To ask what financial advice you would give a new graduate?

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I am in my 20s and just finished university and hoping to get a graduate job soon. I grew up poor so the idea of having savings or being able to buy a house was something I had never really thought about until now. I know next to nothing about how to manage finances and it is something I can't really ask my parents.

I was wondering what kind of financial advice you would give to your adult DC when they are in their early to mid 20s just starting adulthood? How much should they be saving? What kind of amount in savings should they be aiming for if they want to buy a house?

I'm feeling a bit anxious as all of my friends from university have quite significant savings despite us all being new graduates and a few have parents who have got house deposits saved already for them. I feel quite behind and anxious that my adulthood is already not off to the best start which I know is silly... I also feel guilty as my attitude with money so far has not been great. Having money is new and I spend it on things I shouldn't (e.g. expensive makeup when I could make do with cheaper brands). I think because it has been so novel for me I have been spending it on the kinds of things I feel like I missed out on as a teenager. But I am putting my foot down now and aiming to be more sensible.

I know this is quite a broad and unspecific question and I apologise.

choose your partner wisely. Don’t get someone who fritters away their and your savings

Yes please be careful. I ended with someone who was already wealthy but I've just recently found out that he's gambled away 600k in pursuit of becoming a millionaire. That money could have gone towards our DD.

It depends what your aspirations are but I agree with the poster saying focus on wages! If you’re on £20k and super strict with money you’ll probably save a bit but life will be miserable and you may find you can’t buy a house any way as a bank will only lend 4 x wage.

Whilst you’re on the starter wage, do save a bit but also give yourself a realistic budget for fun so you can feel the kind of lifestyle you want. You may have to make some choices but that will help you learn what is important in life to you i.e. if you buy a concert ticket for a night out with friends you can’t afford the expensive make up this month, which would you feel you missed most? Save less than you think you should whilst you’re starting out- I used to think my wage sounded huge so try and save a massive % of it but fall off the wagon mid month and blow it on something fun because I seemed to think I could save loads and spend loads! You can’t do both! I would have actually been better putting away £200 per month successfully rather than trying to save £500, failing and booking a holiday!

Also download Rightmove and start looking at houses. Start thinking about what you want your life to look like- would you think a 2 bed terrace is a comfortable family home or do you aspire to a 4 bed semi. What could you buy as a starter home on your wages? Start thinking about this stuff and think about how you would fund it long term- i.e. how much you’d need to save and how much your wage would need to be. Then work out a career path that would help you achieve this lifestyle.

So many of my friends chose lower paid fun sounding jobs when they left uni and are now annoyed that they can’t afford even a 1bed flat. They told me I was greedy for going to work in a well paying bank but I bought a 1 bed starter home at 24, met my fiance there and we’re now saving for a 3 bed family home. Choosing a well paid employer with many upward opportunities has really changed the trajectory of my life. My friends may be resentful and call it luck but it was actually a very calculated choice based on the kind of lifestyle I want to lead.

Pay the required minimum %age into the employer pension scheme, no more at the start of your working life - you cant get it back until your're 55 so useless for house deposit etc.

Save money into a more accessible savings scheme for house deposit, or car or holidays or as a buffer. Look at a lifetime ISA where govt top up if you meet criteria. Regular savings accounts usually give better interest than normal accounts. No harm in having 2 or more savings accounts for different purposes. Stay away from ISAs linked to stock market or unit trusts etc unless you are willing and able to research and accept the risk of loss of capital in case of market downturn.

Spend time on money websites such as Martin Lewis' www.moneysavingexpert.com to get advice and for info on best deals for interest rates etc. Use website comparison sites for insurance, utilities, holidays, car leasing, etc.

Always check you direct debits and standing orders for utilities, insurance, mobile phone, etc - cancel things you dont need, shop around at end of contract term for better deals, especially mobile phone contracts.

Join loyalty schemes (Clubcard, Nectar etc) - the savings/benefits look small but build up over the years - we've just bought a microwave with our nectar points.

Get credit cards/current accounts that give you benefits such as cash back, travel insurance etc. Watch that any monthly/annual fees are less than the benefits you get. For credit cards, pay off in full every month to avoid paying interest.

ALWAYS read the small print with ANY contract, lease, etc - don't sign anything you don't fully understand. You need to know how long you're committed for, what happens at end of contract, whether you have early termination rights (and at what cost), extra costs, etc etc.

Choosing a well paid employer with many upward opportunities has really changed the trajectory of my life.

Fully agree. A lowly starting position with a large/good employer is often better than a "better" job in a small firm. Once you have the "foot in the door" you can prove yourself and can usually get more training/promotions internally if you want to. Bigger firms also usually have better benefits such as better pension schemes, better sick pay, better holiday allowances etc.

Read 'rich dad, poor dad' by Robert Kiosaki.

Its American and a little dated but it'll give you insights into a whole range of strategies that families with money use and that no-one ever tells you.

I wish I'd read it 15 years ago.

So:

Get to grips with your student loan. Decide whether to live with it or smash it. This was a biggie for me. Graduate friends from better off families didn't have loans.
Save a small rainy day fund just in case.
Be conscious about taking credit. Take it but only for things you need.
Don't forget it's important to invest in relationships. Buy flowers for someone special, treat your boss to a coffee, treat your team to donuts. Don't be flash but equally don't be tight.
Spend big on what appreciates in value (pension, property, relationships, career development). Spend small on what depreciates in value (makeup, lazy cabs, gym memberships)
I'm not kidding on this. Buy yourself the best watch and work handbag you can afford. People judge you on stuff like that. You don't need 'designer' stuff but NEVER wear 'cheapo' coats, shoes or bags.
Buy a property, anywhere, asap. Even if you don't live in it.

Choosing a well paid employer with many upward opportunities has really changed the trajectory of my life

Also think about whether you're a 'live to work' or a 'work to live' sort of person. There's no point going into the 'your employer owns your soul for 60-70 hours a week' sort of job if you don’t want this sort of lifestyle as you'll either be miserable or get let go after a few months.

I disagree with the first post re don't go out if you can't afford it. I'd still go out socially, but I used to make sure I spend very little by arriving after they had eaten, only drinking water, walking home. I had the best time!

Get to grips with your student loan. Decide whether to live with it or smash it

Live with your student loan unless you're going to be a very high earner for am extended period. Most people on average salaries won't pay anywhere near all of it off. Read up what Martin Lewis says about student loans before even thinking about paying a penny extra.

Overpaying is very likely to be money down the drain for most people as you'll still be required to pay the tax like payments out of your salary.

Don't buy anything expensive or optional the same day you saw it! So if you see a nice jacket, for instance, but it's a bit pricey, think about it and at least sleep on it. You might decide that it will last and goes with all your clothes, so it's worth spending a bit more. Or you might realise you'd have only ever worn it once, and decide not to buy.

Don't go into debt to buy things - and I include car finance and phone contracts in this. Don't insure things you can afford to replace - insurance companies don't run at a loss.

Saving is a mindset as much as anything else; you need the mindset that the money you're saving for a house is untouchable (obviously unless there's some personal disaster like losing your job in which case you might have to use it.)

Buy yourself the best watch and work handbag you can afford. People judge you on stuff like that. You don't need 'designer' stuff but NEVER wear 'cheapo' coats, shoes or bags

Stupid advice. Most people don't care.

If you want designer, you're better off going 2nd hand.

Look at money saving expert. There is a lot of financial education on there that is very accessible.

I’d say think carefully about what jobs you’re looking at. If you can get on a grad scheme your path is likely to be much easier. If you don’t, you’ll have to be a bit more strategic about what jobs you take and more pro-active about your own development.

On money, I’ve always seem savings as a bill and tried to budget really clearly including one-off items.

I remember when I first graduated, I had £-2000. I needed help from my parents to buy suitable work clothes and to get back on track. I you are able to stay with family, it will save a lot on rent. It has been really hard for some of the graduates I’ve managed to come to London, spend most of their salary on rent only to live somewhere crap.

I’d also say be realistic. Graduate salaries haven’t really kept pace with living costs. The starting salary for the grad scheme I did actually pays less now a decade later than what I started on.

@Oblomov20

I disagree with the first post re don't go out if you can't afford it. I'd still go out socially, but I used to make sure I spend very little by arriving after they had eaten, only drinking water, walking home. I had the best time!

Yes, go out but make sure you don't get trapped into splitting the bill with big eaters and rounds of cocktails if you can't afford it.

There's nothing shameful or impolite about saying that you're trying to have a frugal week/month especially if you're low paid or saving a house deposit. Seek out cheaper places to go where you can still have fun.

Chances are there's others in your social circle in a similar position but don't want to say anything.

@BarbaraofSeville

Get to grips with your student loan. Decide whether to live with it or smash it

Live with your student loan unless you're going to be a very high earner for am extended period. Most people on average salaries won't pay anywhere near all of it off. Read up what Martin Lewis says about student loans before even thinking about paying a penny extra.

Overpaying is very likely to be money down the drain for most people as you'll still be required to pay the tax like payments out of your salary.

You really need to do some forecasts of likely earnings and to see how the extortionate interest rate accumulates. Yes, most people won't fully repay everything they owe, but the forecasts include the interest, so a high proportion pay off the original loan, but not all the interest. The figures used by Martin are misleading.

So saying Fred doesn't pay off his loan may be true, but Fred could well have taken a £50k loan, repaid £100k over 30 years but still not "repaid" his loan as interest was over double the £50k borrowed. Fred would have been better off overpaying his loan repayments so that less interest accrued. For higher earners, it's like overpaying a mortgage - you can knock years off a mortgage by relatively modest overpayments in early years.

It's the one thing I strongly disagree with Martin about. He's right in what he says re people who are likely to be lower earners or who are going to take career breaks, but for people who are going to consistently earn above average for 30 years, Martin's "advice" is utterly wrong - they should be overpaying from the outset to reduce the interest accumulating.

Take every training, education and learning opportunity offered to you at work. I have been teased by various colleagues for my enthusiasm for (voluntary) professional exams and training etc. I maxed out the training budget most years! And have spent a fair bit of extra time over weekends studying the last few years.

But I started work earning £16k 13 years ago and now earn nearly 10 times that. With plenty of headroom still available over the course of my career (all going well). I know that I wouldn't have even been considered for my current role had it not been for working hard to pass a certain set of exams a few years ago.

I still take my lunch in every day (well, we all WAH now). I also save every rise and max out pension contributions.

I started in your position OP - surrounded by other graduates whose parents gifted them a flat, or had a trust fund etc. I had studied Economics and bought a few books on personal finance and they echoed much of the advice given here.

@ramakinsmarties read what I said, buy the best you can afford.

People who are comfortably off 'signal' to each other all the time. I interpret OPs question as working towards this comfortable lifestyle.

Being frugal is not the same thing.

Don't insure things you can afford to replace - insurance companies don't run at a loss.

Yes to this. Insure your car, your home buildings & contents, and your holiday - the big things you can't afford to replace or for costs you can't afford to pay (repatriation after holiday accident etc).

"Self" insure your phone, kitchen appliances, gadgets, TV, etc. If you insure all the small stuff, it'll cost maybe £100 per month. Save the £100 per month instead and just pay for repair or replacement of what you lose or becomes faulty as and when it happens. As long as you're strict with yourself and ring fence the money you save, you'd be very unlucky indeed not to have the money when needed and in fact could build up quite a nice fund if you're careful with your stuff.

Re student loans. Say £45k borrowed.

If you earn £30k now which increases by 2.5% p.a. for the 30 years, you effectively repay the loan £45k, but the interest is written off.

If you earn £46k now which increases by 2.5% p.a. for the 30 years you pay off the student loan but you've also paid a further £60k in interest! Meaning your total repayments were a whopping £105k over 30 years.

Anyone likely to earn £30k or more (in todays money) for the full 30 years really needs to be overpaying or paying it off as the interest is disgustingly high. A mortgage is cheaper!

www.student-loan-calculator.co.uk

Dont panic and dont feel behind! If you're already wondering how to financially sort yourself out you're ahead of a lot! I know my best friends parent's advice was to save a third, spend a third on bills and a third on enjoyment. My parents said get to a point where you always have between 500 and 1000 in an account for an emergency and to try to have a long term savings account too where you always put something even as low as a euro in to know you saved that month but preferably something like 50 euro a month in (I always had 1000 sitting there but never did regular savings which now of course I regret!) They also said about priorities, so to watch what you spend on, know the things you can save on, and what you need to treat yourself on because ultimately life is about enjoying yourself too!! Best of luck OP!!

Make sure your job has a decent pension and then don’t worry about your pension.
Don’t mistake being generous for actually ending up paying for your friends all the time.
Do buy that dress/bag if you have the disposable cash.
Do arrange a budget and get out of/stay out of debt.
Don’t be guilted into loads of subscription services my flat mates.
Do shop around for bills and challenge landlords if the bills are included and pricey.
Being in control of your money is an amazing feeling! Don’t be scared - take control. It’s the best thing you’ll ever do.

Learn as much as you can about money, finance and debt. Learn how to use it all to your advantage.

You don't have to have a lot of money to start with if you know how to use it and what to do.

Save, save, save.

Learn what to spend money on and what to buy cheaply.

Check out charity shops for kitchen items and furniture. You never know what you will find.

Don't spend like your peers do. Have your own goals and path. Comparison is the thief of joy.

Take any job and be open minded, you never know what skills you might learn and who you might meet.

Invest as much as you can in a pension and under stand how they work as much as you can.

Buy the worst property on the best street.

OverPay your Mortgage. Even £25 a month makes a dent over time.

Understand interest rates and especially compound interest and the effect on debt.

Don't have relationships with people who don't have the same financial goals. This will cost you more than you think.

Understand the "sunk cost" of something.

Check out charity shops for kitchen items and furniture. You never know what you will find.

Likewise don't be afraid to buy used from ebay or amazon. I've had a succession of second hand iphones, ipads, laptop computers etc over the years from approved refurbishers on ebay and amazon. Choose the ones with good feedback over many years. Once or twice I've had problems but the seller has refunded/replaced without quibble. Writing this reply on a Lenovo laptop which cost me £200 last year - an equivalent new one today would be around £1000, i.e. same processor speed, solid state drive, same op system, etc. You really wouldn't know it was used - it looks and operates like new, no damage, no marks, etc.

When our son was small, we bought all kinds of things second hand from ebay for him, books, toys, pram, cot, clothes, the lot really. You quickly learn to sort the wheat from the chaff. We scrolled by any listings with poor photos or poor descriptions or people new to ebay or with low numbers of feedback.

Like anything else, research, research, research, whether it's a bank account, pension, lease, second hand computer, or charity shop find. If you do your research and check things out, second hand can be good as new and a hell of a lot cheaper.

@user1497207191 YES! Thank you. That's exactly what I mean about student loans. If you're a moderately well paid graduate (as per your example) it will financially drain you throughout your working life, it's really not the 'cheap money' that you are led to believe, and is taken into account for other borrowing.

Big stuff:
Pension.
Invest in yourself - it's worth spending money on education which will increase your earning potential.
Be aware of your worth - women are especially bad at negotiating pay rises.
Budget, budget, budget.
Get into the savings habit.
Learn a bit about investing.

Small stuff:
Don't borrow money for stuff you don't need i.e. put clothes, meals out, holidays etc on credit cards which you don't pay off immediately.
Don't waste money on 'stuff' - you'll look back on the cappuccinos, new dress, expensive cocktails with very jaded eyes when you're 35 and can't afford a year off with your baby.
Money Saving Expert is an excellent resource.

Wish someone had told me this stuff 35 years ago!

I would also recommend reading Alvin Hall, 'Money for life'.

Very easy to read and written so you can do one step at a time.

@Theyweretheworstoftimes that is bloody brilliant advice about relationships!

OP, I’ve seen friends who are sensible with money weep when their husbands are running up credit card debt again.