Do I prioritise saving or living life at 21? And what to do with my saved money?
Posted by cdys0n25@reddit | AskUK | View on Reddit | 35 comments
I’ve just turned 21, I am incredibly stuck between the idea of saving as much as possible and living my life to the fullest. Admittedly I struggle with the concept of all or nothing. I have been fortunate enough to know what I wanted to do career wise and started my apprenticeship at 16. Meaning I’m 21 now and I earned 36k last year (I do work 6 days most weeks). I have about 24k saved and have a 10k car bought outright. However the past 6 months/year or so I’ve saved pretty much nothing even with only small outgoings. It’s been an amazing time but I can’t help but stress and regret about what I should’ve saved. But would I regret sacrificing the amazing stuff I’m getting to do at this age? I have just started a 2 year HNC which, by the time I’m 23, sits me on around 56k if I continue to do the same overtime as I have been doing. I live up north too in terms of cost of living etc.
I also have pretty much no idea what to do with my money, I have 10k in an ISA, 10k in premium bonds and 3k just in a standard saver. I’d love some advice on saving/investing, maybe it would give me a better outlook on saving and more of a goal.
steady921@reddit
Live your life spend money on creating memories, most of what you buy now will be gone in 15/20 years but the memories live on. I love reminiscing about my 20s
Fresh-Research3450@reddit
Do both, get a savings account that you can only withdraw from once a year or something and put a regular small amount in it via direct debit, then forget about it and spend the rest, in a few years time you will have a nice little nest egg that has been growing with a high interest rate for whatever you want.
Charlie_Yu@reddit
Spend reasonably but yea live your life
Drwynyllo@reddit
You're already making some good decisions with the ISA and savings account. Personally I wouldn't bother with premium bonds these days (or at least not £10k's worth) — see, e.g. https://www.independent.co.uk/money/premium-bonds-cut-martin-lewis-august-draw-nsi-b2780119.html
Have a read about the "miracle of compound interest" — e.g. https://www.cornerstonecu.com/en/knowledge-centre/articles-advice/article-how-to-harness-the-miracle-of-compound-interest . It may help you set your saving vs spending now priorities.
Investing/saving may sound dull when you're 21, but it should be dull. "Exciting" investing can lead to sleepless nights and catastrophic losses. (Although, at just 21, you do have the time to adopt a higher-risk approach to investment — it all depends on your personal attitude to risk.)
That said, once you're happy that your personal long(er)-term investment/savings goals are taken care of, make sure you enjoy living your life! As the old saying goes, no-one's last words are "I wish I spent more time in the office." (Well, maybe Musk's or Alan Sugar's will be, but would you want to be like them?)
another_online_idiot@reddit
You are doing very well. What I would do, If I was in your position and 21 again, is save 10% to 15% of my disposable income every month. So after all regular bills are taken care of (including your pension) get saving a percentage of your disposable income. Start to make investments in low to medium risk places (stocks, shares etc..) but again split what you do and have say 60% low risk and 40% medium risk. If your car is fully paid off then make sure it is serviced regularly and keep hold of it for as long as you can. Resist the urge to get "the latest thing" just because it is fashionable.
With the remaining amount of disposable income enjoy yourself and cultivate long-term friendships.
cdys0n25@reddit (OP)
Thankyou, investment is definitely something I’m going to look into but I feel as if I should at least educate myself first so that’s the path I’m on right now, an hour or so a week just learning.
As for my car, it’s fully paid off. Had it for about 3 years. I’ve taught myself how to service it, do the brakes etc myself and even things such as my wheel hub assembly. So it’s definitely staying with me until it fully breaks😂
BusyBeeBridgette@reddit
I lived my life when I could have saved, wish I did save lol. Hindsight is a wonderful thing, eh?
Emotional-Start7994@reddit
I imagine if you had saved, you'd have wished you lived your life. It's hard to find a good balance at a young age.
Cubetrainer@reddit
Live your life. But have a think about what that actually means. It sounds like your thoughts on saving are because it's something you probably 'should' do, are the things you will do to enjoy life actually going to be things you enjoy or things that other people say are what you 'should' do to enjoy it?
Many people who become mega rich do so because either they're doing the thing they love most anyway and it just happens to take off, or the thing that they love happens to be learning how to grow wealth. Either way if you're doing the stuff you actually enjoy you probably won't care too much about the end result.
cdys0n25@reddit (OP)
Yes the saving part is based on what I think I should be doing because in reality I haven’t a fuckin clue about that part of life yet I just know it costs money to be comfortable. But as for the living life part, I’d say I’m pretty good and aware of what it is that I enjoy, I’ve genuinely had the best last 18 months, I don’t have anything to show for it in terms of materialistic items or flashy designer gear but I have had some of the most priceless memories, laughs and I’ve seen places I have dreamt of seeing.
Agitated-Tourist9845@reddit
Take a good look around at the world right now. Do you think it's going to get better or worse?
Live according to how you answer that.
Kolo_ToureHH@reddit
A healthy balance is the best approach.
Save some money for a rainy day, or to help you put down a deposit on a house when you want to settle down, or whatever you decide to spend your money on. But also keep enough money aside so that you can enjoy life at the same time.
That's what I did. And I've had a cracking time, which has continued even after buying my first house.
Saltysockies@reddit
All you are is memories so you've got to create them. Spend money on experiences not physical items. That new car/phone/watch or whatever will mean nothing to you but your memories will mean everything.
My only advice would be, don't get in debt
Turbulent-Pilot-1436@reddit
You can do both it’s called a budget. Set aside savings but it’s just as important to set aside fun money also.
S4h1l_4l1@reddit
Do you live with your parents? Take this opportunity to save as much as want because I don’t know if you’re like me who wants to start a family in the future but families are expensive and you’ll be kicking yourself if you didn’t save when you were young and single with no bills or responsibilities.
pencilrain99@reddit
I think it's.more about finding a happy medium than one or the other
Polz34@reddit
I think most people are one way or another. I rarely spend money (I drive a 13 year old car and only have occasional overnight holidays in the UK) my sister on the other hand is all about 'making memories' even if it means constantly being in debt. I think there is a balance there I'm sure! I got a bit better by the fact I get a yearly bonus, which is my 'fun money' as I save every month so it is just 'spare' cash so use it for day trips/events etc.
dvi84@reddit
Without a doubt life.
spacemanmoses@reddit
The key mnemonic is PIPSI, Protection, Income Protection, Pensions, Savings, and Investments.
Check what happens at work in case of illness or redundancy. Protection and income protection tends to become more important as you get older and get a family or home, but remember they always come first and are really important if you go solo.
Then look at your pension, a simple adventurous tracker is a good bet given your age. Take care you're not in a balanced tracker which is more for oldies.
14% is big. 8% is the legal requirement for auto-enrollment, 10% is typical in financial services. Always good to take advantage of matching though.
Savings next, you want an emergency pot of 3-6 months income which you have.
Start thinking about the kind of home you want and the deposit it will need. You can speak to a mortgage broker if you want early clarity. Avoid any that charge fees as they all get commission from sales so charging a fee on top is a bit much.
The remainder is where you can look at investments, but investments should run 10 years+ to overcome any stock market dips, and I doubt you want to tie money up that long when you haven't bought a home and will need money for the purchase.
Premium bonds are a nice way to buy a lottery ticket, but you will be losing out on around 5% interest, so £500 per year, whereas the lottery costs £104, so I would switch all that money to a cash ISA.
The 50/30/20 rule doesn't apply well to someone living at home, but look into it as you approach renting or purchasing a home as it is a good way to organise finances.
As long as you keep putting money away for a deposit, live your life. The amount of oldies who complain about wishing they went travelling etc is off the chain.
Rough-Sprinkles2343@reddit
Live live live
I only properly started saving at 25.
Eastern_Bit_9279@reddit
I enjoyed the shit out of my 20's , had a great time .
But my bank account and career took a major hit.
You need to find a balance , my 30's have been pretty much written off to adulting.
By all means enjoy your 20's but don't neglect your career prospects, other wise you'll find yourself in a position competing with people 10 years younger than you for promotions and pay rises and be chatting to them while they buy their first house .
I'm not broke , but I could've put myself in a much better position.
I never really had anyone talk to me about planning for the future , and then I found myself on the other side of covid 32 living pay check to pay check.
RichlyB@reddit
£36k is much higher than the average 21 years old in UK, so go spend it and gave no regrets. You'll still be able to save some and be in a better position than the majority
cdys0n25@reddit (OP)
Thankyou, it’s just the battle between being ahead in terms of wage. Do I spend it and be lucky to experience stuff most people don’t get to while I’m young and have smaller responsibilities or do I get ahead in terms of my future while I’m young and have smaller responsibilities.
2stewped2havgudtime@reddit
My advice would be this.
1) Pension, do you have a salary sacrifice scheme? Add a bit extra into your pension.
2) LISA, put 4K per annum into that. Taken from existing savings.
3) Set up a direct debit to save a small amount into your preferred savings account, stocks ISA, bonds etc.
4) Live your life. You’re 21, have a couple more years being free. Enjoy yourself.
I’d say life is about balance. At your age it’s good to be smart about the future, but I’d say you can tip the scales towards enjoyment. The trick is to be able to look back and think “I got it right”. Go too far one way or the other and you’ll look back and think “shit I should have saved more” Or “why did I waste my youth saving everything”. You can’t get your youth back.
Just another note to add, well done, because it seems like you’re smashing it!
cdys0n25@reddit (OP)
Thankyou, really appreciate it sometimes I do need to have a look at how far I’ve come. I have just started paying into my pension it was abit tricky before turning 21. I pay 7 percent of my wage and they match it (the max they’ll match is 7). LISA is next on my list.
The direct debit is a great idea thankyou, I get paid weekly and it’s pretty easy to get ahead of myself because I know “ah well I’m getting paid next week” it can mess up my budgeting quite a bit.
Hopefully a few years down the line I’ll be able to say I’ve got it right, thankyou!
2stewped2havgudtime@reddit
14% at your age is great. I think at those rates you could have a pension pot of 500k at 60, with a not outlandish 5% return. Obviously as your wage grows, so will your contributions, you’re off to a good sensible start. If and when you get into the higher tax bracket also, remember that each £2 you save is basically costing you 55p from your take home. Think about that a bit more later though, live a bit first!
Embarrassed_Fan_8380@reddit
Travel! Go and see the world while you can afford it and you have no responsibilities!
cdys0n25@reddit (OP)
This is my main culprit of money spending to be honest! I managed 6 holidays last year and on track for 5 this year. I’m just struggling to get out of Europe due to holiday days etc at work. Meticulous planning has gone in to get 5-6 holidays and 3 festivals a year on 22 days holiday to say the least ahaha.
thequeenoftheandals@reddit
Dude, live your life. You’re obviously sensible and you won’t go over the top, but I can’t stress to you (at aged 35) how quickly time flies by. You’ll never be as young and as free as you are now.
Like you I chose to be very careful with money. I lived at home for uni to save costs, I worked every hour I could get to build my pot. And yes it was wonderful paying off my student debt before everyone else but tbh, I’d much rather have gone to Ibiza when my knees could handle it. Or buy the bag which now I look at and think I’m too old to have.
Life is for living. Be sensible and safe and always have a safety net but you’re gonna be okay.
cdys0n25@reddit (OP)
Thankyou, I appreciate it.
There’s such a fine line between it I’m sure if you didn’t save and spent it all you’d be sat saying you wish you’d not gone and done those things and instead paid off your debts. I’m sure we’re wired up to never be completely content and without regret it’s frustrating.
PatTheCatMcDonald@reddit
Radical plan - do both (enjoy and invest) with an annual gold prospecting holiday in Australia. Detecting on Crown land is a free for all.
New Zealand maybe has more gold, but it's always on private land, usually more stream based so it's much less developed. More of a dig and pan job than metal detecting.
INTJinx@reddit
Can you do both? Not save as much as you can but still commit to squirreling away X amount every month? I regret not putting away more in my 20s.
bsnimunf@reddit
This is the advice because alot of "living your life" can be done on a budget it's just a case of staying in cheaper hotels buying less drinks eating at cheaper restaurants not buying as expensive designer clothes a cheaper car etc etc. most other people your age will be doing the same.
cdys0n25@reddit (OP)
I think this is the consensus ideally, probably just me needing to shift my all or nothing mindset. Although it’s never material things that I indulge in. Over the past year or so it’s been all about holidays, festivals, pubs and eating out. Not necessarily above my means in terms of luxury just probably way too much volume.
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