As a Londoner of almost 7 years, I would vouch that living in a capital city or other major urban centre comes hand in hand with a whole host of benefits. You will generally find yourself in a bustling area that has the widest range of jobs on offer. No matter what field you work in (unless you happen to specialise in agriculture or marine biology), chances are that the major names and employers in the field are based nearby. You also don’t have to worry all too much about getting to and from the workplace on your morning commute, as urban centres tend to have the best public transport links available. This can benefit your social life too. After all, they’re simple and relatively cheap ways to get to all of the local entertainment on offer: restaurants, bars, clubs, and cinemas, alongside more cultural attractions such as museums, art galleries, and theatres. It’s really not all too surprising that so many people will flock to live in these spaces. The drawback? Living in a major city is by no means the cheapest option to consider. All of these benefits generate high demand, and chances are that you won’t get all too much space for your money either: the price of land in inner city spaces skyrockets, and property developers then build upwards in blocks of small flats to make the most of the investment. Rent and mortgages are high, so the price of everything else becomes high too. People start adding to the price of anything they’re selling to cover their own running costs. Food is expensive, drinks are expensive, entertainment is expensive. You know the drill. So, how can we benefit from living in a major city without sinking into debt? Here are a few steps that you too can take to organise your finances efficiently.
The first step towards staying in the black is to budget effectively, knowing your disposable income. Pull up a notebook, as it tends to be easier to organise things when everything is written down in black and white. First, note down your take home pay, that is the money you get with taxes deducted (a mistake I have made when I started freelancing, but it’s easy to make as employed too, especially when first starting work). Once you have this figure, you need to deduct your necessities. These include your rent or mortgage payments, payments for energy bills, and basic grocery shopping (and no, no matter what I might say about needing it to survive, wine isn’t one of these!). Anything left over is your disposable income and what you have left to use at your leisure. In my case, since I don’t buy new clothes and rarely buy shoes, it’s for the wine. If you make sure that you don’t exceed your disposable income, you shouldn’t have to worry about falling into debt (especially if your salary is £40K pa…you know who I’m talking about…).
Of course, there are situations in life where you may find yourself in need of borrowing money, and not everyone has recourse to the bank of mum and dad when hit by unexpected expenses beyond the money they earn. Borrowing gets a bad reputation because of the many loan sharks, which offer speed and convenience but come hand in hand with extremely high interest rates, and people find themselves struggling to keep up with outrageous payments and may slip further and further into debt as a consequence. However, it doesn’t have to be that way. Most people can access better options, and before you write yourself off as not eligible (I thought my credit score would be low as I’m a recent-ish migrant, but I’m doing better than I expected), browse different secured loans. You will have to put some form of collateral down on these, but as long as you pay on time and as agreed, the collateral won’t be touched, and you should be able to clear the loan quickly and efficiently with a lower interest rate.
Create a Savings Account
Something I wish I had begun to do earlier was attempting to save. Even if earning enough, when working most hours of the day it’s easy to fall into the trap of wanting to treat yourself, whether it’s a bath bomb or a bottle of wine or dinner out, or even a mere coffee to take a break from strolling around a big museum. Most people who save are saving for something other than a rainy day, which gives them motivation, but setting aside some money in an account where it can gather more interest is a good move to make, even if you’re not sure exactly what you want to gather savings for. Then, down the line, if you want to make a big investment (such as putting a deposit down on a mortgage, or heading away travelling, or you know, get married…), you will have the funds readily available rather than having to postpone your plans for months or years. Your savings account can also come in useful if you are hit by further unexpected expenses (like mousegate), as you will have money readily available to bail yourself out rather than having to borrow further or go without.
While inner city living is inevitably going to be a relatively expensive lifestyle choice, there are steps that you can take to organise your finances effectively and efficiently that will keep you financially positive and self-sufficient. Incorporate the above steps into your lifestyle as soon as possible in order to benefit from them as much as possible!