Recently Employed - What to do now?

elliot032

Hi,

I'm eighteen and earning £18,000 a year gross in my first job. I work in the financial parts of London. I am really stuck for what to do with the money when it comes to saving and minimising the tax I have to pay! (I've heard that an ISA is a good idea?) can anyone give me any advice?

Elliot,

MatyMoo

Hi Elliot

Didn't want to read and run.

I am not sure this board is the right place for your query as it is more about finding a job or problems with the job you have.

The Savings & Investment Board might be a better place for you.

agrinnall

I'm not sure if this is the best place for this thread, you might want to ask in the Savings forum, but I'll give my answer here anyway.

First thought is that £18K isn't a lot for London, I assume you're living at home and not paying the full market rate for room and board (although I hope you have at least offered to pay your share of Council Tax, food and bills and maybe a bit towards the mortgage if there is one).

So, after your living expenses how much of your net pay do you have left each week/month? There are two places where you should be considering putting spare money.

First is a pension, if your employer has a scheme (and even more so if they make a contribution) you should consider joining it as any payments come out of your gross salary, saving you 20% immediately. Also, the effects of compounding and capital growth mean that investing at 18 makes your money worth a huge amount more at retirement age.

Second is, as you say, an ISA. Have a look on MSE for the best rates, you may want to pick one where you can make regular payments as you get paid (most will allow this), and remember to transfer it once the rate plummets (which it will) to one of the new best buys. And don't forget that any money taken out of an ISA can never be replaced so only withdraw if you really have to.

It's good that you're thinking of saving at 18, although I'd also say you should think about enjoying yourself too, don't be too stict with the savings.

SaLoGo

£18k at 18? I'm in the wrong career!!

McKneff

Well done to you,

First of all pay your parents some bed and board, keep some for yourself for fun and think about your current account also.
Halifax give you £5 reward a month if you pay at least £1k a month in to the account, thats £60 a year free money.

Research ISAs, they are tax free, but there a lots to choose from.

Fixed Rate, easy access, etc, etc, etc.

A good rate at the moment is anything over 3%, have a look at your bank website first to get an idea

Good luck.

Research

getmore4less

BUDGET.

The trick is to plan ahead setting goals, some of these goals will change over time but having goals brings focus

Start with a SOA. and consider more elaberate software going forward.

Think ahead what you will spend over the next year.
Normal living and transport.
You might find that going out after work is quite common.
holidays
toys
clothes
etc.

Emergency fund.
for unplanned expences, if living at home, o car there won't be may so don't ned a lot.

Disaster fund(loss of income)
6-12 months minimum expences
again these may be small if living at home.


Medium term.
saving for purchases or deposits
car, house, flat rental.

Long term
usualy retirement/ replace earnd income.
Key here is that a pension locks in money so for early retirement you need alternative funds. Make use of any free money from employer.


SO what to do with the current surplus.
Cash ISA,
Monthly savers,

Will do for the first year that will build up the buffer needed going forward.
Don't let the tax drive the choice, net return is what you are looking for.

Bank : get set up with one of the good ones fisrstdirect have a very good monthly saver that beats ISAs

Credit cards : worth considering, they become essential for some things.

Within a managed budget and used for normal spends,paid off every month(or min payment and dull at end of promotional period) starts to build up a history.

Geko

Well done Elliot for getting a job, good luck mate.

elliot032

Thanks for all the advice.

Googlewhacker wrote: »

You work in the financial parts of London yet you are asking what an ISA is?

I've been working there five days, and I work on currency markets - not in banking.

ERICS_MUM

Googlewhacker wrote: »

You work in the financial parts of London yet you are asking what an ISA is?

Give him a break ! The ISA is a very narrow product in retail banking. The City does not sell or focus in any way on retail banking products so I would not expect him to know about them purely through his work.

OP, start with the bank branch where you hold your account. Pick up their leaflets and have a read about their different savings accounts - once you see what's available I think you will be able to work out how you want to manage your money. You can then shop around to see if you can get a better deal from other banks.

I strongly recommend you start a pension now, as it will build up into a really good nest egg by the time you retire. Don't tie all your spare money up, do spend some! You sound very sensible so I'm sure you will soon work out a balanced budget.

Going off at a tangent now !! I worked in the City for 35 years and loved every minute of it. Make the most of it, enjoy the "buzz" , the customer contact, the social life, you won't find the same environment anywhere else (well, Wall St obviously !).

Good luck

Linda