Financial lessons for a younger me

Do not mistake your student loan for a grant

Sheepishly, I admit this is exactly what I did and, in my first few weeks of university, I was spending about £180 a week until a new friend said to me “you do know we’ll have to pay this back”? I foolishly thought I was living frivolously on a government grant for my studies! I did not read the small print and wish I had done. Fellow Mouthy Money blogger Joseph Seager offers some additional tips specifically for university students, which I wholeheartedly agree with.

Invest in the property market in the early 2000s

While at university (after learning the hard way not to fritter), I worked a bar job and was doing medical role play in term time, and worked for temping agencies and in retail during the holidays. I saved as much of my student loan as possible, planning to put it towards further study (which then did not come to pass). However, I wish I had put it together with a couple of friends’ unspent loans and bought a house in our campus town, Hull. In our first year, houses went for £40,000! By our third year, they were being sold for £80,000. I ended up paying my student loan back plus 11% interest (we were told in our first year that at 2.5% interest it was the cheapest loan we would ever get but this fixed rate myth was not true). I wish I had invested it either in property or in my theatre company, or used it to fund a couple of LA pilot seasons. But, at least having paid it off in full now, I have upped my credit rating, which may not be as fruitful as having property but in the long term it will lead to lower interest rates on future loans and credit cards.

Spending and saving is a balancing act

Growing up, I yo-yoed between feeling terribly guilty for spending any money on anything and having once in a blue moon splurge. I was always that friend who hesitated when the rest of the group wanted to do something and definitely the person to want to pay for what you had during a meal out rather than split the bill. Nowadays, I am frugal with certain things and allow myself more leeway with others – for example, with the money I’ve saved on public transport over the last six weeks by walking everywhere (like I did for most of this year!), I spent most of it yesterday on things that I enjoy, such as clothes and theatre tickets. I think that’s okay, though because part of sensible budgeting is prioritising what you spend your money on, rather than throwing it at everything in life.

Question why you want to buy something

We’ve all been food shopping on an empty stomach, right? After one such occasion and £90 later (in my defence I only went shopping every fortnight at university, but still), I vowed never to do that again. A similar thing used to happen in my twenties when, if an audition went badly or a date did not go how I wanted it to, I would buy something to cheer myself up. These days, I would recommend calling a friend, reading a good book, or going for a walk, in order to self-soothe – buying stuff isn’t going to fix your problem, and you could end up just wasting money.

Buying a property isn’t the ‘be all and end all’

I have tried to buy a property in a myriad of ways; shared ownership, looking at living outside London (even though, with the commute, my outgoings would cost the same), not claiming any expenses for years to boost my income (and footing an additional £10,000 in tax for this purpose). I have thus far been unable to buy. One of my friends has put his performance and writing career on hold for the last two years, working PAYE jobs to get to that magic threshold of being able to afford a £250,000 studio flat in London yet he has also been unable to buy, despite the steady income. One issue that many people face is that house prices are increasing at a much greater rate than wages are in London, so no matter how much you save towards a deposit or even how much your income increases, unless you have help (e.g. from the generation above or have inherited a property) it is nigh on impossible to buy in London. In Europe it is the norm to rent not buy for adults, plus they often have far cheaper rent than ours. While this may make it seem like buying a house isn’t as important, you will still need to take into account paying rent through your retirement, potentially taking a large portion from your savings and pension.

What to take away from all of this

Learning where to spend and where to save is one of the things you can only learn from trial and error and is often a very individual experience. But if you take away anything from this article, it should be this: don’t fret about not owning your own property yet; try not to overthink missed investment opportunities; and learn to budget and prioritise your money in a way that works well for you.