Things they don't tell you at university

With higher education costs soaring many of this year’s freshers have accepted student debt as a way of life, but may have given little more thought to their financial future after they graduate.

It is not uncommon to leave university having had no financial education apart from a self-imposed budgeting for essentials and it’s an area that parents and lecturers often fail to address.

For the benefit of those starting out, here are a few financial ‘facts of life’ that we wish we’d been told at the outset, instead of learning the hard way.


Start saving NOW for your financial future

When you’re a student, saving may seem near to impossible and standing your round at the student union is always going to seem more of a priority than saving.  However, putting small amounts away now for the long term can have a big impact on your financial future.  The reason for this is the power of compounding which is the ‘greatest secret’ that the investment world never tells you and it is the basis of most long term investment. 

For example £100 invested in the UK stock market for 67 years would give you roughly £8,011.  However the same £100 invested with all the dividends reinvested would have given you £147,384.

You may not be able to save much, but getting into the habit of saving a small amount regularly can really pay off.  Also, you may think that when you are earning it will be easier to save, but experience tells us that there are always pressures on your finances and it never gets easier!


It’s never too early to start thinking about retirement

Retirement may be a long way down the list of student concerns (if it makes the list at all!) but the signs are that you will hopefully live longer than your parents’ generation but that there will be even less state support when you come to retire.  To avoid a poverty stricken old age, it makes sense to start thinking about the kind of income you would like to enjoy your retirement. 

Perhaps it might be more helpful to start thinking about how much you could manage on when you retire.  For example most of us would struggle to manage on £10,000 a year (after paying off the mortgage and other debts) so for arguments sake, let’s decide that £25,000 is a more realistic amount.

The bad news is that some experts would advise you need to hand over £500,000 to achieve this!  The good news is that time is on your side and by saving as little as £100 a month over 6 decades at 7% long term investment rate you could yield as much at £300,000.

You might not feel able to save this amount whilst studying, but starting sooner and having a retirement plan could mean the difference between a comfortable or struggling old age.


Family financial planning pays off

In this day and age we are encouraged to think of ourselves as individuals and make our financial arrangements accordingly.  However, we are nearly all part of a family (however dysfunctional) and sometimes co-ordinating our financial affairs can reap significant rewards.   

Some experts suggest looking at our family in terms of a ‘business’ with assets and liabilities.  When finances, taxes, debt and inheritance are managed collectively they can bring greater benefits to the family as a whole.  Many families are already doing this to help young people get a foothold on the property ladder.    

Families saving collectively can also bring considerable wealth to the unit as a whole.  For example, a family of ten who contribute £1,000 each to a long term wealth plan over 70 years could net £1.2million. A life changing amount of money!

Although no one can ‘gold plate’ your future after you graduate, the good news is that whatever your earnings,  thinking about your financial future in your early adult life can maximise your  life chances and opportunities and is well worth the time and effort.


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