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Mouthy Money’s regular blogger, Finance Dee, discusses how she improved her financial health before she reached 30.
I believe that as you reach the end of your 20s, you start to become a bit more reflective of where you are in life versus where you want to be – at least that’s been true for me.
Reflecting on my financial health has been no exception! Here are four things I put into place to feel happy, secure and confident about my personal finances before I hit 30.
Determine my spending plan BEFORE payday – This step alone probably makes up about 80% of what I consider ‘good financial standing’. I found for too many years in my early 20s, every time I got paid I had absolutely nothing to show for it by the end of the month – other than a few decent days and nights out etched into my memory.
For the past few years, I have been doing zero-based budgeting every month without fail, deciding exactly where every pound will go before it even hits my account. This avoids me overspending, allows me to save and invest, and ultimately gives me full control over my hard-earned money.
Asked for a raise – Now I know this may not be relevant to every industry, but if it is a possibility for your line of work, asking for a raise can really make a noticeable difference to your finances. Although it seems a bit nerve-racking to ask for more money, if you have a good track record at work, can articulate why you are an asset to your team/company/organisation, and can confidently relay why you love your job but feel you deserve better compensation, you may find that your employer is willing to give you a raise instead of risk losing you. Marketing one’s own skills – essentially blowing your own trumpet – can feel uncomfortable at the best-of-times, but marketing yourself is an essential skill in getting what you deserve.
Maxed out my employer pension contribution – We all love free money, and free money into pensions is as good as it gets due to its tax benefits. If you work for an employer who contributes a certain amount to your pension based on your own pension contribution, always make sure that your own contribution is as high as it needs to be to get the most out of your employer.
For instance, if your employer will contribute 5% if you contribute 4%, or 10% if you contribute 6%, do your very best to contribute that 6%! That will mean you can benefit from that wonderful 10% of free money into your pension. You may not feel the benefits of it now, but future you surely will!
Reduced liabilities – Liabilities come in the form of debts such as credit cards, loans, car financing, etc. The horrible part of liabilities is that you’re often paying for things that have long been bought, experienced, or perhaps aren’t even around anymore.
It is very easy to look at your financial health in terms of “affordable” monthly payments, but if you can only buy things in instalments, it may be worth questioning whether you can really afford it (with the exception of some larger purchases such as homes).
By reducing your liabilities, it frees up cash for you to make decisions about your present and future and reduces the focus on your past.
Diandra Latibeaudiere-Gardner 'Finance Dee' is a 28-year old British-Jamaican living in the SE of England. By day she's a research consultant and by night a finance YouTuber and FIRE blogger