As the next generation begins to reach adulthood, they may find themselves in a society where the cost of living seems to be extortionately high, especially in larger cities. This can make people feel quite despondent, especially if they are in a low-paying job. However, there may be ways you could expand on your finances, allowing you to go further in life, or simply feel less pressure getting to the next payday.
Young adults would benefit from better education in schools on managing money, avoiding credit card debt and how compound interest works, this financial literacy would ensure a good credit score. In it’s absence from the curriculum, hopefully these money tips will help secure a better financial future for generation Z.
Learn how to save money
Being able to put money each month into a savings or bank account can be a good habit to make, especially a savings account with good interest rates. When you first start working it may seem fun to have a lot of money at your disposal, especially if you still live with your parents and don’t have to pay much in the way of rent or bills. However, this habit could cause you problems in the future. You might want to consider opening up a Wealthify ISA that can be used to save tax-free money each year.
That money can slowly accrue, depending on how much you choose to save each month, and then be used on your first car, emergency fund, a deposit, or simply to enjoy yourself. The younger you start learning to save, the easier it may be when you become genuinely independent.
There are other ways of saving and generating a passive income that you could also explore. Investing your money may sound boring, as well as take a long time, but you could find yourself with a nice amount of cash at the end. Depending on what you choose to do, there could be some level of risk associated. This is a bold move for any young adult, while it can ensure a financial future, it’s not a secure way of building a retirement fund so you need to understand the risks.
This means you might lose your initial collateral. Speaking to a financial advisor could help you to figure out the trends in the stock market, and make better choices. Realistically, giving up one night out a month could generate between £60 to £100 which could be used for investments that could return you a significantly higher sum.
And if employed, check out any company sponsored retirement plans where your employer offers payment matching for the pension scheme. Any monthly payments you make come direct from your wages so are not taxed, so with matching you could be putting away 15% each month and spending just 6%.
Steer away from convenience and practice self control
There are many convenient products and services that you might utilise in your daily life, from food delivery to transportation. Some of these could be swapped out to save you money. Cycling, walking, and cooking your own food can be a lot cheaper than having someone else do the grunt work for you.
Alongside this, you might also want to consider some of the items you buy each month, which could be slowly racking up in cost. Some products, such as toiletries, could potentially be made in your kitchen for a fraction of the cost. These may also be more natural, without any chemical additives, which may be kinder to your body while saving you money.
Financial tips for young people must also highlight that spending money is usually what causes financial difficulties. Now as the economy shrinks, essential everyday items cost more than any salary increase, money problems are becoming an epidemic. Life will be tougher if you bury your head in the sand, you need to look at what you earn, plan ahead on your outgoings, then prioritise paying any credit card debt or high interest loans. Rent, food and utility bills are always more essential to pay than luxuries. If you have enough money, start saving and earn interest.
Reaching adult life may give you some freedom, but it can also come with a lot of responsibility. Figuring out ways to better manage your finances could help you to become independent a lot quicker, as well as to avoid being short of money, or getting yourself into debt. Setting and working towards saving money may also help you to achieve some of your life goals so look for more financial tips that can help.