or drive amazing cars but we do enjoy ourselves.
Whatever I can afford to save each month I put 50% towards long term sensible stuff and enjoy 50%, otherwise what's the point in working and earning a half decent wage.
See the world, blow some cash on a nice car, experience things you can afford now but not once you have a house.
Circa £45k is ok whilst you live at home but owning your own house with bills etc it may not be, dependent where you are in the U.K.
Friend of mine still lives at home, just bought himself an AM V8 Vantage and rents 2 or 3 houses out whilst renovating others, he is 26.
Yeah you may have a nice pension for when you are 55 or 65 ... You might be dead, you might not, but I know I'd rather enjoy myself now rather than in my 60's / 70's.
Prudent, sensible financial advice is great, you should plan for the future and ensure you are financially stable if you wish to travel, have children or whatever, your choice and good luck to whatever you decide.
I stayed at home until 25 (28 now, just.. ) and moved out when I bought my second house, I now rent (where I am working) and rent my two houses out.
I put 4% into my pension, employer puts 12.5% or 14.5%. Earn circa 100k (Euro) and get my house paid for, plus rental income in the UK, we don't live in an amazing house, or drive amazing cars but we do enjoy ourselves.
Whatever I can afford to save each month I put 50% towards long term sensible stuff and enjoy 50%, otherwise what's the point in working and earning a half decent wage.
See the world, blow some cash on a nice car, experience things you can afford now but not once you have a house.
Circa £45k is ok whilst you live at home but owning your own house with bills etc it may not be, dependent where you are in the U.K.
Friend of mine still lives at home, just bought himself an AM V8 Vantage and rents 2 or 3 houses out whilst renovating others, he is 26.
Yeah you may have a nice pension for when you are 55 or 65 ... You might be dead, you might not, but I know I'd rather enjoy myself now rather than in my 60's / 70's.
Prudent, sensible financial advice is great, you should plan for the future and ensure you are financially stable if you wish to travel, have children or whatever, your choice and good luck to whatever you decide.
z4RRSchris said:
pensions will be gone in 40 years, don't bother!
Interesting - I came to the opposite conclusion...pensions will be gone in 40 years, so take advantage of the tax relief as much as possible now!M94 - I was in your situation really not long ago. Left uni and went straight into a well-paid job. Lived at home for 3 years before buying my own place. Some tips:
a) Don't underestimate the financial value of living at home. I was stashing away 75% of my income each month - this would have been <25% if I hadn't been at home. If you're happy there, do not feel under any pressure to move out. Save the cash.
b) Save hard. It's unlikely you'll be in the combined situation of high earnings plus low expenses again in the next 20 years. You should easily be looking to max out the ISA allowance every year. And some.
c) Plan for the future. In your situation, I'd be looking to make sure between me and my employer, pension contributions were at least 15%. Compound interest means contributions now are more valuable than the same contributions in 10 years.
d) Enjoy yourself. After this phase, you're unlikely to have so much spare money again for a while. Enjoy it, even just a little bit. (I bought a Porsche.)
M94 said:
Exactly, think some people secretly regret moving out so early... I've cousins who've stayed at home till late 20s and are now living awfully comfortably.
I bring no trouble to my parents door nor do I give them any hassle. They don't have to be very understanding or clingy to have no problems with me at home at 22.
Absolutely this. I live with mine for a long time because a) we got on well, b) I wasn't in any relationships so was unlikely to be able to share expenses with anyone long-term. I got a lot of stick from some quarters of the extended family, mostly those who were 'forced' out at a young age (and if you knew them, you would instantly understand why).I bring no trouble to my parents door nor do I give them any hassle. They don't have to be very understanding or clingy to have no problems with me at home at 22.
My advice would be to pile as much money away in an ISA as possible to put towards a house, then regularly look out for what you will be able to afford based on what you have, you should be able to save enough to get a good rate on somewhere very decent.
I felt it important to not be extravagant with spending, I was obviously into cars, but always older/interesting stuff, nothing new or expensive. Also possibly consider your parents for thoughtful gifts and things around the house now and then - I probably didn't do that enough.
M94 said:
Exactly, think some people secretly regret moving out so early... I've cousins who've stayed at home till late 20s and are now living awfully comfortably.
I bring no trouble to my parents door nor do I give them any hassle. They don't have to be very understanding or clingy to have no problems with me at home at 22.
But you've not moved out, so how can you comment from both sides? I bring no trouble to my parents door nor do I give them any hassle. They don't have to be very understanding or clingy to have no problems with me at home at 22.
Moving out was one of the best things I ever did, and I dont know many people who would chose to live with their parents once they've been away from home. There is far more to life than living 'awfully comfortably'.
Condi said:
M94 said:
Exactly, think some people secretly regret moving out so early... I've cousins who've stayed at home till late 20s and are now living awfully comfortably.
I bring no trouble to my parents door nor do I give them any hassle. They don't have to be very understanding or clingy to have no problems with me at home at 22.
But you've not moved out, so how can you comment from both sides? I bring no trouble to my parents door nor do I give them any hassle. They don't have to be very understanding or clingy to have no problems with me at home at 22.
Moving out was one of the best things I ever did, and I dont know many people who would chose to live with their parents once they've been away from home. There is far more to life than living 'awfully comfortably'.
And people don't tend to move backwards which has more to play in why once people move forwards they tend not to move backwards unless pushed.
If living cheap doesn't impact on the career prospects and so long as those savings are saved not spent like a girl with daddy's cheque book then the positive impact is almost certainly going to outweigh going and spending a load of money on extra rent and furniture that in 5 years time is going to repulse you.
I think that while property prices are holding steady this is a time for accumulating wealth rather than spending it unecassarily. And for the Millenial generation this hasn't been so important for a century as their society is wholly defined by people who either see themselves as the 'man of the house' who must make their own way or as the 'mistress' who is just to be kept by others and spend all day shopping, talking banalities and looking fabulous.
DonkeyApple said:
I think that while property prices are holding steady this is a time for accumulating wealth rather than spending it unecassarily.
Are property prices holding steady? My house cost £175k 2 years ago, just been valued at £225k for mortgage purposes which is probably conservative. Okay, Ive put about £20k of money in with new bathroom, boiler, windows etc, but it still shows at least £15k (8.5%) return. Saving 15k a year after tax, even on a 40k salary, would be a big ask and would mean saving 50% of your take home. Condi said:
DonkeyApple said:
I think that while property prices are holding steady this is a time for accumulating wealth rather than spending it unecassarily.
Are property prices holding steady? My house cost £175k 2 years ago, just been valued at £225k for mortgage purposes which is probably conservative. Okay, Ive put about £20k of money in with new bathroom, boiler, windows etc, but it still shows at least £15k (8.5%) return. Saving 15k a year after tax, even on a 40k salary, would be a big ask and would mean saving 50% of your take home. Gassing Station | Finance | Top of Page | What's New | My Stuff