Issue #65: How you Should Spend £37k 🤑

^{Read Time: 2.9 mins}

🤑 Budgeting your salary can be HARD …

The average UK salary sits at £37,000, so let’s break down how I’d budget it, and hopefully give you a few ideas for your own finances along the way.

But before you start mentally allocating your money to a sushi night in or after work drinks, let’s BE REAL about what actually lands in your bank account…

Because tax, pensions, and that loyal old student loan are all taking their cut before you even see the cash 😅

Fantastic 🙃

💰 What actually ends up in your bank?

First off, we need to figure out how much of that money actually lands in your bank account.

(It’ll slightly vary per person based on pension contributions and your student loan plan if you have one - but we can take a good guess)

First, let’s factor in a 5% employee pension contribution (£154.17/month), matched by your employer at 3% (£92.50).

That’s £246.67/month going towards your retired self (win!)

Now deduct:

• Income tax: £376.33

• National Insurance: £150.53

• Student Loan (Plan 2): £50

That leaves a take-home pay of

£2,352.30 per month 🤑 

plus the pension quietly building behind the scenes.

🌟 The Golden Three

Next, we need to split this take home pay into three categories:

needs, wants and savings

Traditionally, people use the 50 / 30 / 20 rule. I'm going to change this to the 60 / 20 / 20 rule because of the cost of living at the moment.

🍎Starting with NEEDS:
60% of your salary will go towards this or £1,411.
These are your non-negotiables:
🏠 Rent or mortgage
💡 Bills
🛒 Groceries
🚇 Transport
🩺 Insurance
💪 (Maybe the gym, if that’s your kind of thing)

Start here - everything else comes after.

🛍️Next, WANTS:
This is 20% of your salary or £470.46.
This is your fun money:
🍿 Streaming services
🍝 Dinners out
🎁 Birthday gifts
🛍️ That pair of shoes you’ve clicked on five times

Life isn’t about surviving. It's about happiness and this is the pot for that.

💷Finally, SAVINGS:
Again at 20% of your salary or £470.46.
For your future you:
👩‍⚕️ Emergency fund
🌴 Holiday savings or wedding funds
📈 Investments or long-term goals

That MIGHT sound a little bit overwhelming… so if you’re not sure how to start saving, here are three things you can try right now:

1. Save first - save the moment your paycheque comes in rather than spend your salary and just save what's left. Because let's be honest, that's usually none 😅

2. If 20% feels tough, start small. Even if it's 5%, 10% or just a tenner every single month. The habit is more important than the amount at this stage 🤝

3. Save money in a separate bank account. PLEASE do not save your money in the same account that you spend from because that is where the lines get blurry. Separate it, get some high interest on it and you'll be less likely to spend it 😌

Budgeting isn’t about restriction - it’s about direction. It’s telling your money where to go, rather than wondering where it went!!

£37,000 can definitely stretch further than you might think 🤗

And that’s it for today friends. See you next week 😁

Got a question you’d like answered in next week’s newsletter? Just hit reply! Let me know your question and whether you’d like to stay anonymous.  

^{DISCLAIMER: None of the above is financial advice. This newsletter is strictly education and should not be taken as investment advice or a solicitation to buy or sell any assets or to make any financial decisions. Please be careful and always do your own research.}