Looking for financial advice

[learningfromscratch]

Hello, I’m hoping someone might be able to help me.

We’ve never really talked much about finances in my family. Pretty sure my parents don’t have shares or investments. They own their house outright and put a bit into savings, but that’s about it. Just to give you an idea of how clueless I am! Some of my friends have all sorts of stocks and isas and things, and money is something they've grown up with. I feel like I'm being left behind as I don't have any inheritance or knowledge to work with.

Dad has always encouraged me to save 50% of my income (after essentials), which has been a good habit to get into. But I’m wondering if there’s more I could be doing? I’d really appreciate it if you could share your experiences and advice. I feel like I have so much to learn, and it’s not something I’ve grown up with much knowledge about.

Here’s what I am already doing :

• Regularly save into an account with the best interest rate I can find (I have shopped around to avoid being stuck with a lower rate, which I guess then happens every year? Do you close the old accounts?)
• Have just started investing into a stocks and shares ISA. Only £25 a month but it's a start.
• Pay into a SIPP, again not much right now but trying to start good habits.

I don’t have a big pot, but I’m hoping to make sensible decisions and grow it while I’ve got very few responsibilities and outgoings. Appreciate any advice! Thanks.

How far are you from. Retirement? Do you have a work pension that matches contributions? What are your financial goals?

I'm only 19, so a long way off. Don't have a work pension option yet.

My goal right now is learning. I want to start good habits and learn more about how to look after money. I have a few ideas of things I'd like to do in the next 10 years (travel, buy a house), but it's more the having a life where I am understanding the finance world in the same way that people who have been born into money seem to get it. I don't just want to save for something, then spend the money, then start saving again. It feels shortsighted somehow. Although perhaps I'm wrong and that is just what people do? We're very much working class and I feel like because noone has ever taken an interest/it's not talked about that perhaps we're not gaining as much from the world as people who ask questions and take an interest in money. Don't mean that in a judgemental way. My family work hard. I just want to do the best I can. I tried studying economics but it didn't focus on personal finances.

I've learnt all this from scratch too!

I highly recommend finding things that work for your preferred method of learning. It's not a magical overnight process to be financially responsible and 'smart' with savings - see it as an ongoing thing. I learn better in bits and pieces from following on social media and reading blogs. I find I pick up loads that way.

I follow:
(insta)
MyFrugalYear talking about spending habits

TheSavvySpenderOfficial - talking about different types of credit and how to make it work for you, savings accounts, and side hustles/tax

HerFirst100k - this is US based but lots of useful information on habits and making your money work for you

Go Fund Yourself - this keeps you up to date with UK changes in interest rates and how politics and the news effects money, and is really relevant.

• I read Refinery29s Money Diaries ~ they're blogs where readers write in with a full description of a weeks spending and their financial background/salary info/job titles etc. They're published twice a week - more on the US site - and I just find them so interesting. It's really shown me the differences in spending with different backgrounds, how people save and use their money. There's also a Facebook group for UK readers which is AMAZING - people ask for advice and there's such a varied range of responses.

Obviously pick what you think is helpful, but for me this was the way I learnt - not just the headlines but how people manage day to day, and has made me much more money savvy. You can also search within the pages and sites for specific information related to immediate decisions.

Great that you are learning and thinking about this aged 19. It will stand you in good stead.

Always worth making sure you have thought about all the savings goals you have - both long and short term. There's nothing wrong with saving up for a holiday, then going on holiday and enjoying yourself! Way better than putting the holiday on a credit card and racking up interest payments. But yes, as well as that short-term saving you should be thinking about long term saving like for a house deposit. But there is room for both.

Martin Lewis's moneysavingexpert is a good website for tips. Check out the LISA (Lifetime ISA) which can be used for saving for a house and gets a government bonus.

Thanks so much this is great!

Yes the day to day stuff is something I'm really interested in. Like I said right now the best we do is pay the bills and save the rest, but then when the car breaks or we have a holiday or something the savings pot is empty and it all starts again. Other people seem to have savings which grow and grow, despite I'm assuming having similar bills. When I mentioned I was changing my savings account because my interest rate had dropped there were a lot of raised eyebrows and 'hark at the little Lord Sugar. It's not normal behaviour, but I'd like it to be. Hoping to have a life where if the boiler breaks that doesn't mean Christmas is cancelled, and I don't think that is purely reliant on the job I have. Though that would help.

Do a proper budget, with sinking funds. Make sure all your bills are the lowest they can be.

Holidays or the car breaking down can be budgeted for to a large extent.

So ours goes something like
Mortgage £800
Gas electric £150
Council tax £200
Water £30
Internet £25
Phones £20

Then once all the monthly fixed bills are accounted for, we do money into pots for annualised expenses, so
Home insurance £25
Car insurance £40

and whatever (can't think what they are off the top of my head haha!)

Then a set amount for variable spends, food, personal spending, toiletries etc.

Then a set amount each month to build up funds for a holiday.

A set amount each month to cover presents for birthdays and Christmas (otherwise you end up spending £££ in December and as you say not being able to afford it if the boiler needs a repair!)

A set amount each month to cover the car expenses - so MOT, tax, servicing, and a guestimate for costs for some repairs being needed.

A set amount for home maintenance or new furniture/appliances that are needed. That way when the washer breaks down you've hopefully got a bit built up and it's not coming out of your savings.

You can put less in proper long term savings each month this way, but you're much more in control of what you're able to afford.

Out of interest, which S&S ISA have you gone for? I'm looking for one where you can pay in £25 a month.

It was on Hargreaves Lansdown but only opened it a few days ago. It said I could either pay in a lump sum of £100 or transfer £25 a month, so went with that. I've no idea what I'm doing really. Right now I have about £100 a month I can save, so thought if I put £50 into something I can access if I need it, £25 into the fixed rate and £25 into this fund then perhaps that was a good thing to do.

Op who are you comparing yourself to when you say that other people have savings that seem to grow and grow? You seem in a fantastic position for a young adult.

I second looking at Martin Lewis site for advice. Also Open University have a free course linked to Bobby Seagull with useful info for younger person related to finance

Separate savings pots helps. You can do this as 'spaces' in starling. Try to have at least £1K in emergency fund for when things going wrong/need replacing. Then build up separate pots for xmas, holidays, treats etc - small amount every pay day.

If you're 19 the best thing you can do financially is invest in yourself - get as much training as you can and build skills in areas that are well paid, in demand or have lots of benefits like a good pension. Your ability to save is limited by your ability to earn. I've been learning that the hard way after decade of shit pay and scraping by! Also if you might want to buy a home in future start saving now - look into a lifetime isa.

I would put as much as I possibly could into the SIPP without leaving you short. Every pound in there now will be worth £££ by the time you retire. If you retire at 67 you’ll have almost 50 years of compound interest! If you can find a calculator online you can have a play around and see the difference that even an extra £10 a month will make at such a young age.

Mostly thinking about my friends parents compared to my parents. My friends dad works in a similar job to mine. I think they have similar incomes, and we live in similar houses. But they go skiing every year and they bought her car for her, and now helping pay for university, whereas we just do not have that kind of money. I asked her how they afford stuff and she said her family have shares, so started looking into it and found it interesting. Can imagine there's more to it than just they have shares and we don't. Have other friends who have had investment accounts and things opened for them by grandparents as well. Feels like some people are thinking long term, and I want to be one of those people. Someone said this might be a good forum to get real world advice so I thought I'd try here. Felt like it might have more sensible people than on tiktok.

thank you

You are not budgeting properly if you are dipping into savings to pay for emergencies.

You need an emergency fund first.

Short term saving goals.

Long term saving goals.

Ah! So you are talking about your parents' finances, not your own! I was confused.

I have found using a flowchart like this useful to give me ideas of what I should be doing with my money: https://ukpersonal.finance/flowchart/

Firstly your parents have done well to have a mortgage free house, when I presume they are only middle age and maybe still working, so only now do they have free money to begin to save. When I started work, my parents encouraged me to save 1/5, pay 1/5 to them for rent so I had 2/5 to myself which covered 2 nights out each week, maybe a pair of shoes and another item of clothing. Usually I would run out of money by the time I got my next pay and would borrow from my Mum just enough for bus and lunch. I started work at 16 and had my first mortgage at 20, although my bf put in 5 times the deposit more than me in our first property. With regards to pensions with my Sons I’ve said it’s entirely their decision whether to pay extra into them, one is paying in more, the other is paying in the minimum.

When you get the option of a workplace pension you should certainly put something into that as your employer also has to contribute.

I suggest at your age the obvious thing to save for is a house/car and there are plenty of 'inflation beating' accounts available. Your money will be safe and avalible when you decide you want it.

But congratulations for thinking about it

Sorry for being confusing.

It's how my parents do things, everything is in one pot. That's the sort of thing I want to learn how to do better.

But surely you still have to save for the emergency pot, so it's still a 'savings account' in a way, and can earn interest? I spend about half my pay (give parents rent, pay for car, plus fun money etc), put some in savings for specific things (I went on holiday for example). But now I'm paying into a longer term pot (fixed rate, but which I would use for an emergency if I needed), and have also started an investment account which I don't want to touch if I can help it, plus the pension. Is that what you mean? There's only tiny amounts going into each bit right now, but I think it's more the habits and also was reading about compound interest.

I hadn't thought of it like that, but yes maybe that's why they've not saved. Though when I talk to mum about investing she is very dismissive that she doesn't understand it and it's something people with money do, not really for the likes of us.

Wow, that looks like I have a long way to go before I should be considering the savings. Saving to have enough for 12 months of outgoings before doing anything else is probably the sort of thing that put my parents off, because something always happens before they get there

This. Do this. My DH was the person who taught me about this when we got together, and now our finances are intertwined and we have a car ‘sink’ fund, holiday savings, emergency savings and long term savings (including some shares) and our little boy has an investment account where we save for him every month and grandparents contribute too. It’s revolutionary when you come from a background where Peter was constantly being robbed to pay Paul and investments were looked upon with suspicion.

I also use monzo for my own personal spending money every month and save into pots. So I have money for travel seperately so I never run out and I save for Christmas every month so I’ve usually got £500+ saved and I’m not stressing about how to afford Christmas (DH does the same so we have a splash out on pressies and food).

You’re in a great position as you’re thinking about this at such a young age. Well done and good luck!

thank you @Retrospeaker and @SapphireOpal I will look at sink funds, have not heard of them.