Are you ever scared to check your bank balance? A study last year revealed that a third of 18-24 year olds were, with 46% saying that they’ve lost sleep over their financial situations.
We’re told from childhood that money is a subject best kept quiet, and talking about your incomings and outgoings is your own private business. But with so many young people struggling to get by, we think it’s time to talk. We spoke to four Debrief readers under 25 earning less than £25,000 a year about how they manage their finances. All four have recently had a reason to change their financial game plan - from paying off an overdraft to preparing for a baby – here’s what they had to say.
Jo Cheek, 22, working at a London theatre as a FOH manager
Jo left a high-paying job as a legal assistant in the City to pursue her dream job in the arts. Although the role as a paralegal paid well for a graduate job, Jo only stayed for six months as she wanted to find a job that would have a more positive impact on her quality of life, she says. However, she’s definitely felt the difference in her bank balance, with her new position paying just £17,000 a year (almost £5,000 less than her previous job).
‘I don’t regret changing to a less well-paid position, I absolutely love my new job,’ she said. However, sometimes I can’t help but think that there’s only X amount of time I can do this job, because financially, I’m going nowhere. I’m usually only just about breaking even every month - there’s absolutely no room for saving.’
I asked her how she’s managing to get by on a lower salary, particularly with the financial strain of commuting into London every day from Tunbridge Wells. ‘It can be really difficult sometimes. I’m finding that a lot of my friends and people my age are on salaries around £24-25k, so it can be quite difficult to arrange social stuff sometimes. I feel like I can’t chip in with as much stuff as I’d like to. There’s also no chance of me buying a house anytime soon, when quite a few of my friends are thinking about putting a deposit down on a mortgage.’
It seems like there can often be unwanted feelings of competition among friends and family when it comes to comparing our incomings. I spoke to another 22-year-old living in south west London who said she finds it really difficult to save as she tries to keep up with the spending habits of her sisters and friends.
But Jo is finding that small changes to her daily routine are helping, including using budget apps to log her daily expenditure and pre-planning meals to cook with her flatmate. ‘We try to cook more meals together and plan ahead so we buy fewer ingredients. It helps to save money, and we try to make our meals more interesting by experimenting with different recipes,’ she said.
‘If I have an expensive week this week, I know that the next one will have to be extra frugal.’
Harri, 24, a mother with an eight-month old son, soon going back to work full-time
Mum-of-one Harri, who worked in events management before moving back home to live with her parents in Peterborough when she had a baby, is heading back to work next month. I asked her about the financial implications of having a baby, and the ways in which you have to turn your spending habits around.
‘Well, I used to spend money on whatever, not even sure where it disappeared each month - I lived from month to month and saved little. I actually thought I couldn't keep my baby because I couldn't afford one, that's how bad I was with managing money. It made me anxious about money when I never had been before, and regret not being more sensible with it so I had a better start for a child. ‘I opened up a savings account and bought premium bonds. I didn't know what they were before, but they’re a pretty safe way to store your money. I also cut down on spending unnecessarily, started buying only the essentials and used the car less. ‘Now, apart from the odd splurge because I'd just been paid, I refrain from unnecessary spending that I used to do every month. I even take things out the basket in supermarkets now, telling myself I don't actually need it and to behave! And, as I’ve said, I’ve started paying into savings accounts which I wasn't doing before, because I freaked out that I had no back-up money if I ever needed it. I am also drinking less gin, therefore buying less gin, which helps.’
Laura, 23, a PhD student in London
After taking out a loan to study a Masters in the capital, Laura has gone on to take a PhD in Medicine – with her Masters loan to pay back pronto. She’d taken out a Career Development Loan for her MA, something you have to pay back straight after you finish your course. But she’s found a (rather old-fashioned) way to keep on top of her spending habits.
She said: ‘I think I’ve become much better with money, mostly because I had to be, really. I left my Masters with a big loan to pay back straight away, and it was quite stressful financially. In terms of my day-to-day spending, I carry around a little red notebook and write down everything I buy and how much it costs. It might sound a bit crazy, but it works! It was difficult to keep up at the beginning, but I’ve been doing it for almost a year now and it helps me become more conscious of just how much I’m spending.
‘In terms of my loan, I took out a credit card with a temporary 0% interest rate [http://www.moneysavingexpert.com/credit-cards/best-0-credit-cards] so I had a bit of freedom to pay it back when I could with zero interest. The Career Development Loan has a 20% interest rate on its repayments, so it’s a way for me to keep those as low as possible. It’s not that easy to get a credit card with 0% interest though, I was just lucky ’cause my credit history was pretty good.’
Samm, 23, is on a graduate scheme at an insurance firm in Bristol
Samm graduated from uni last year and has a ‘hefty’ £1,500 overdraft to pay off within the next 18 months. She’s now on a grad scheme job in Bristol, after she realised her dreams of moving to London were unlikely to ever become a reality.
She said: ‘I studied English at Bristol University and considered moving to London afterwards to work as a journalist, but my partner of three and a half years and I agreed that it wouldn’t be financially possible. I started looking at graduate jobs and got one working in insurance for £23k. It’s pretty decent for a grad scheme outside of London, but it’s still not that easy to save.
‘We want to save up for a deposit to buy a house, but trying to scrape together enough money each month is an uphill struggle. I’m planning to save my money using an ISA – and once my money’s in that account, I won’t touch it.
‘I’m doing that saving trick where you put away £1 in the first week, then £2 in the second week, £3 in week 3, and so on, to slowly but surely pay off my overdraft. By week 52 - so after a year - I’ll be saving £52 a month. I also put a standing order into my graduate bank account each month.’
Samm also suggested the tried-and-tested trick of only drawing out the money you can spend in cash: ‘My partner and I go halves on bills, but then draw out £70 each a week that pays for food shopping, petrol and transport. Basically, credit cards and debit cards are never used. Any extra money goes towards little treats or gets saved up. Our ‘luxury’ is a £17.40 a month Cineworld Card each. We’re both movie junkies and see a couple of films a week, meaning we never feel holed up at home, bored.’
‘I just don’t ever think I’ll have enough money,’ she added. ‘The more you earn, the more things you want. I think it’s just about realising what you really need, and knowing what’s really important.’
If there’s one thing I learnt from speaking to women in lots of different financial situations, it was that no-one really felt like they were doing enough. From those on low-end salaries seriously skilled in the art of the budgeting app, to those on wages nearing £25k but with less of a clue on how to save smartly, it’s important to remember that by doing just a little to keep your finances in check, you’re setting yourself up for a financial future with fewer nasty surprises.
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This article originally appeared on The Debrief.