15 money moves to make at different stages in your life

In partnership with NatWest

Posted by for Money

Because money makes the world go round. From how to handle your first credit card to how to prep for your funeral, here’s everything you should be doing with your money throughout your life… 

How on top of your finances are you? Whether you feel like you’re in control of your cash or could do with a little guidance, there are some things we should all be doing throughout our life to keep our financial wellbeing in the pink.

We spoke to Chartered Financial Advisor and author of Money Lessons, Lisa Conway-Hughes, to find out the 15 steps we should follow with our finances, from when we first start earning it to passing it on after you yourself pass…

1. First steps to financial independence

From bars to supermarkets, holiday and weekend jobs are usually every teen’s first taste of financial freedom. 

You might already have a debit bank account, but consider switching to an account that will earn interest on your wages while still allowing you unlimited withdrawals. 

The best easy-access accounts on the market will earn you around 1.45%, but you can compare which works for you at moneysavingexpert.com.

If you’re saving for something specific, whether that’s a first car or holiday, you can set up a spending plan with the help of NatWest MoneySense. Just put in your goal, add your estimated costs and the spending plan will help you to stay on the right track.

You might then go onto university, where you’ll then want to look for a student bank account with a hefty overdraft, preferably with 0% interest for as many months as possible. Do your research on moneysavingexpert.com and if you need some guidance on how to manage your money, both they and UCAS have helpful guides.

There are tonnes of student websites out there designed to help you spend less, too, offering freebies, voucher codes and free trials. Try savethestudent.com, studentbeans.com/uk or myunidays.com. Get your hands on a Totum student discount card too for your official student ID. Most shops, bars, theatres, cinemas and more will give students an extra discount.

In your second year, you’ll probably rent your first property. This might be the first, but it almost definitely won’t be the last, so get into good habits and set up direct debits to pay your rent and bills each month. Making payments automatic will ensure you’re never late.

2. Making your first career moves

Getting your first job might feel like you’ve hit the jackpot, but there’s some financial housekeeping to do before you sit back and enjoy the rewards.

Join your company’s pension scheme as soon as you’re able to. Your company must pay a minimum of 3% a month into your pension, with you adding 5% a month, although many will match more than that if you pay in a higher percentage. Take advantage of any health, travel or perk plans too, which could save you on everything from sports massages to cinema tickets - just ask your HR team what’s available.

Then work out what you can afford to spend each month. Find out how much you’ll take home each month, accounting for student loan repayments, pension, tax and National Insurance contributions, then deduct any direct debits or bills. Whatever’s left is yours to save or spend.

“You should also set up direct debits to clear any debts you might have”, Lisa advises. According to debt charity StepChange, the number of young people seeking help for problem debts is on the up. 

Don’t overstretch yourself; be reasonable about what you can afford to pay back without getting into more debt and consider 0% interest balance transfers on credit cards to manage significant debt. Be wary of hidden T&Cs that will sting you in the long run - StepChange have more helpful advice on managing your debt without consequences.

Finally, Lisa suggests trying to build a ‘fudge it fund’; an emergency cash buffer of three months’ worth of rent, bills and living expenses, as redundancy, illness or other unexpected situations can crop up at any time. This could also give you the safety cushion you need to leave your job, start your own business or go freelance.

3. Getting a credit card

A credit card might seem like a rite of passage, but consider why you really want one. 

Will you use the card to be able to afford a wedding, a dream holiday or to manage existing debts? Do your research and only apply for a card that you know you’ll be able to pay off each month. You can compare the best rates at moneysavingexpert.com, from ones with 0% interest and the best cashback or perks (such as airmiles) to cards that will help to improve your credit score.

You should use your credit card little and often and try not to use too much of your available credit to boost your score. ClearScore recommends staying under 30% of your limit to show lenders that you can manage your credit sensibly and reliable when it comes to paying any money back. You should be paying off your credit card in full at the end of each month, or at least enough that you don’t start earning interest on the money you owe. 

Registering to vote, paying all your bills on time, cancelling unused store cards and checking that your credit report is correct (try experian.co.uk) can further help to improve your credit score, Lisa adds. 

4. Merging finances as a couple

At this point in your life, you might find yourself in a serious relationship and wondering what to do with your combined income. It’s important to have an honest, upfront conversation about money, debt and financial goals, deciding how you want to manage communal finances like rent, bills and social expenses.

Consider whether you want to fully merge your money or have a joint account to pay in bill money but keep your spending money separate, noting that bad financial behaviour from a joint account can negatively affect your credit score. 

It’s also important to ensure that both people in the partnership know who has access to which accounts and have a clear understanding of how to manage your money, should any sticky situations arise.

This is also the time to discuss how to tackle one partner’s debt and whether you’ll split bills equally or pay in different amounts proportionate to your income, says Lisa, as well as considering what would happen if you broke up. 

“A no-nup is an agreement that is drawn up between two individuals who aren’t married to set out what would happen financially if they split up,” Lisa writes in her book, Money Lessons. From rent and mortgage contracts to any wealth earned during the relationship, clearly outline what will happen to your cash in the event of your split. 

5. Buying your first property

If owning a property is important to you, you should start saving as soon as possible. 

“I believe you should “attack” the challenge,” Lisa says. “You should do all you can to save as much as possible as quickly as possible. Otherwise, saving ends up as a distraction from building up your short, medium and long term goals, like a dream holiday, wedding or baby fund.”

Sign up for a Help to Buy ISA account, where you can pay in up to £200 a month (after an initial deposit of up to £1200) up to £12,000. When you’re ready to buy a property, the government will pitch in a quarter of what you’ve saved, both for your own half of the deposit and a friend or partner, if you’re buying with someone else. 

There are a couple of caveats, such as the property musn’t be worth more than £250,000, or £450,000 if you’re buying in London.

Alternatively, consider a Lifetime ISA, from which the government will also give you 25% on top of what you’ve saved for a property. 

The difference is that you can save more with a LISA, up to £4000 a year, meaning if you can afford to save more, you’ll get a better return from the government. Again, both you and your buying partner can use this bonus towards a shared property. 

If you don’t want to use your LISA for a property, you can use the money towards your retirement - more on that later.

It’s a good idea to give yourself a financial health check at this point, ensuring your spending is under control and you have a decent credit score. 

Once you’ve got your deposit saved and mortgage approved, make sure you have enough cash to pay all the associated legal fees, stamp duty and furniture or repair costs. Don’t forget council tax - though if you’re buying alone, you could be entitled to a 25% single person’s discount.

6. Going freelance

Looking to strike out on your own? If you’ve got the skills and the contacts, going freelance can be a great way to get more control over your time. As Lisa notes, it’s important to make sure you can financially support yourself.

“Refer back to that cash buffer,” Lisa says. “Create a safety net so that you can cope if your income fluctuates.” 

From not getting work every day to being unable to work because of illness or personal circumstances income protection, Lisa also sees income protection as essential. 

With 37% of households a pay packet away from being able to afford their rent or mortgage, we can see why. When looking for insurance, Lisa suggests asking an expert for help on finding the right plan for you, as well as looking out for policies linked to inflation that will pay out for as long as you need them to, very few exclusions, and cover for your particular job, rather than doing any job. 

Critical illness cover is also an optional insurance policy that will pay out a single lump sum if you’re diagnosed with a critical illness, such as a stroke.

“When working out your day rate, check that you’re including costs for your pension contributions, your expertise, insurance, your overheads and the fact that you might not get work five days a week,” she adds. An accountant can help with these calculations, so ask around for personal recommendations or search by location through the Institute of Financial Accountants.

7. Starting your own business

If you’re looking to start your own business, many of the same rules apply. Build your cash buffer, insure your income and work with an accountant to keep your finances in check. 

Around 80% of businesses fail in their first 18 months, according to research by Bloomberg, so it’s important to have a comprehensive understanding of the costs involved.

You can either register as a sole trader, where you are personally responsible for business debts, or as a limited company, where you’re not personally liable as long as your finances are separate from that of the business. You can also register as a partnership, where the responsibility is shared between you and a business partner.

Connecting with other business founders can be a huge support for entrepreneurs. Streaming NatWest’s Women In Business podcast is a great place to start, where June Sarpong talks to fashion executives, chocolate entrepreneurs, venture capital investors and jewellery designers to find out how they got to where they are now. 

With men 86% more likely to get venture capital funding than women, tips on navigating the landscape could make or break a business. Do your research into grants or funds that you could apply for to boost your capital.

8. Getting hitched

With the average cost of a UK wedding at over £31,000, getting hitched isn’t cheap. If you’ve planned ahead, you’ll already have set aside money each month in a separate high-interest savings accounts to put towards your nuptials. 

If you haven’t - you might want to. Work out how much you’ll realistically need for a day you and your partner will be happy with, then add some extra slack. Don’t forget the costs of changing your name on official documents, too, if you choose to do so.

If you’re on a tight budget, consider what you can cut back on and still make your day memorable. Do you care more about canapes or a DJ? Your dress or flowers? Keep your long-term goals in mind, too - can family and friends offer services like cakes and decorations as their wedding gifts so you can still afford your dream honeymoon? Could you set up a wedding registry for useful presents that you can use in a new home?

You might already have a structure for managing your finances as a couple, but now is a good time to check on your no-nup or pre-nup agreements to ensure you’re still happy with the contents. 

You may want to change or consider life insurance if your partner depends on you financially - you can compare quotes at moneysupermarket.com

Finally, remember that marriage voids a will, so see a solicitor to ensure your will is up to date, or to create your first one.

9. Expanding your family

Whether you choose to have children before or after marriage, or on your own, children are an expensive step in any person’s life. 

According to research by Child Poverty Action Group, raising a child in a couple costs over £75,000 (excluding housing, childcare and council tax), and over £102,000 for a lone parent, with £11,498 of that in the child’s first year. 

Then there’s also the future costs of funding family holidays, teenage hobbies and schooling.

But before all of that, you need to navigate parental leave. “Parents in the UK can share parental leave, with mums able to take up to 52 weeks off and share over 50 weeks with their partner,” Lisa writes. 

Your employer will pay you varying amounts throughout your leave, with statutory pay at 90% of your average weekly earnings before tax for the first six weeks, followed by £148.68 or 90% of your average weekly earnings (whichever is lower) for the next 33 weeks. 

If you’re self employed, Maternity Allowance can offer £145.18 a week for expectant mothers. The full details are at gov.uk, as well as the eligibility criteria for adoption leave.

As your child grows, you’ll also be eligible for means-tested child benefits up until your child is 16, or 20 and in full-time state-approved education. There’s no limit to the amount of children you can claim for. You should also check if you can claim any childcare vouchers from your workplace, or tax-free childcare, where the state will pay £20 for every £80 you spend on child care, up to £2000 a year.

You should also take this opportunity to consider life cover, if you haven’t already, and update your will with children in mind.

10. Upsizing your property

A bigger family might mean your home is feeling a little cramped, so you might now start to hunt for somewhere bigger. There are a couple of things to keep in mind when moving on to your forever home. 

The Homeowners Alliance recommend firstly considering whether building an extension or converting your attic could meet your needs instead. With property prices spiralling, you may not be able to afford a space much bigger than your current home in today’s climate, so it’s worth considering your needs and comparing the costs.

If you do decide to go ahead, there are a few costs to keep in mind. 

Estate agents fees, conveyancing fees and removal costs can all add up. You should also check that there will be no early redemption penalties on your current mortgage. 

Use a free valuation tool to work out how much your home is worth before seeing an estate agent or list your home on a sale site, but keep in mind that the value of your current house is only approximate - you won’t know how much your home will sell for until you exchange contracts, and you should add on 5%-10% of what you’d be willing to sell for to account for buyer negotiations. 

11. Getting a divorce

Divorce is always entered into with a lot of emotional thought, but it’s wise to consider the cost of a break-up too. If you’re eligible for a divorce, separation or annulment, solicitors’ fees can rack up, especially if your case goes to court. There may also be significant costs involved if you have to find a new place to live (but tax breaks for living alone), and you might want to change your name back on any official documents.

If you’ve practiced good financial habits throughout your relationship, you might have a legal agreement as to how your finances should be untangled, or at least a solid understanding of what you’ll each take from the relationship. Do ensure you also discuss your pensions in your divorce agreement if you need to - people often forget about this but if your pension contributions have taken a dip due to circumstances like children but your partner’s haven’t then it’s worth the conversation to ensure you’re both protecting your retirement/future options.

Close down any joint accounts as soon as you’ve taken the money you’re both owed, and update your will if you need to.

12. Breaking a tax barrier

With your career progressing nicely, you may be heading towards a new tax barrier. 

After your tax-free allowance of £12,500, you’ll start to pay 20% tax on any earnings above that up to £46,350. From that, you jump to 40% at any earnings between that and £150,000. Factor this into all your budgets and spending plans. To find out your new take home pay, use the HMRC Income Tax calculator.

At this point, it’s never wise to stash your cash in one place. Spreading out your money means you safeguard your green, so continue to shift your money into the savings accounts that’ll earn you the highest interest rates. 

You could also consider investing your money; there are risks, but there could also be great rewards*. If you’re not sure where to start, speak to an independent accountant who can give you impartial advice, or use a product like NatWest Invest, with funds you can start investing in from £50 a month and manage online.

13. Inheriting someone’s estate

When a loved one passes, you may receive a portion of their estate through property, money or possessions. While this might seem like a minute comfort in a time of grief, there might be some financial housekeeping to keep in mind.

You won’t need to pay inheritance tax if the value of the estate is below the £325,000 threshold, but you will still need to declare it to HMRC

If you inherit the home from a parent or grandparent, the threshold increases to £475,000, so keep this in mind. 

The standard inheritance tax is 40%, and is only charged on the part of the estate above the threshold amount, but your executor will take care of making this payment.

14. Going into retirement

Throughout your career, Lisa advises annual checks on your pension to make sure that you’re really on track to retire in the way you want. Would you like to be able to go on holidays, spend more time with your children and grandchildren or be a culture vulture in your own city? Maybe you don’t want to do any of the above and just want to sit back and relax. 

Whatever your plans are, factor this in to how much money you plan to save for your retirement, advises Lisa.

The maximum the government currently offers is £164.35 a week, but the exact amount you’re entitled to is dependent on your age. You can find out how much you’ll get from the state here, but you should also factor in the amount you’ll get from your workplace pension and any private pensions you might hold.

Throughout your career, you might be auto-enrolled in various workplace pensions. 

It’s a good financial habit to keep track of your pensions and to know what interest you’re earning on your savings. It’s personal preference as to whether you keep your pensions in separate pots or consolidate them into one account, however it makes financial sense to move your money into the account earning you the most interest. 

You could also use the money in your Lifetime ISA account to top up the money that will see you through your later days, if you haven’t spent it on a property. You might also want to consider how you’d like to be taken care of at the end of your life, and factor these calculations into your goal. Would you like to pay for a home, or have healthcare assistants visit you at home?

How much you need to retire is dependent on what your goals are after finishing work. A good general rule from Lisa is “the 4% rule. For every £4000 of annual income you want in your retirement, you need at least £100,000 of savings. So if you want to live off an income of £20,000 in your retirement, you’ll need £500,000 in your pension pot, savings or investments.”

There are a few online pension calculators that will let you know how you’re doing and what you need to adjust for a comfortable retirement, like the Fidelity calculator. After all, leaving work is just the start of your second life, right? 

15. Preparing for death

Yes, we all think we’re invincible and no, it’s not the nicest thing to think about, but leaving your finances in order after you die could be a huge help to your loved ones.

At this point, Lisa suggests that your will should be up to date, alongside a file of all your financial information, from life insurance policies and a summary of your assets and debts to the contact details of your financial advisor.

With the average funeral costs reaching £4,000 according to the Money Advice Service, you might also want to start saving for this so your loved ones don’t have to after you pass. There are lots of saving plans on the market (compare the best on various comparison sites), but read the T&Cs closely or pay into a private account.   

Whatever stage of life you’re at, whether you’re thinking about investing or just looking to talk about any financial issues you may have, join A Woman’s Worth Collective – a space created by Stylist and NatWest for women to get free tips on what they can be doing to improve their financial wellbeing, with no judgments or biases.

NatWest is the bank that believes ‘we are what we do’. Whatever your financial needs, they’ll do all they can to help keep your relationship with money healthy.

*The value of investments can fall as well as rise and you may not get back the full amount you invest, your capital is at risk. Eligibility criteria, fees and charges apply.

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