5 September 2024
Margo Lestz
Head of Communications
Get Your Money Game On
If you’re just getting started on your career path, it’s the perfect time to begin laying a strong financial foundation – one that will support your goals and dreams for years to come. Making the effort to take control of your financial future now, will lead to tremendous benefits down the road.
While the world of finance can seem daunting at the beginning, this article will guide you through financial planning steps that will set you up for success without making your head spin.
Know Your Cash Flow
Now that you’ve started earning an income, the first thing to do is get a handle on what's coming in and what's going out. Take a good look at your take-home pay, after taxes and other deductions. Then list all your regular expenses: rent, bills, groceries, loan repayments, transportation, that daily coffee habit… get it all down. Then see which expenses you can cut back on. There are lots of free apps out there to help you keep tabs on where your money's going.
Save for a Rainy Day
We all know that life is unpredictable, so it’s a good idea to put away some money for those unexpected financial emergencies. This emergency fund will serve as a safety net in case of job loss, medical emergencies, or other unforeseen circumstances.
A good first step would be to get £1,000 in your savings account and then aim to save 3-6 months' worth of living expenses in a readily accessible account. It’s okay to start small. Just set aside a portion of each pay-cheque until you reach your goal. Even £50 per month can add up over time and provide a cushion when you need it most.
Tackle High-Interest Debt
If you have started your career with high-interest debt hanging around your neck, get rid of it as quickly as possible. High-interest debt, such as credit card balances, can significantly hinder your ability to save and invest for the future.
Think about using the "debt avalanche" method, where you focus on paying off the debt with the highest interest rate first while making minimum payments on your other debts.
Retirement? Already?
You’ve only just started your career, and retirement seems like a lifetime away. However, starting to save early and getting the power of compound interest working for you will be one of the best decisions you could make.
Workplace Pension - If you're employed, you're likely to be automatically enrolled in a workplace pension scheme. Your employer will contribute a minimum amount, and you'll also contribute a portion of your salary. Contribute as much as you can afford, as your employer may match higher contributions – it's essentially free money.
Remember, the earlier you start saving, the more time your money has to grow. Even small, regular contributions can make a significant difference over the long term.
Set Some Money Goals
Make a list of your short-term and long-term financial goals. Short-term goals might include a relaxing holiday in the sun, or a new car. Long-term goals might be buying a home or retiring comfortably. Whatever your goals, write them down and make them specific.
Clear goals will help you stay motivated and make good financial decisions. Use the SMART criteria when setting goals: Specific, Measurable, Achievable, Relevant, and Time-bound. For example, instead of "save more money," a SMART goal would be "save £5,000 for a down payment on a car by 31 December next year".
Level Up Your Career
Your most valuable financial asset is your earning potential! Invest in yourself by continuously learning and improving your skills. Take some courses, go to workshops – anything to boost your skills and earning potential. Many employers offer tuition reimbursement programs, so check if this benefit is available to you.
Networking is another crucial aspect of career development. Attend industry events, join professional organizations, and build relationships with colleagues and mentors who can provide guidance and opportunities for growth.
Decode Your Employee Benefits
Take the time to fully understand the benefits package offered by your employer. This may include life insurance, employee discounts, pension or even stock options. Make sure you're taking advantage of all the benefits available to you, as they can provide significant value and protection.
Dip Your Toes into Investing
Once you've established an emergency fund and are consistently saving for retirement through your pension, consider additional investment options for medium-term and long-term goals. A popular and tax-efficient way to invest is through an Individual Savings Account (ISA).
Remember, unlike cash savings, investments can go down as well as up. It's important to understand the risks involved and consider seeking advice from a financial professional if you're unsure. Also, be aware of ongoing charges and other fees, as these can impact your returns over time.
Protect Your Assets
As your career progresses and your financial responsibilities grow, be sure to protect what you've built. Consider purchasing term life insurance if you have dependents or plan to in the future. Income protection insurance is also crucial, as it protects your income if you're unable to work due to illness or injury.
Additionally, make sure you have adequate renter's or homeowner's insurance to protect your possessions. As your assets grow, you may want to consult with a financial planner about more comprehensive planning.
Think Before You Spend
Developing good spending habits early in your career can set you up for long-term financial success. Before buying that shiny new gadget, take time to consider whether it aligns with your values and goals. Avoid lifestyle inflation as your income grows, and instead focus on increasing your savings and investments.
Consider implementing a "cooling off" period for large purchases. Try waiting a day or two before making big purchases – you might find you don't need it after all.
Stay Informed and Adjust Your Plan
The financial world is always changing, and so are your personal circumstances. Stay informed about personal finance topics: Read financial articles, listen to podcasts about money, attend financial workshops, etc.
And don’t forget to review and adjust your financial plan regularly, ideally at least once a year or whenever your life circumstances change. If you get married, have children, or change jobs you need to review your plan.
Remember, getting your finances in order isn't a sprint – it's more like a marathon. It may seem overwhelming when you're just starting your career, but taking small, consistent steps can lead to great results over time. Take it one step at a time, be patient with yourself, and don't be afraid to ask for help if you need it.
Your Genistar representative can help you get started on the right track with our complimentary Financial Plan. Contact your Genistar rep or our Support Centre.
__________
The information provided on this website is for educational or informational purposes only. Please refer to our legal disclaimer for further information.
Share article
