As a third year student, you are probably still enjoying living off your student loan and part-time wage, with your only stresses coming from the pile of end of year assignments or dissertation. You might not want to hear this – but it’s wise to start thinking about financial planning before you graduate and enter the real world of adulthood.
It’s not necessarily plain sailing anymore. Graduating university usually comes hand in hand with full-time employment and more financial responsibilities. Your circumstances change, so it’s wise to think ahead.
With adult life comes new goals, and new priorities. Whether you are saving for a home, or looking to purchase a new car, you’ll need to carefully plan your finances to make sure you meet your goals, and don’t fall behind on existing outgoings.
Here, Personal pension provider, True Potential Investor, explains more:
Set your goals
Your goals will be unique to you – whatever you are saving or investing for, big or small, you’ll want to make sure your goals are manageable. People often save for ‘milestones’ in their life, and whilst it might seem a little early to be thinking about retirement, it is not too early to start putting money aside for your pension.
In True potential’s latest Savings Gap survey, they found that people in the UK are on course to receive just £6,000 per year in retirement. In reality, £23,000 per year is needed to ensure a comfortable retirement.
Quantify your goals
Once you have set out your goals, it’s important to quantify them. Giving yourself a timeframe to achieve your goals gives you something to work towards, and helps to stop you falling behind. Depending on your goal, the timeframe will vary, but make sure you make it realistic – the last thing you want is to follow an unrealistic timeframe that makes you fall behind with your other finances.
Create a budget
Paint yourself a true picture of your current finances – don’t leave anything out. From this you can see how many outgoings you have on a monthly basis, and establish how much you can afford to set aside and save. It’s sometimes easier to group outgoings together into categories like car finance, housing, utility bills etc.
Again, make your budget realistic and manageable – you don’t want to put unnecessary strain on your existing finances.
Invest in the right product for you
Once you have established the right amount to put aside, choosing the right product to support your savings and investments is next. Individual Savings Accounts (ISAs) offer a tax efficient way to save and/or invest,
If you’re hoping to raise a significant amount, a Stocks and Shares ISAs could be a good option. The money you add to these can be invested in bonds, property or stocks and shares, so you could get out more than you pay in. However, there is a level of risk involved.
Overall, the saving or investing option you choose should be based on what you’re saving for, the return you’ll require and level of risk you’re comfortable with.