If you are of the younger generation by which I mean 40 or under and you are struggling to set yourself up for life financially here is what you need to do.


  • Pay off all of your unsecured debts especially student loans as soon as possible
  • Minimise your outgoings
  • Maximise your income and create multiple sources of income
  • Join your workplace pension scheme
  • Buy a property and borrow from the Bank of Mum and Dad if necessary to help fund the deposit
  • Maximise your pension contributions (after you have bought a house)
  • Maximise your ISA contributions
  • Invest primarily into equities (shares)
  • Ignore state pensions 


In a nutshell there you have it but let me expand.




Borrowing, unless it is a mortgage to buy a property, is a waste of money.  Period.  So either don’t borrow or pay off your borrowings ASAP.


Don’t dismiss student loans when applying for a mortgage.  Whilst these loans do not appear on your credit record they are still taken into account by mortgage lenders.  Any debt repayments that increase your monthly expenditure including student loans will result in a mortgage lender lending you less.  In fact, keep all expenditure to a minimum otherwise your lender will not lend you as much.


Maximise your income in your own job by working hard and proving your value.  Additionally create multiple sources of income e.g. renting out your drive or parking space, renting a room to  a lodger, renting out your car when you are not using it, network marketing, eBay trading etc.  You decide.  The more regular income you have the more favourable will be your mortgage lender to lend to you.


As soon as you get a job, join the workplace pension scheme and never leave it.  Employer pension contributions are free money after all.  They are also a tax-free benefit in kind.


Buy your first property as soon as you can.  Use the Bank of Mum and Dad to fund the deposit if they are amenable to this idea.

Once you have bought your house, maximise the pension contributions into your workplace scheme at least up the level at which your employer will match your contributions.  Ask if your employer allows salary sacrifice.  If they do, then increase your contributions via this method by as much as possible.





Once you have maximised your pension contributions you need to maximise your ISA contributions up to a maximum of £20,000 p.a.


In terms of your investment strategy, invest primarily into equity funds as you are young and can afford to take a long term view accepting the higher level of volatility of shares.  Over the long term shares have historically outperformed all other asset classes such as property, bonds and cash.


As for state pensions, forget it.  The state pension scheme is bankrupt.  It is nothing other than a giant Ponzi scheme.  You have virtually zero chance of receiving a state pension when you retire purely because of demographics and our vastly ageing population.  With the current dependency ratio of 3 people working for every 1 person retired set to change to 1 for 1 by 2050, it is inconceivable that the government will ever pay state pensions to the vast majority of pensioners from 2050 onwards.  A 5- year- old could work that one out.





In the meantime expect the state pension retirement age to keep rising as life expectancy expands.  It has been predicted that life expectancy will increase from around age 80  to age 120 in the West over the next 20 years.  So a future state pension age of 100 is quite likely.


Workplace pensions appear to be the work of the government to replace state pensions by privatising them.


So the main message from this blog is to look after yourself, do not rely on the state or a benevolent employer in the future.  Become financially independent as soon as you can.  You know it makes sense.*


*The value of your investments can go down as well as up, so you could get back less than you invested. Your home may be repossessed if you do not keep up repayments on your mortgage. The contents of this blog are for information purposes only and do not constitute individual advice. You should always seek professional advice from a specialist.  All information is based on our current understanding of taxation, legislation and regulations in the current tax year. Any levels and bases of and relief from taxation are subject to change. Tax treatment is based on individual circumstances and may be subject to change in the future. This blog is based on my own observations and opinions.