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Money management Essentials for School Leavers
| Bringing home that first pay cheque from work is always an exciting moment, but learning how to use it sensibly will help ensure you enjoy a secure financial future. Tempting as it may be to head straight out and splash your cash, unless you learn how to budget effectively and manage your money from the start, you could quickly find yourself falling into debt and struggling to make ends meet. When working out how to manage your money, a good place to begin is to sit down and make a list of all your monthly outgoings each month. |  |
Budgeting effectively
Your list should include things such as food costs, rent, utility bills, insurance, council tax and transport. Once you know exactly how much is going out each month, you can then work out what is going to be left for you to have fun with, as well as how much you can afford to save every month. If something bad were to happen, such as you falling ill, or losing your job, it is essential to have a financial buffer in place to tide you over while times are hard, which is why saving is so important.
Try not to exceed the amount you have put aside for socialising and having fun with, as this will eat into the amount you can save each month. Set yourself a budget when you go out, or if you are going shopping, and try not to exceed this amount. If you think you might succumb to temptation, then only take out with you the amount of cash you can afford to spend, and leave your plastic at home.
Get the savings habit
When thinking about the best homes for your savings, individual savings accounts (ISAs) are a good place to start, especially because they are tax-free, so you could consider setting up a direct debit so that you pay a set amount in every month. You can invest up to 3,600 into a cash ISA this tax year (if under 50) or up to 5,100 if you are 50 or over.
Regular savings accounts are also a good option, as you need to commit to paying in a certain amount every month, usually in return for a high interest rate.
You'll be surprised at how quickly your savings can mount up, even if you can only afford to put aside a few pounds each month, and once you have saved a decent lump sum, you will then be free to decide what to spend the money on. From a deposit for a home, to a new car, or, once you have children, putting some of the money into their child trust fund, there will be plenty of ways in which your savings can be put to good use.
Don't forget however, to always keep some savings back for emergencies to give you peace of mind that you won't have to end up borrowing money at what may be a time when you can least afford to take on any debts.
