As you come to the end of your third year at university, you’re probably focusing so much on your dissertation and end-of-term assignments that you’ve pushed post-university life to the back of your mind.
However, once you graduate, your circumstances will change. Waving goodbye to shared accommodation and Saturday jobs, you’ll say hello to full time employment and the responsibilities of adult life.
As your circumstances change, you’ll find yourself setting new goals — whether it’s saving for a house or purchasing a new car to help with your daily commute. You may not have considered it, but careful financial planning could be key in helping you meet them. Personal pension provider, True Potential Investor, explains more:
Whatever you want to achieve, your goals will be unique to you — just make sure it’s manageable and achievable. As well as the ‘milestones’ of buying a home or car, you might also want to start saving towards your pension.
It may seem like a long way off, but a recent True Potential survey has found that you’re likely to need an annual income of £23,000 to live comfortably in retirement. In contrast, UK citizens are on course to receive just £6,000 per year, so putting some money away for your retirement as soon as you can is important.
Once you know what you want to achieve, you’ll need to decide on a timeframe to achieve it by. This will depend on your type of goal; for example, saving for a car may be a short-term aim compared to buying a property.
Make sure your timescales are realistic, to avoid putting additional strain and pressure on your finances.
The next step is to create a budget. Map out your monthly expenses against your income — it may be easier to do if you group them into categories, such as housing, utilities and more. Make sure it’s a true picture of your finances, so you can create a realistic, accurate budget.
From this, work out areas where you can save and establish how much you can put aside each month, remembering not to put your finances under unnecessary strain.
Choosing the right product is key to correctly supporting the growth of your savings and investments. There are lots of options out there, so you should review each with your goals, the level of return you’re looking for and the amount of risk you’re comfortable with in mind.
Cash Individual Savings Accounts (ISAs) are a tax-free way to save, meaning you’ll pay no tax on the interest your money generates. Another option is Stocks and Shares ISAs. With them, the amount you save is invested in bonds, stocks, shares or property, which offer the potential for greater returns. Of course, there is a level of risk involved so you could get back less than you invest, you should therefore carefully consider your choice.
With investing, your capital is at risk. Investments can fluctuate in value and you may get back less than you invest. Tax rules can change at any time.