Many young adults have seen their finances battered over the past couple of years, with some having to put plans on hold as the pandemic has impacted their work, income and life.
While money situations may still be difficult, there may be some small changes people can make which can help to mend their finances over the short-term – and also set themselves up on a firmer longer-term footing.
Make the most of digital tools
Budgeting apps and other online tools can help you keep track of your daily outgoings, says Emma-Lou Montgomery, associate director for personal investing at Fidelity International, giving you a rundown of what you’ve spent and where.
“Keeping your eye on your spending is the first – and most essential – step, when it comes to looking after your finances, but you would be surprised how few people regularly check what’s coming in or going out of their bank accounts.”
Tackle those debts that are weighing you down
“With more opportunities to splurge than in lockdown, it can be quite tempting to spend freely – even if you know you’re holding on to a couple of unpaid debts,” Montgomery continues.
“Remember, paying your bills on time leads to a positive credit history – and too much debt can cause a lot of stress. If you’re struggling with paying off an overdraft, map out how much you can realistically afford to pay off each month. If you have credit card debts, focus on those with the highest interest rates first and keep track of your due dates, so you don’t incur any late payment fees.”
Re-boot pension savings
If your income was reduced in 2020 and you made the decision to reduce or stop your pension contributions, now might be the time to reassess your situation. “It’s important to consider how much you need to add to your pension pot now, in order to have the lifestyle you would like in later life. If you’re a couple and one of you isn’t working right now, your partner could top up your pension for you,” says Montgomery.
Budget for your future work-related costs
The new working world is still evolving, but that doesn’t mean you have to start spending at pre-pandemic levels in future.
Additional costs such as coffees, lunches and dinners on-the-go can all quickly mount up, so it’s vital you put a financial plan in place.
Invest for the future
For those who’ve been fortunate enough to save money in lockdown, diverting some of that cash into investments could put your finances to work for the future. In 2020, Fidelity International saw the number of new personal investing customers aged 18 to 29 double, compared with 2019.
