Quarter-Life Crisis! Financial Check-up/Wake-Up

RachelBP

Hi there,

I've been thinking lately about my finances - and I am not sure if I am doing well or if I am in trouble - that might sound strange but when I look at my friends, most of them are putting down deposits etc on places and I am no where near that being a possibility.

Background: Im 25 and single (all my friends I speak of are married). Im also from a much more working class background than any of them and they have much more financial help and stability then I do personally. Also, I don't have my parents in my life, so I guess that is part of the reason I am asking strangers on a forum this kind of question.

I know most people on here are money savvy and Im hoping someone (or a few of you!) could give me an opinion on my current financial situation, what I need to change and how worried I should be about the future.

The only debt I have is my student loan, which is high (£35k) but of course I pay this back in the normal way through my wages. I am sure it will be written off in years to come as I can't see myself ever making the repayments before the 20(?) years for this is up.

I have 3 credit cards, two of which I've had for about 7 years and one I took out recently to use the 0% as I couldn't afford my car insurance renewal. However, I now have no debt on any of them, apart from £100 on the 0%, because I used it recently when I had ot change a flight and will pay it off at the end of this month.

I don't have any loans. I have an interest-free graduate overdraft but I don't use it except in an emergency.

Conversely, however, I have very little savings. I have £1000 in an instant access account but that is all.

I now earn £1500 a month. I pay £550 in rent inc bills, £100 into a 'car fund' account to help cover insurance, repairs, MOT etc, around £40 a month petrol, £25 phone, £60 storage costs, give £100 to charity (religious obligation to give 10%) and I have started saving £350 a month. The rest of my cash is my day to day money, as I keep kosher, food is quite expensive as I cannot buy super market own brands of most foods, but I'm fairly good at budgeting other things. A pension contribution comes out with my tax and NI also.

Anyway, I was wondering if anyone could tell me if there's anything I am doing wrong or could improve. Also, how worried should I be at my lack of savings? I haven't had chance to save anything until now as I have been in university and with no family around I've used every penny to look after myself.

Additional info, I live in North London.

Gizmo247

You sound pretty good to me. :T Could you leave your body to MSE in your will and we could get you stuffed.

Your outgoing look low-ish and under control so I would concentrate on your savings.

Review your saving account interest and perhaps move it to a cash ISA and either save in that or a regular saver (if you can get one).

Also review your current account and see if there is anything better available but I suppose you may be tied by you student loan.

[Deleted User]

Sounds like you've got it pretty much nailed.

Only things I would ask are...

1) Is your instant access savings account an ISA?

2) Your 10% charity donation, are you calculating that on your take-home? Or on your pre-tax income? (Would work out better for you and for the charity if you work it out on your take-home, then donate it using the Gift Aid scheme so they can reclaim the 20% extra from the taxman)

3) Credit cards - what cards are they? Would it be worth getting a cashback credit card (or Amazon card etc) for putting all your purchases on, then paying off in full every month?

4) Do you make full use of any loyalty programmes (Nectar, Clubcard, etc) at any places you spend at anyway?

5) Getting more advanced, could you withdraw the entire interest-free overdraft, put it into a high interest savings account, keep the interest earned, then pay back the overdraft at a later date when required?

RachelBP

billbennett:

Only things I would ask are...

1) Is your instant access savings account an ISA?

No, but I keep seeing info about these given the time of year and I'm looking into it. Can I dip into this as and when if need be if it is in an ISA? The account now is just a 'savings' account I've had since I was about 14.

2) Your 10% charity donation, are you calculating that on your take-home? Or on your pre-tax income? (Would work out better for you and for the charity if you work it out on your take-home, then donate it using the Gift Aid scheme so they can reclaim the 20% extra from the taxman)

It is worked out on take-home pay, after having paid rent, I usually make an online donation to a charity. I hadn't thought about the idea of Gift Aid - thanks.

3) Credit cards - what cards are they? Would it be worth getting a cashback credit card (or Amazon card etc) for putting all your purchases on, then paying off in full every month?

Two are standard RBS cards - I got them as a student. I only really kept them open as I was told it looked good to creditors in the future if I have a long standing, and in good standing, credit agreement.

4) Do you make full use of any loyalty programmes (Nectar, Clubcard, etc) at any places you spend at anyway?

I use clubcard yes as I can buy some food and household things at Tesco, also sometimes pertrol. My 3rd credit card is a clubcard credit card.

5) Getting more advanced, could you withdraw the entire interest-free overdraft, put it into a high interest savings account, keep the interest earned, then pay back the overdraft at a later date when required?

That sounds advanced and Im not sure I'd like to not have that overdraft money available in case I go over! Sometimes I end the month maybe £50 or £100 into it because I need petrol, there's a couple of birthdays that month etc