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Five essential savings tips every young adult should know

Financial advice for young adults: 5 tips to help you save

Navigating financial responsibilities can be overwhelming. Faced with budgeting, saving, and managing other complexities that come with becoming financially independent can be difficult to get to grips with. While finances might not be top of your agenda, developing the right habits now can give you a financial head-start for the years ahead. 

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Our top tips 

1. Start early, reap the rewards

Imagine planting a small seed that grows into a massive tree over time. That's exactly how your savings can grow with compound interest. The key here is start saving early. The way compound interest works is you earn interest on interest over time, which means that even small contributions can grow significantly over time. The sooner you begin, the more your money will work for you.

2. Credit caution 

We've all been tempted to whip out the credit card for a spur-of-the-moment purchase. But using cash or a debit card keeps you in control. You'll only spend what you have, helping you avoid credit card debt. Reserve credit cards for true emergencies and focus on building a strong credit score.

3. The art of budgeting 

While the idea of establishing a budget might not be thrilling, it can act as your financial roadmap to success. Keep it simple—track your income and expenses to make sure you're living within your means. Once you see where your money is going, you'll spot areas to trim, making room for saving and investing in your future.

4. Be prepared, build an emergency fund 

Life is full of surprises, and not all of them are pleasant. An emergency fund acts as your financial safety net. Set aside a portion of your income each month to cover unexpected expenses, like a sudden car repair. With an emergency fund in place, you'll sleep better at night, knowing you're better financially prepared for whatever comes your way. 

5. Embrace retirement savings now 

Retirement may feel light-years away, but trust us, future you will thank current you for starting early. Take advantage of employer-sponsored retirement plans and explore whether your employer matches your contributions. In addition to this remember the power of compound interest—it turns small contributions into substantial savings over time.

While these essential money-saving tips are a fantastic starting point, remember that your financial journey is unique. As a young adult, seeking further guidance from a financial advisor can provide invaluable insights tailored to your specific situation. 

What is a Financial Adviser? 

A Financial Adviser is someone who can provide professional guidance and expertise on a range of areas within your financial life. Just as you might consult a personal trainer to develop a fitness plan tailored to your goals, a financial advisor is engaged to craft a customised financial strategy that aligns with your objectives. Areas a financial advisor may offer services in includes, investment advice, budgeting, tax planning and many more.  

There are two key categories financial advisers can fit within; independent or restricted. This is a really important factor to consider when examining which adviser is the right one for you.  Restricted advisers can only recommend products from certain providers. In comparison an independent adviser can recommend financial products spanning across the whole of market, allowing for a more bespoke financial plan to be created.

How do I get financial advice?  

There are a range of services available that will help you search for a financial adviser based on what you are looking for: 

Unbiased is a free service that use a short questionnaire to match you with an adviser. 

The Personal Finance Society offers a search tool that helps you discover certified financial advisers located in your vicinity. This tool also enables you to delve into the adviser's qualifications, accreditations, and areas of expertise. 

VouchedFor is a review platform that allows you to explore reviews individuals have left for Advisers they have worked with.

How much does it cost?  

The price you pay for financial advice is influenced by various factors, including your specific requirements, the nature of the advice you need, and the advisory firm you select. There are two key ways you will be charged:  

  1.  One-off piece of work. If you were requiring a one-off piece of advice you would likely incur a either a fixed fee for the work done or fee reflecting percentage of the monies invested. This fee would vary depending on the complexity of the work.  
  2. Ongoing advice fee. This charge is levied in the situation where you receive ongoing financial advice and services and will vary from firm to firm.

Do I need financial advice? 

Knowing if you need financial advice requires some reflection and consideration of your financial situation and goals. You might wish to start by asking yourself the following questions:

  • Do I have specific financial goals, such as investing, planning for the longer term or managing my money more effectively?
  • Is my financial situation complex, involving various considerations and financial products which I need help navigating to make informed decisions?  
  • Am I well versed in financial concepts and investment experience? 
  • Do I have sufficient information about the financial options available to me?  

If you find yourself in a situation where your financial decisions are complex, your goals are specific, and you lack expertise, seeking financial advice can be a valuable investment. Advisers can help you make informed choices and guide you through important decisions. 

How we can help 

Starting with these savings tips is a great start to your financial journey, however, a Financial Adviser can enhance your efforts by crafting a customised financial plan, guiding you through investment options, and aiding in decisions that match your long-term aspirations.  

It's never too early to start planning for your financial future. At The Private Office we work closely with our clients to build solid foundations for financial well-being. We are a chartered planning firm offering independent financial advice. If you would like to find out more about how we can help you, why not get in touch for a free initial review.  

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The information contained within this article is for guidance only and does not constitute advice which should be sought before taking any action or inaction. Investment returns are not guaranteed and you may get less than you originally invested.