7 tips for making the most of your first pay check
You’ve survived your first month at work and pay day has finally arrived. While you’re definitely entitled to treat yourself for your new found independence, also take this opportunity to set yourself up for a bright(er) financial future.
Over the years, we – millennials – have been called all sorts of names from ‘entitled’ to ‘lazy’ or more recently ‘generation ostrich’. With an average of only £156 to spare each month – according to the 2016 Aviva Family Finances survey – it can be hard to make ends meet without a solid plan of action. Here are seven tips on how you can make the most of your first pay check.
1. Fix yourself a budget…for everything
Just under half (48%) of millennials admit regularly asking their parents for money. Instead of following the herd, why not try budgeting all your expenses. Coffees, night outs, groceries, no matter where you’re spending your money fix yourself a monthly budget and stick to it. And don’t forget, live within your means!
2. Put money aside
Once all your bills are paid, try to put 10 to 20% of your disposable income in your savings account. Just over half (51%) of millennials feel that their friends pressure them into spending money. Not having your money physically in your bank account will help you say ‘no’ to those egg benedicts and weekend cocktails.
3. Invest your money
If you feel confident you won’t need to dip into your saving accounts in the next few months, investing in an ISA might help you save more. Placing your money in an ISA (individual savings account) will give you interest on your savings, what’s more, the money you receive from your ISA is tax free!
4. Invest in yourself
With your first pay check also comes your first pension contributions. As of April 2016 employers and employees have to both contribute 1% of the employee’s salary. However, you’re free to opt out of the State pension scheme, increase your contributions or even open a private pension fund. The sooner you put money towards your pension pot, the bigger your pension fund will be when you retire as your money benefits from ‘compound interest’. For example, an 18 year-old investing £292 a month could be a millionaire by the time they retire, not bad we say.
5. Figure out your financial goals
Saving for a ‘rainy day’ can feel like an abstract concept, so first figure out your top financial priorities for the next few years. Saving is easier when you have a goal in mind. 61% of millennials say buying a home is their top financial priority. What’s yours?
6. Boomerang it!
Do you want to save on rent? Boomerang it! One in five 25-29 year-olds live with their parents, they’re called ‘boomerang kids’: young adults who after living on their own return to live in their parental home. Whether it’s to make ends meet or save money towards one of your financial goals, going to live back home can have (financial) advantages.
7. Keep your student ID
If you’ve just finished Uni, chances are most places will still accept your student ID and, more often than not, will offer you discounts on clothes, food and even haircuts. So take advantage of it while you still can!
