How would a young woman become financially independent?

[AbsentinSpring]

Without help from parents or an inheritance.

I've been pondering. I bought my first house (2 up 2 down Victorian terrace in not great area) 30+ years ago. I was single, worked in admin and earned slightly above average wage for that role. House cost £30k which was slightly less than 3x my salary and the interest rate was, for a time, 15%.

How could a young woman (who wasn't a hedge fund manager or corporate lawyer or such like) do that now?

That same house is now selling for £350k. And it's not in London or SE.

Work, live within your means, don't have children young.

If you have the smarts study STEM subjects rather then humanities, get on a decent grad scheme, get professionally qualified, don't piss your money away on inconsequential luxuries.

Not everyone has the option to live at home rent free for an extra 20 years though, this has been the equivalent to a gift for thousands from her parents.

I just want to point out for those who are desperate to include men in this conversation, that many women are already at a disadvantage to men financially because of any potential child rearing, failure of relationships (where children are involved) and the disparity in pay between men and women, and then later in pension contributions, plus op has already mentioned her FEMALE relatives, so I don't think it's unreasonable to keep this conversation directed at women.

I think the shrewder move for someone smart is to study a relatively non-competitive subject at Oxbridge (like theology, languages, classics etc) and use the resources and connections. You can get on most lucrative grad schemes with a humanities degree as well (eg banking, accounting/audit, management consulting). The only exception would be that I would do some sort of relevant course if software engineering were the preferred route (but doesn’t have to be computer science).

My daughter bought a house on her own three years ago, aged 32. She managed to save for the deposit by moving from a lovely flat in Manchester City centre to a much cheaper one in Atherton, a small town N of the city. Took her about three years to save for the deposit on a £98,000 2 bed terraced house on a main road towards Wigan, again not a “trendy” area but much cheaper. She still managed to enjoy a reasonable quality of life with cheap holidays and paying for her horses so I assume she earned a decent amount. She has paid off her student loan as well.

Now at age 35 she has sold her house for £50,000 more than she paid and is buying another house with her partner - they met a year or so ago and are very happy together.

She could have chosen to live in much nicer areas but would still be renting with no hope of saving a deposit. Her brother, age 34, did pretty much the same, lived in a cheapish area of Birmingham rather than the leafy suburbs where he grew up in order to buy his first house and has also just moved into his girlfriends house but has decided to rent out his house rather than sell it.

So it can be done but people might need to make some sacrifices along the way and not everybody wants to do this. My niece has no intention at the moment of moving out of her high rental flat in walking distance of shops and bars as it suits her current lifestyle!

I grew up relatively poor and actively targeted jobs that were higher paid. Ended up in tax as this is less competition that law / medicine and it’s still fairly lucrative. (This was after a humanities degree).

Worked hard and made it to senior manager in a Big 4 firm within 6 years. Within that time I saved for a deposit (my salary during this time was £21k and up to £33k when I bought so not loads). I took a £10k graduate interest free loan from my employer and we saved up £10k in two years. I bought with my then boyfriend (which if I’m being honest, I purposely settled down young as I realised it was a much better option, I couldn’t move back home and didn’t fancy a house share). I also stayed in the NW rather than move to London as I realised I could actually buy up here. So compromised on missing out on a fun few years in London in favour of getting on the property ladder.

once I’d bought the flat for c.£200k, I maxed out pension contributions and continued saving at the same rate as if we hadn’t bought.

Made it to manager at work and immediately leveraged the pay rise to buy a small house.

made it to senior manager and continued to max out pension (me 10% contribution, employer 12%). I have a personal ISA with £10k which is solely mine, joint savings with husband and a pension pot of c.£65k at 30. Current equity as a result of massively overpaying the mortgage is about £120k.

we’re looking to sell the house in a couple of years and buy a family home around £600k - £700k.

all of the above was done with no parental help, yes I have a partner but I earn more than he does.

My top tip is aim for a highly paid career and work hard in it. No point working hard somewhere there is no scope to progress. I also spend quite mindfully. I don’t buy anything that I’ve not really thought about. So I don’t buy clothes regularly, I’ll review my wardrobe and buy for example a trench coat that will last 10 years.

ill pay for a lovely meal out, but I won’t buy a takeaway because I’m feeling lazy. I don’t buy lunches at work or coffees on a whim. I’m a very conscious spender and what I’m buying has to add value.

Now I’m a civil servant, earn reasonably well. Bought a £250k house in the SE in my early 20s (late 20s now), deposit was quicker thanks to a compensation payout but would still have been done without it. And the mortgage is just on my salary although it’s jointly owned with DP

But couldn't you have been a CS earning "reasonably well" without incurring the cost of 4 years at university?

If you have the smarts study STEM subjects rather then humanities

STEM isn’t inherently more valuable. If you get on a decent grad scheme the degree isn’t relevant.

i did STEM- everyone I know who is earning well doesn’t work directly in the field. Science especially isn’t well paid. Use the degree to get into management, law, accountancy etc, but you can do that just as well with history.

amongst my peers the ones with high pay are the humanities grads, as they were the ones with the aims of grad schemes. The scientists who stayed working in science are no way near that level.

Why is financial independence such a big deal? I'm married and therefore not independent. My DM lived with her DM until she got married at 35.
My DF lived with his DPs until they died. We're meant to support each other.

My role is a graduate role, so no. I think you can work up from lower down roles but it’s much harder. I would be very surprised to see someone my age at my level/salary without a degree and I would expect them to be doing some sort of sponsored qualification.

And I wouldn’t have had the other benefits of university, like the careers service (for advice,
CV/interview help and job listings) and being able to try out internships in different sectors, the skills, the experiences, the confidence etc.

I think it’s interesting that ‘financial independence’ is being conflated with home ownership. You can have one without the other. There are any number of wholly financially independent, self sustaining women who rent.

For the record, I have a humanities degree (postgrad), I’m a third sector director and I earn enough to pay higher rate tax. I’m in my early 30’s, couldn’t have got my job without my degrees and have been financially independent (in the literal sense) since I was 23. I bought a home in my 30’s, but don’t consider myself any more or less financially independent than I was prior.

Reallyreallyborednow

There will always a be few outliers with humanities but with the exception of law grads, engineering and technology degrees tend to lead to much better paid jobs. Sure, if you studied math's and stayed in academia you will probably not be on stellar money but a mathematics degree from a decent uni will open a lot of doors for you on the grad recruitment circuit in the City. Languages, literature, philosophy, history, archaeology, anthropology, human geography, religion, and art, less so.

Unless you know that your daughter will not be entering into a partnership (hint: you don't, whatever she might feel now, it's a known-unknown), then you should also advise her on financial planning should she enter a relationship

Very good point.

I'm a millennial and I bought a 3 bed semi on my own a couple of years ago with no help from anyone. I earn above average but not mega bucks.

I am in the north, which helps a bit, but still an expensive area of the north (average house price close to 350k)

To be honest, I feel that I had a better deal in some ways than my mother, who was a baby boomer. In those days, women didn't earn the same as men, even for doing the same job, so they had even less chance of independence.

What do you consider financial independence? I did a four-year humanities degree with a year abroad. Worked in various jobs as a student to gain experience in all sorts of things (mostly temped for an agency). At the end of my degree I moved home for three months while I looked for a job in my field/area of interest - after I got a job and moved out I never lived at home again and have worked/paid my own share of my living arrangements ever since. Started paying (peanuts then!) into a pension/savings when I got that first job. Am now in my early forties, still working, and own half the equity in a house, have savings and investments in my own name and my own pension. Consider myself financially independent despite marriage/kids. Could I have done it without the degree? No, because the first job was a grad-level job. The year abroad was valuable experience and may have put me ahead of other candidates (though I didn't work abroad, was at a foreign uni).

Also left home at 18, so had to save the deposit whilst renting. It is doable for many.

And with my grandparents generation it was even worse. Women weren't even allowed a mortgage!

The standard route is the same for men or women, get a decent education followed by some sort of professional or skilled training. Then work all the hours possible.

I got the degree/career but then also bought a filthy neglected dump of a flat and did it up. Spent my evenings and weekends renovating or learning to plaster and tile. Then sold it, bought a slightly larger dump and so on.

Single until my 40s because I was busy becoming independent.

And with a guiding principle of never ever ever rely on someone else for money.

I knew that the thread would turn into “live on pasta and grass clippings for fifteen years and NEVER go out or have fun, that’s what I did!” but the OP asks a good question.

It’s much harder now for young women to be truly financially independent than it was in the nineties. Generation X (I’m part of it) were much luckier than the reviled boomers.

I wonder whether the reason so many younger women go into cohabitation with partners quite early in the relationship is so that they can afford housing costs, whether rent or mortgage. If so, that’s a real shame for them.

A shared ownership flat, or buy with a friend. Or better still, live with parents for five years. Save£20k per year then get a mortgage on whatever she can afford.

The thing is, I tend to observe that some people just seem to weakly bleed money out through their twenties. No big haemorrhages, just a steady but solid trickle.

I didn't, and benefitted from that. And I certainly had plenty of fun. But I had a fun budget and stuck to it.

For example, if I spent fifty quid on a night out, then it would be only a couple of evenings in the pub the rest of the month. If I spent thirty quid on a haircut, then new shoes would wait a couple of months. A one off holiday, costing about £250 for a week all in was my budget - five of those for £1250.

Another friend asked us how we afforded to go away so often, and it turned out that she spent £1500 on one bloody week - I only knew because they complained about it!

Part of it is pure dispositions. Some people really would just rather have the latest iPhone, a lease car etc. But I've found that those people, more often than not, also want the other things too. And pay for it on credit.

I didn't go to uni, I got an entry level job that paid 14,000 pa, lived at home with parents so my only real costs were running my car and one holiday abroad a year. 4 years I saved most of this salary.

I then went and worked a ski season so I was paid for the experience of living abroad and partaking in my hobby for 6 months and it meant I didn't have to touch my savings. Returned to England, got a job lived with parents for the next year, then bought a 2 bedroom flat and took in a lodger which paid a good chunk of my mortgage each month.

I bought in 2009 though so property was cheaper and interest rates were higher when I was saving so I was getting a good return on savings each month.

I really, really don't believe that, it's not even remotely what I said.

If you don't want to pay for her to go to university unless you have a guaranteed return on investment then fine but be honest about it.

There are lots of ways to gain an education, and university is by no means a guarantee of high pay. If you are willing to pay for her to go to university, it is safest to dissociate that from the idea of financial gain. If she doesn't get a high
paid job after, will you hold it against her?

I mean, I worked 2 full days a week through university, my parents couldn't afford any contribution so I had to have an income as well as studying. I probably would be in a similar job to the one I'm doing now without a degree, it's not a graduate role and I started at the bottom and am working up, I don't use my degree subject at all and my work experience says a lot more about me than what I was doing 15 odd years ago. And dare I say, luck had more to do with it than a degree...

If her owning a house is the most important thing to you then I agree, don't pay for uni and use it towards a deposit. I am just saying - be honest about your expectations...

Get a PT job as a teen, direct half the money you earn into a high-yield/high-risk managed fund. Take extra jobs like babysitting whenever you can. Don't spend on stuff you don't really want or need. Go to uni on a loan - avoid all voluntary paybacks - these can wait as student loans are cheap credit - channel any funds into your managed funds instead. Establish a good credit score by taking on a credit card but only spending a small amount on it and paying it back by direct payment consistently every month. Take a job early - do not do postgraduate study, get working early! Seek promotions. Be ruthless in your job selection. Prioritise salary growth. Do NOT get pregnant! Save all bonuses, payrises, but have fun.

Do this and you'll have £100k saved by 29.