How young adults can improve their financial situation
Many young adults’ finances have been battered over the last two years, with some putting plans on hold as the pandemic hit work, income and life.
While money situations may still be difficult, there may be small changes people can make, to help sort finances over the short-term – and set them on a firmer longer-term footing.
■ MAKE THE MOST OF DIGITAL TOOLS
Budgeting apps and other online tools can help track daily outgoings, says Emma-Lou Montgomery, inset, associate director for personal investing at Fidelity International. “Keeping your eye on spending is the essential first step.”
■ TACKLE DEBTS WEIGHING YOU DOWN
“With more opportunities to splurge than in lockdown, it can be tempting to spend freely – even if you know you’re holding on to a couple of unpaid debts,” Emma-Lou continues.
“Paying bills on time leads to a positive credit history – and too much debt can cause 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 and keep track of due dates, so you don’t incur late payment fees.”
■ RE-BOOT PENSION SAVINGS
If your income was reduced in 2020 and you reduced or stopped pension contributions, now might be the time to reassess.
“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, your partner could top up your pension for you,” says Emma-Lou.
■ INVEST FOR THE FUTURE
For those fortunate enough to have saved money in lockdown, diverting some of that 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.