Fresh out of university, beginning an exciting career and experiencing freedom for the first time, financial planning isn't always top of the agenda. Building a solid foundation is the key to long-term success.
Tasting freedom for the first time from parents and having financial independence can often feel overwhelming. It can be very easy to feel as though saving and investing at this stage will have little impact in the long run and it can be tempting to throw caution to the wind with spending habits. The key here is to set a realistic personal expenditure budget, live within your means, and establish a consistent saving level every month, and to start saving for a house deposit.
If you want to get on the property ladder sooner than later and avoid the rental trap, it is vital to start saving for a deposit as early as possible. Consider utilising government saving schemes for first time buyers such as life time ISAs and start researching property values and lender mortgage parameters based on your projected income within 3-5 years as well as realistic deposit size.
For many young adults with an already tight budget, expenses and purchases can erode a budget, and saving is often the last thing on the agenda. Holidays, clothes, and other luxuries should be restricted to within reason to allow for a consistent monthly saving plan. Living within your means is key and avoiding unnecessary consumer credit debt at all costs.
Many graduates across the country especially those moving out of rural towns and into big cities experience a dramatic increase in monthly living costs having to pay for accommodation for the first time, high food costs, transportation etc. Sensible lifestyle choices such as flat sharing, adding half an hour to the commute by living further out of the city centre, cooking and eating out less frequently are all small changes that can add up to avoid drowning in student loan repayments and living costs, and being forced to move back in with parents.
Earned income is the greatest wealth-building tool aside from passive investments. Whilst it is impossible to forecast a multi-decade career trajectory, job decisions in the early years of your career can have a dramatic knock-on effect on your net worth down the line. Make smart long-term decisions.
