Various surveys over the past two years have shown that many of us Brits aren’t that great at handling our money. In fact, around half of UK adults are thought to be ‘living on a financial edge.’ For many, this is the result of being caught up in house price rises, the recession, or other issues out of individual control. But for a lot of us we probably could have done better with a little early help. If you could go back and have a word with your 18 year old self what financial tips would you pass on? We came up with these Top Ten but feel free to tell us yours in the comments section below:
Tip 1: Start saving now
At 18 years old you feel like you’re never going to get old. The tender age of 30 seems like a very distant milestone and houses, kids and pensions are less important than parties and travel. However, the advantages of saving early are huge. The younger you are the more years you have for “compound interest” to work its magic. For example, if you’d saved just £2,000 – £5,000 a year from the ages of 18 – 28 (assuming you move from a part time job to full time), you’d have much more than £20,000 – £50,000 you’d expect by the end of the decade. You’ll have the interest on the interest on the interest, etc.
Tip 2: Retirement plan from your first job
Pensions aren’t sexy. However, they are necessary. And statistics show that most of us won’t have enough to live on when it comes to our golden years. Paying into a pension from the first employment contract will create a significant buffer for old age.
Tip 3: Learn how to budget
Again, there’s nothing cool about budgeting and learning to live on what you earn. However, budgeting is the one tool that can really open financial doors. Young people who learn early how to divide income into cash to spend and cash to save will be able to reach their financial goals far sooner than those who are still struggling to get control of their finances at 30.
Tip 4: Set financial goals
What many of us don’t realise when we leave school is how much our financial goals are tied into every other dream we have in life. If you dream of being a parent, you need to plan to have the money to fund a period of child rearing. If you want to have a second home somewhere hot and sunny, you need to start saving for this early. For those who dream of working freelance, a significant pool of savings is important while you get on your feet.
Tip 5: Get onto the housing ladder
We are increasingly becoming a society of renters because most potential first time buyers now simply can’t afford to buy. If you don’t already own a property, no doubt you wish you could go back at tell your 18 year old self to make it a priority. According to The Telegraph newspaper, the value of homes in the UK has soared by £1.412 trillion to £5.752 trillion over the past 10 years. That’s more than the GDP of France, Germany and Italy, combined. Those who got onto the property ladder early are now quids in.
Tip 6: Make sure you have a safety net
Life is very unpredictable and, at 18 years old, most of us still have a naively positive impression that everything will turn out ok. Of course, sadly that isn’t always the case. A financial safety net that provides a buffer for bad times and rainy days is something that provides protection well into adulthood, whenever that may occur…
Tip 7: Take out health insurance
We do still have a good, functioning NHS in the UK but the chances are that this may not be the case for that much longer. Those with longer term health insurance policies on which they have not claimed tend to be able to get better rates for the future. Plus, taking out health insurance when you’re young, fit and healthy is much cheaper than when life starts taking its toll on your body.
Tip 8: Get to grips with the taxman
This is particularly important if you’re planning to be self-employed at any point in your life. Starting out at 18 with a good understanding of how tax is paid, when and why should ensure that costly mistakes and over payments can be avoided.
Tip 9: Get into good habits, young
One tip that would have benefited many of us at the age of 18 would be to start getting into healthy financial habits right now. Over borrowing, reliance on credit cards, putting off deadlines and missing bill payments are bad habits that can have a big impact on financial future. Learning how to borrow well, repay quickly and make good choices about products such as personal loans is better done at a young age.
Alex Hartley is a keen advocate of improving personal finance skills. She's worked at Solution Loans since 2014 and written hundreds of articles about how people can manage their money better. Her interest in personal finance goes way back to...Read about Alex Hartley
We use cookies to make your experience on our site even better. They also help us to understand how you use our site. By clicking 'Accept All' you're agreeing to our use of cookies. You can change your cookie preferences by choosing 'Manage Settings' and if you want to know more, you can read our cookie policy.
This website uses cookies to improve your experience while you navigate through the website. Out of these, the cookies that are categorized as necessary are stored on your browser as they are essential for the working of basic functionalities of the website. We also use third-party cookies that help us analyze and understand how you use this website. These cookies will be stored in your browser only with your consent. You also have the option to opt-out of these cookies. But opting out of some of these cookies may affect your browsing experience.
Necessary cookies are absolutely essential for the website to function properly. These cookies ensure basic functionalities and security features of the website, anonymously.
Cookie
Duration
Description
cookielawinfo-checkbox-analytics
11 months
This cookie is set by GDPR Cookie Consent plugin. The cookie is used to store the user consent for the cookies in the category "Analytics".
cookielawinfo-checkbox-functional
11 months
The cookie is set by GDPR cookie consent to record the user consent for the cookies in the category "Functional".
cookielawinfo-checkbox-necessary
11 months
This cookie is set by GDPR Cookie Consent plugin. The cookies is used to store the user consent for the cookies in the category "Necessary".
cookielawinfo-checkbox-others
11 months
This cookie is set by GDPR Cookie Consent plugin. The cookie is used to store the user consent for the cookies in the category "Other.
cookielawinfo-checkbox-performance
11 months
This cookie is set by GDPR Cookie Consent plugin. The cookie is used to store the user consent for the cookies in the category "Performance".
viewed_cookie_policy
11 months
The cookie is set by the GDPR Cookie Consent plugin and is used to store whether or not user has consented to the use of cookies. It does not store any personal data.
Functional cookies help to perform certain functionalities like sharing the content of the website on social media platforms, collect feedbacks, and other third-party features.
Performance cookies are used to understand and analyze the key performance indexes of the website which helps in delivering a better user experience for the visitors.
Analytical cookies are used to understand how visitors interact with the website. These cookies help provide information on metrics the number of visitors, bounce rate, traffic source, etc.
Advertisement cookies are used to provide visitors with relevant ads and marketing campaigns. These cookies track visitors across websites and collect information to provide customized ads.