As if turning 30 wasn’t jarring enough, the web is littered with advice and figures of what you should be earning, saving, and buying by the time you hit the big 3-0. From telling you that you should have already paid off your student loan, to reprimanding you for not saving anywhere between half and the full amount of your annual salary, it can be crushing if you feel you are not, as yet, on 'track'.
If you don't feel financially in control, don't panic. Trust us, you are not alone. Follow these 5 simple steps to help turn your finances around and begin making progress towards financial control.
There’s no time like the present to make good choices.
1. Start budgeting
Maybe you have a good salary so you’ve never needed to bother with a budget because you’ve always had enough cash to see you to the end of the month. Conversely, maybe you feel like you’re on the bread line permanently and so you’ve never bothered to make a budget because there’s never been enough cash to spread around.
Whatever the reason, your budgeting career needs to start now.
Budgeting is key to control. Managing exactly how much you have coming in, going out, and where it is all spent lets you understand your own spending habits much more thoroughly. Tracking your spending gives you a holistic view of your behaviour and lets you take steps towards stopping damaging behaviour, and develop a more mindful approach to your money.
2. Start paying toward your retirement
Retirement is coming up fast. It may not feel like it, but the earlier you start to save the more comfortable you will be later on. Fidelity, the investment firm, says that by 30 you should have saved half your annual salary towards retirement.
If this is not you then don't worry, the best thing you can do is just start saving now. Most experts agree that you should put between 10 – 15% of your income each month toward your pension. If you can’t afford to do this then start small. Sit down and do the maths. Decide what percentage of your income you can do without, and begin by saving that, even if it is only 1% or 2%.
Then, as your income increases over time don’t put the extra money towards everyday expenses, instead, just increase your pension contributions.
3. Start your emergency fund
Again, an emergency fund is important for helping you out with freak situations like losing your job. Ideally an emergency fund, also known as a financial safety net, should contain between £3,000 and £5,000. If you don’t have this saved then it’s not a problem. Even as little as £500 could make the difference between having to take out a short-term loan, or putting the expense on a credit card.
If you find saving difficult then downloading an app like Oval Money can help you by programming automated saving steps. You can start saving from as little as £1 a week, or begin rounding up the outstanding pennies from each transaction into a savings wallet. It is an easy and hassle free way to start your savings.
4. Start paying off your high interest debt
Before you start doing anything else, pay off your high interest debt. It will free up more of your income each month, which you can then start to save or put toward your retirement contributions.
5. Start investing
Although a scary prospect for many, it’s crucial to wrap your head around your investment options as soon as possible. Rather than just letting it sit in a bank account with a negligible interest rate, sensibly investing a portion of your income can bring you solid returns. It's a good way of learning to make your money work for you.