How do I 'Adult' financially?

Justwe03

So this is rather embarrassing but I am going to ask anyway in the hope that I will learn quite a lot.

late 20's, mum of two, I work a couple of part-time jobs and rent from a Local Housing Association. I am also studying for a degree.

I have reached a point in 'growing up' where I need to make future planning a priority. I am saving in an HTB ISA, I've just applied for life insurance and I also save a few quid a week with my local credit union.

I am planning to sort out a will once my life insurance is accepted.

I feel like I should be opening and paying into a private pension, but I am not honestly sure how these things work. I earn less than £10k a year and don't think I can afford to go and get professional advice.

One of my jobs deducts a pension contribution automatically but again, I don't really understand it. I am only on contract until next July when my position with the company goes to someone else. I will be graduating and looking for 1 full-time position or possibly going on to do my PGCE and still working part-time.


I have no debts that I am aware of and need to start doing a comprehensive budget.

I guess I am wondering where a sensible place to start is. I don't have any family or people I can ask for advice, I've had a look on MSE but I am feeling more lost than before.

TeamPlum

Hi and welcome,

My first advice would be to being a budget, so you know exactly whats coming in, and whats going out - and what you have to play with.

What are you aiming to do, exactly? When you say "future planning" - what do you mean by that?

Justwe03

Hi, Gosh what a plonker. That would help wouldn't it!

I want to own a house outright, Have a decent pension and make sure I am all paid up for the state pension (if there is still one when I retire) A good savings plan that I can skim the interest from if I needed too and I'd eventually consider getting into investments should I be in the financial position too, But that is years away and I will get professional advice for that.

A budget is my biggest priority, I am taking an afternoon off tomorrow to go through Martin's money stuff and do a budget.

Pollycat

There's a specific Pensions board a bit higher up the forum.

Some very knowledgeable people post on there, I'm sure you'd get good advice.

There's also a wealth of advice of all kinds to be had on the Old-Style board from cheap cleaning to menu planning and cooking in bulk.

KxMx

Alongside a budget a spending diary is very useful.

It shows in black & what exactly how much money is going on everything.

You can then re-assess what you are spending money on, and choose priorities for each £.

I started mine because I didn't see where the excess I allegedly had from my budget was going. Before I started I could have sworn up & down no way can I make my money go further.

Now, not only what was meant to be a temporary measure is permanent, I absolutely can and do make my money go further! I also know from my spending diary spreadsheet what has been spent, what is pending to be spent, and how much to the penny I have to play with at any time.

enthusiasticsaver

Generally if you already have a company pension with both you and employer contributing you would be better doing Avcs rather than opening a SIPP but check on scheme you have and ask for quotes from your pension provider. Difficult if you only earn £10k though.

Budgeting is your first step. Add up all income and take off essential expenditure - rent, utilities, claim single discount for council tax if you pay it, travel to work and food. Look for ways to economise on meals.

What is left after all that and any debt is disposable income to cover clothes for kids and yourself, entertainment and savings for larger items or emergencies. Put something back every month and keep spending diary. Htb ISA is good idea. Have separate emergency fund too though. You have to decide what is priority for now. Buying home or pension, long term savings.

Pixie5740

A workplace pension would be the easiest to set up and with your employer also making contributions it's like getting a pay rise. From little acorns....

As for budgeting you really need to look at the whole year rather than just a month at a time because some expenses aren't monthly such as MOT, insurance, Christmas, birthdays, etc. I use a programme called YNAB which has vastly improved my budgeting but you could do the same using a spreadsheet and a notebook if you wanted to. Give every £ a job and know where your money is going. Accumulating wealth is more about what you save than what you have coming in. I know people on 6 figure salaries who frequently use Wonga, and others who earn a fraction of that but because they don't fritter away money are much more financially comfortable.

MandM90

You should really check out You Need a Budget (YNAB). The free trial doesn't ask for any up front card details, so it's impossible to get stung accidentally by forgetting to cancel! Then it's £3 a month or so ($5).There are other threads on the MSE forum about it, and loads online. It's changed my life. For the first time ever I know where every penny goes and we pay for next month with last month's money. Can't recommend it enough!

As for your pension, have you read the MSE page on pensions? By the end of the year, I think, all employers will have to contribute something towards it, so it will definitely be worth making an informed choice on how much you can spare!

paddyrg

My most simplistic suggestion is to save yourself a cash buffer - an instant access savings account for instance - with say £5k in it. What causes people problems is not always lack of wealth, but lack of cash. A pension or home is wealth, but it's slow to turn into cash if you've got a sudden big bill for an unforseen emergency. Having a cash buffer is singularly the best thing you can do to let you weather any storm

White-as-Snow

you can actually use YNAB for free if you are a student. I am an open uni student and love it. It's not for everyone but try it and see x

Justwe03

Thanks all, I'm going to have a look at YNAB.

The buffer is a good idea. I tend to put my student finance payments to one side when they arrive and I recently purchased a 13 plate car outright with it so I have something reliable and still with warranty until after I graduate.

I've opened the TSB Plus account (5%) so I can put my savings in that and then piggyback £200 each month into my HTB ISA (4%) and I'll possibly move my main wages into there as they are just over the £500 required and then auto transfer them into my normal current account.

I will also have a good look at the pensions board above. I am also going to check out my NI contributions through HMRC and see how on track I am with that.

My work history has been sporadic due to having my daughters young, Now they are at primary school I want to get us all sorted and on the way to good things!

Thank you for all your help so far I really appreciate it! I missed a call from the Life Insurance underwriters yesterday afternoon so will get back in touch with them today.