Setting a budget, managing your spending, putting a portion away every month – good financial behaviors start by seeing results in good time. One of the hardest challenges of saving money is being proactive despite having the money available and not spending it. That long-term view of money is a great way to build up a foundation and make bigger more impactful decisions in the future. It’s pretty difficult, but that’s the great thing about becoming habitual with these good practices, eventually, it’s second nature and you’re making progress without thinking about it.
Living in a big city or working in lower paid experience-based professions, managing in and outgoing payments will be even more important. Let’s say you’re a first-time homeowner or you’ve never done any more with your money than leave it in a savings account. Certain lessons you learn earlier will serve you well once you start to get into these financial situations where know-how can be your most valuable asset.
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Slashing Essentials
Lowering bills often sounds too good to be true. We assume that achieving it means negotiating from a sub-optimal position. Not true. Firstly, your utilities are not fixed quantities. Bulb is an example of a European brand that sources new providers for water, electricity, or gas, and can save homeowners hundreds of pounds. A mortgage will likely be your largest monthly expenditure. You can slash that down by seeking out a quick and easy mortgage advice service like Trussle, allowing you to save potentially hundreds of pounds, and make further savings if you find a better, more flexible mortgage deal. This comparison service is fast and could save you notable amounts of money.
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The Eighth Wonder of the World
Your money has the potential to grow. Compound interest, the ‘eighth wonder of the world’ as Einstein described it, is an understanding that investing is essential to the longevity of wealth. As a young professional, there is a huge variety of ways you can now get involved, and none of them requires hundreds of thousands of pounds worth of capital to get started. Take micro-investing. Services like Moneybox and Wealthify will either allow frequent small transactions or ‘rounding-up’ settings to allow you to put money into a portfolio as you spend every day. You define the style of the portfolio, from conservative or tracker funds through to higher returns aggressive styles.
Other platforms such as Freetrade and Robinhood will take it a step further. Buy shares in popular high-street brands and household names easily and often at low cost, especially through fractional shares where you can buy, for example, a portion of a high-cost share like Apple or Tesla. It’s easy, it’s free and it’ll surprise you with the impact you can have to swell savings that would otherwise sit in an account with a low-interest rate.
Deeper Connections
Finally, there is pension consolidation. It’s hard to predict how many jobs you might have but it’s likely to be more than one, and at least five and ten. That means you’ll have the same amount of separate pension pots. Picking up a consolidating platform like Pensionbee lets you effectively pool those resources in the UK for example. Not only that, but you’ll also be able to quickly deposit more funds when they’re available. Your pension is one of the most important amounts of money you build-up, it could mean early retirement – it’s well worth having oversight over it.
Fundamentally, we’re told that a lot of these financial concepts are long-term in the sense they won’t matter until you’re a bit older. However, getting into the habit of looking at, interacting with your money – slashing bills, feeding pensions, picking investments – it all compliments your financial outlook. Those sorts of behaviors can’t be taught soon enough.
