Lifestyle creeps

[Firefumes]

I’m late 20s. I previously earned £45k. Lifestyle was fairly comfortable, have my own home + all bills paid, but would generally split purchases for anything over £250. Didn’t really go travelling much for the same reason.

Started a new, better paying job last month. After all deductions and paying all bills, I basically have my previous salary left to play around with. So what I used to live off for the month, is now what I’m able to spend/save and I find it hard to get my head around.

It’s the most I’ve earned. I’d like advice on investing properly in the future and resisting the temptation to spend it poorly. I have some credit card debt (£4k) to pay off. Then I might think about increasing pension payments or getting some professional memberships and qualifications perhaps? I work in an analytical field.

I would...

1. Pay off credit card
2. Increase Pension Payments (tax efficient - at the moment)
3. Invest Stocks and Shares ISA.

Note: I am not a financial advisor.

With regards to 'professional memberships and qualifications' - this could be a good move but when you say you 'work in ananalytical field' - in all seriousness is this not an area that may taken over by AI?

Although, perhaps ironically, AI in Google states... but it may be protecting itself!

'AI won't completely take over analytical jobs; instead, it's transforming them, automating routine tasks like data cleaning and basic reporting, but requiring analysts to evolve into "Augmented Analysts" who focus on higher-level strategic thinking, business context, communication, and guiding AI tools to solve complex problems and drive real-world implementation. While some entry-level, repetitive tasks may be automated, core analytical roles needing human judgment, empathy, and understanding of complex business goals are unlikely to disappear, with new roles emerging around AI integration. '

@TwoLeftSocksWithHoles not really, people that do basic admin in any field can be replaced by AI. But whilst my line of work can leverage AI, AI can’t replace it. I agree with what the bot sent you.

It’s a bit redundant to discuss anyway because I am a machine learning specialist - I’m more on the backend of AI like a developer, so I’m protected in a sense.

Do you have 6 months living expenses in savings?
if not, that is a good place to start. Find where you will get highest interest.

What % pension contributions are you making?

Do you have an ISA?

Set aside some money each month towards travelling if that is what you want to do.

Pay off credit card - this is your priority and it is currently costing you money
top up pension - this will future proof you should you take time off work/ get made redundant etc at anytime in the next 30 years.
over pay mortgage if your interest rate is greater than the best savings rate you can get.
watch Martin Lewis this week, it was investing 101.
Start an ISA

First, pay off your credit card.
James shack on youtube has a good post on order of managing money. I watched it and noted it down stopping the clip to make notes. It starts with clearing debt, emergency savings pot, paying pension, utilising tax free savings limits, going into different sorts of investments etc as wealth builds. You are going to be earning more and more so really educate yourself about money beyond just savings. It might be worth paying an independent financial advisor for a financial review to get the ball rolling and take it from there, building your knowledge slowly. A person can manage finances well, doing all the steps, but there are ways of doing it efficiently by maximising tax allowances and reducing ni contributions etc. This is what you need to know.

Anything you earn over 100k should go into a pension, as otherwise you’re paying over 60% tax on it

Financial flow chart is a good 'to do list' of what you should be thinking about:

https://ukpersonal.finance/flowchart/

Also be aware of how you think about work etc now, could well change in 5/10/20 years time so it's good to be aware that decisions you make now could have a huge effect on the choices you can make later - ie if you spend all your money on lifestyle now, in effect you will end up paying for it later. On the other hand, things like travelling or professional development might be easier now than in a few years time if you decide to have children or your health declines.

The Meaningful Money podcast is a good way to learn about money. There's a huge back catalogue but a recent season discusses the financial flowchart in detail, so gives a good overview of what you need to know. They're also branching out into Youtube and I think he's planning to do a 'young person' version with his 20 something DD, so Tiktok and Instagram rather than longer podcasts with two relatively old men chatting for nearly an hour.

https://meaningfulmoney.tv/category/podcast/season-25-finance-os/

But there's nothing wrong with spending more on 'nice things', you've earned it. You could split the extra money into quarters and use a quarter each on spending, mortgage overpayment, short term savings/investments and increasing your pension contributions. Also definitely keep the effect of tax in mind and like a PP says, if you can afford it and are happy to tie the money up for the long term, make sure your pension contributions take your taxable earnings below £100k.

Hi
Martin Lewis gave a speed version of what they teach you on The Rebel Finance School programme.
Have a look. It's free, not a con but covers everything from debt, emergency funds, ISA, pensions, the lot.