How can UK migrants achieve financial stability?
How can UK migrants achieve financial stability?: There was a study done within the UK based on how ethnic groups within the UK have different savings. Now the findings from this study shocked me and this is the reason I created this post. Because if you are on my website reading this post, you are likely to be an immigrant in the UK. So that just means you might be a healthcare professional, another professional from it, or a student who is planning to live in the UK or work in the UK or is already doing that. And if that is you, you need to be aware that there are reasons why you are going to be financially poor in the UK, and today’s post is going to try and bring about a change in that outlook and hopefully give you some really good tips on how to not stay broke in the UK as a first-generation immigrant.
Let’s talk about the four reasons why you are going to be broke as a first-generation immigrant. And how can you change that.
The Cause 1 – Reliance on credit
The first reason why you are going to remain poor is too much reliance on credit. But when people come to the UK, you have seen Instagram influencers, you have seen YouTubers showing this glamorous life in the UK, but they are wearing Nike, Louis Vuitton, they’re wearing so many other designer clothes. They have the latest iPhone, they have good cars, and they eat in brilliant restaurants. And then you’re thinking, oh gosh, when I move to the UK, I want to do the same.
And that’s what happens when you come to the UK, because then you try to apply for a credit card and you are given one, and then you try buying everything on credit. But what you don’t realise is that those people are obviously having a very good lifestyle based on their circumstances, but when you have moved to the UK, you’re obviously just starting to build your life and you cannot use up all the money that you have on credit because you have got to pay it back.
Another option that a lot of people in the UK use quite frequently and again, I have seen this very commonly across my immigrant friends is the option of buy now, pay later. For example, you go to big stores like Marks and Spencers or even more expensive stores like Selfridges in London. And you really like a perfume, a dress, a bag. It’s completely fine to say, yep, I like it and go ahead and buy it. But my understanding is if you do not have the cash to buy it outright, please don’t go in with the option of buy now and pay later. Because what that does is that you end up spending more than what you originally estimated, and that can leave a big hole in your bank balance because again, that is a form of credit that does not help you.Obviously poor utilisation of credit is one of the reasons why people in the UK. Struggle to build financial independence.
Now, if you are a student financially, you are going to be really stretched and you want to find the best budget friendly accommodation for you that you can so that you can be stress free. And this is where Destinydot.com comes in because they have affordable, budget friendly options for you close to your university.
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The Cause 2 – Not building wealth in the UK
The second reason why you are staying poor is because you are not building wealth in the UK now. Right now in the UK, you’ve got to think about how you are going to make the money work hard for you. Because let’s be honest, as people coming into the UK, we are working really hard. We are taking on extra shifts, we are doing the best work that we can. We’re obviously looking for other jobs as well. If it is possible to gain more employment to boost our income, but what is the point of that income? Staying in your bank account and not making any extra money? Right now in the UK, there are two main options for you to think about making your money work harder.
The first is the high-yield savings accounts, where you are getting really good interest rates, so you are getting the rate of 4.5% or 5%, which is good. You’ve got to use them now.
But the second option you have is tax free saving options, which again, I knew nothing about. So let me introduce you to it. So tax free saving options include options such as AI such as your individual savings accounts. But whatever profits or whatever additional money you make through interest or through excess dividends on these particular accounts, they are tax free. So you do not have to pay any tax on the money that accumulates over the years.
The Cause 3 – Emergency fund
The third reason why a lot of people are staying poor in the UK is not having an emergency fund. Now let’s be honest, when we come to the UK, money is tight, our budgets are small because we are just earning single salaries, which is not a lot. But what you’ve got to think about is say for example, if I lose my job or if I need to pay deposit for a rental property in the next month because my landlord throws me out, do I have enough savings to put down that money? Or am I living paycheck to paycheck? If the answer is you are living paycheck to paycheck. Your approach to life needs to change.
What you need to do is have a bit of an emergency fund. An emergency fund is what I call a staging spot for a rainy day. Now, what this means is that, say, for example, if you are kicked out of your job, or if you do not have any money to pay your bills or to pay your credit card off, then this is where you can tap into your savings pot for a rainy day. You can use that money to get out of a tricky situation. What is usually recommended is that you should have nearly three months of emergency funds saved in that account. Now again, I am going to be honest. They usually recommend 3 to 6 months, but personally, for me, I have just about a month or slightly over a month of emergency money with me, but this is something I’m working towards. It is a goal that I see myself working towards actively.
And you know, even if you’re putting 10 or £20 towards it every single month. That still building up these funds. So I would say having an emergency fund is the next most important thing for you. And the more that money right out of your payment and your salary, because that is the money that’s going to help you when you are in a difficult or tricky situation.
The Cause 4 – Financial planning
Another bad money habit that is keeping you poor is not having any financial planning. Now, I am going to be honest, there are people who come to the UK and buy a property to live in within the first year, and then there are people who have lived there for ten years or more and are renting a property, and there is no harm in thinking about what it is that you find is best for you.
But think about what is it that you want your money to accomplish over the next few years? So for example, right now I live in a two bedroom house and that is costing me £1,000 a month, but that could have easily been mortgage payments for me to own a house. So do you see the difference? Right now I am paying somebody else’s mortgage, but if I Was able to buy a house, I would be paying my mortgage and maybe say 20 years down the line or 30 years down the line. I would have owned the house, which would have brought me so much joy. But that is not me right now, because I have demonstrated poor financial planning and that is not something I actively looked at. So again, if you are somebody who is just starting out or who is building your finances in the UK, think about how you can plan your finances in a better way.
One rule of thumb, or one strategy that a lot of people have used in the past, is using the 50, 30, 20 method, where 50% of your salary goes towards your needs, which which is your bills, your rent, your food, your groceries, your car expenses, fuel expenses, etc. 30% of it goes towards your loan. So things like a vacation fund or things like eating out expenses or a fun day expenses or things like hobbies and subscriptions and 20% of it goes towards savings. Now, what is important for you to remember is that you take out that 20% on payday and pay it into a savings account or an investment account, and don’t leave it be, because usually when we think about going on vacations, we dip into our savings, not realizing that we are putting our long term financial independence at a risk.
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