Financial tips for young professionals
Cost of Living: Financial tips for young professionals
By Lilly Croucher
Young people are the most financially vulnerable age group. Despite the criticism of overspending on avocados and Netflix, 18 – 30-year-olds save more than any other generation yet are the most affected by the cost-of-living crisis, according to think tank, Demos.
With rising inflation and the new measures from the Autumn Statement, more young people will be feeling the squeeze, so what can be done? Here are some essential tips for young professionals to help.
Budgeting effectively
The 50-30-20 method
Get the spreadsheet out, this simple method will help you budget whilst adapting to your financial commitments.
Divide your monthly income into 50% for needs (rent and bills) 30% for wants (subscriptions, socialising) and 20% for saving.
Using money ‘pots’
Look at your online banking apps. Some, such as Monzo and Starling, have ‘pots’ or ‘spaces’ where you can put money to organise your finances.
Label these pots as you like, set up a standing order each month from your income and have direct payments taken from the pot.
Salary increases
Negotiating pay in line with inflation
First, share your concerns with your line manager, if there is no luck here, discuss this with HR.
If they are not moving, suggest different ideas to increase your salary such as working on different products, increasing commissions, or taking on training to improve your chances of promotion.
Companies cannot always increase salaries to meet demand but taking a consultive and positive approach is the mature and professional way to handle the situation.
If your company cannot increase your pay, this may be the time to look for a new job with a higher salary but make sure you have exhausted all other options first.
Savings accounts
Higher interest
Take advantage of the higher interest rates by opening a savings account. Many have interest rates as high as five per cent with some having good variable and fixed rates too.
Low risk investing
Investing in an index fund using a stocks and shares ISA is a good way to make your money grow further. Investing in the S&P 500 or FTSE 100 can have average returns of approximately 10%. Low risk means risk, your investment will vary depending on the stock market.
While the cost-of-living crisis will affect many of us it’s important to stay organised, be money savvy and think resourcefully.