Staying in is the new going out. It’s very 2020. But what do you do with all the money and time you save when you don’t go out on a Friday night?
Though your past self might be utterly flabbergasted by the thought of spending that time and money on preparing financially for life after university, stranger things have happened. And you don’t need me to tell you we’re living in a time where what is normal has gone completely out the window. This year has changed all of us.
So the best way forward is to try to keep our chins up, and do what we can to make the most of a difficult and challenging time. One of those things might be preparing financially for the future that comes after the pandemic, after university and beyond. Because that time is coming.
Why prepare financially for life after university?
After earning your degree you’ll be an absolute expert in your chosen field of study. But there is one area of our education that too few of us ever receive, and that’s a financial one. Not knowing how to manage money is something that, unfortunately, a huge section of the population struggle with.
It can be a real pain point for them because money affects our whole lives – from our homes, to our relationships, and our overall wellbeing. Money is the leading cause of stress for young adults in the UK.
Getting to grips with it now can not only prevent you from struggling with it in the future, but it can also help ensure that you’re in the strongest position possible to go out into the world after university.
Building your financial health makes it more likely you’ll be approved for a mortgage were you hoping to buy a house one day. It’ll also make it more likely you’ll be approved for a new credit card, and one that doesn’t come with a terrifying APR. Further establishing a regular savings habit now, can help you to keep it up in the future. And these savings pots will help you achieve your life goals, whether that’s getting married, buying a new car or starting a business.
Sold on the idea of building financial health? Here’s how to do it.
How to prepare financially for life after university
1. Build your credit history
If you’ve never come across your credit history before, don’t be alarmed. A credit history records an individual’s credit agreements (things like credit cards, loans, contract phones and mortgages), and all payments made or missed towards those accounts. It also records your address history, your financial associations and whether you’re on the electoral roll – or not.
Credit histories are automatically collected by private companies known as credit reference agencies. (You can find out more about this by watching my video here.) For most young adults, their credit history is what’s known as ‘thin file’ or ‘no file’. This is because they haven’t taken out any credit agreements in the past, and so how they deal with credit is an unknown.
This becomes a problem if and when they want to take out a credit agreement (like those mentioned above) because lenders, having reviewed their credit history, will see them as high risk.
And it’s not just lenders who might credit check you, some employers also check your credit history as part of their pre-employment screening, and landlords too may require it before agreeing to rent their property to you.
That’s why it’s important to build a credit history now, so it won’t catch you out further down the road. Loqbox makes this easy, and helps you to build your credit history while you save. Find out more about how it works here.
2. Learn how to master your money
Mastering your money isn’t as tough as it sounds. Learning some key principles and putting them into action might take a couple of months, but it’s worth it because you’ll benefit for the rest of your life. To do this check out some of these personal finance blogs and podcasts. And of course, Loqbox is here to help you too. We regularly share top tips to help you master your money, I share a link to sign up for our newsletter to receive these straight to your inbox at the bottom of this post.
3. Avoid credit cards where possible
Credit cards, when used responsibly, can be a brilliant tool. Especially when it comes to building your credit history. However, when misused they can leave you in a huge amount of debt that will take you years to clear off. The interest rates can be especially high for people who have little to no credit history, so this debt can snowball fast. Therefore they are best avoided if at all possible.
4. Establish a regular savings habit
Many of the big goals in life tend to require money to be achieved. People who are able to save money, and who do so habitually, are therefore much more likely to succeed in reaching their goals. Although it can feel hard at first, especially if money is tight, saving just £20 a month, every month, can help make it a habit. Loqbox helps you build your credit history, while you save, for as little as £20 a month.
5. Find a way to feel good about money
Fostering a positive money mindset can help you with achieving the financial ambitions you have in life. Many of us are unaware that our parents’ beliefs about money – the good and the bad – have trickled down into us. And these sometimes need to be reviewed before we can move forwards towards a brighter financial future.
6. Set goals
To help motivate you to build up your financial health, keep your eyes on the prize. This isn’t an exercise purely for fun, it’s to help give you the best chance possible of achieving your biggest goals in life. And we all know that a goal without a plan is just a dream. So from setting your goal, the next step is to make a plan to achieve it.
If you’re a student we’d love to help you build a brighter financial future. Find out about how Loqbox can help you here.