A student saving guide

Financial Services

When you are caught up in the stresses of dissertation and final exams, your post-university future can be pushed aside – after all, it’s hard to imagine another life following the university bubble you’ve lived in for the past 3+ years.

However, financial planning for your future once you graduate is important. You can no longer live in student accommodation and rely on student loans and bailouts from your parents. Welcome to the real adult world. Your circumstances will change, and so will your needs.

With careful financial planning, you can meet your individual goals. Whether its saving for a car to help with your daily commute to work or saving for that big dream holiday, stocks and shares ISA provider, True Potential Investor, share their tips for managing your financial goals.

Identify your goals
Whilst most of your goals are unique to you, some common goals include saving for a home, car or holiday. And whilst it might seem like a lifetime away, you might also want to start considering putting money aside toward your pension.

Thinking about your pension before you’ve even graduated might sound crazy, but is it crucial that you start contributing to your pension in the early stages of your career so that you can be financially comfortable during retirement. After all, a recent True Potential survey found that £23,000 was the average yearly amount needed for a comfortable retirement — compared to the £6,000 British people are on course to receive.

Your goals should be realistic and affordable – you can split your goals depending on timescales. Short-term goals could be saving for a car, while a long-term goal could be saving towards your pension plan.

Quantify your goals
Once you have defined goals, it’s vital to quantify them to make sure you don’t fall behind on goals as well as your other finances. How much do you need to save or invest? And when do you need it by? Again, timescales and budgets must be realistic and affordable so that your other finances don’t feel the strain of your saving.

Budget
Before you commit to saving ‘X’ amount every month, you need to establish what your current outgoings look like. Look at all your monthly expenses and establish how much you can afford to put aside after you have paid all your current outgoings.

Make sure during this process that you paint a true picture of your financial situation. Don’t forget about irregular expenses, such as one-off insurance payments or maintenance costs. ‘Out of sight, out of mind’ does not apply here.

You can also consider any spending that isn’t essential. These expenses could contribute even more to your saving or investment accounts. However, don’t overstretch your finances – whilst putting money aside for those goals is important, you don’t want to leave yourself struggling for money every month.

Investing
So, you’ve identified your goals, quantified them, established a budget, and now you need to choose the right method of investing to help you reach your financial goal. A tax-efficient way to put money aside is to open an Individual Savings Account (ISA).

Stocks and Shares ISAs are one option if you’re hoping to raise a significant amount, as the amount you pay-in is invested in bonds, property or stocks and shares. This mean you could get out more than you pay in, although there is a level of risk involved.

Ultimately, always choose the most suitable saving or investing option for you based on what you’re putting money aside for, the level of return you’ll receive and the associated risk.

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.