Three top tips for starting your financial journey

Starting your financial journey can feel overwhelming. When you begin to think about big future steps like purchasing a house or saving for retirement, you might instinctively want to shy away from such serious topics. But your financial future is important, and it doesn’t have to be as scary as it might seem. With these three top tips, you could be well on your way to a positive financial future.

Avoid uncontrolled debt

Times are tight for everyone, and debt can pile up before you notice it happening. However, avoiding uncontrolled debt is one of the best first steps you can take in your financial journey. This means creating a firm budget for yourself and avoiding taking out credit cards where you can.

If you do have a credit card for emergency purposes, then it is a good idea to pay this off every month rather than only paying the minimum monthly amount. By limiting the amount of credit card and overdraft facilities you use, then you will minimise the interest fees you are paying, which can mean less debt overall.

Get informed about mortgages

Getting a foot on the property ladder is more challenging now than ever before, or so it seems, with people in some groups struggling more than others to achieve property ownership. Understanding what a mortgage is can be a powerful tool in gaining control of your finances and getting a good grip on what your options are.

When you take out a mortgage on a home, you generally need to provide a certain amount of money upfront as a deposit. This can be ten percent of the overall purchase price, with some lenders requiring up to twenty, or as little as five in some schemes.

Your mortgage lender will provide you with a certain amount of capital to buy your home, based on your total income, which you must then pay back. This will be paid back over a pre-agreed period, with interest, and your mortgage lender will retain rights to the property until you have paid the full balance.

Understand your pension

Do you have a retirement plan in place? Retiring might seem a long way off, but it is never too early to start thinking about your pension. If you work for a company, they will often have a pension scheme in place, whereby you contribute a certain amount per month and your company will also contribute. You can also contribute to your own private pension (which is often what self-employed people choose to do). This allows you to have savings when you retire and no longer have an income – and can provide a lump sum payment to your family in the event of your passing.

While it can seem impossible to get a grip on your finances now, it is never too late to start planning for the future. The sooner the better! With these three top tips, you will be able to enjoy the fruits of your hard work later in life, and still have fun today.