How to survive London as a new graduate

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With no pressing essay deadlines and a fresh career to carve out, the world is your oyster as a new graduate. With a bustling city life, a large number of young professionals and an abundance of job opportunities, it’s no wonder why new grads are attracted to London.


As a financial coach, I speak to a lot of these new grads who don’t want to feel guilty about enjoying London life but also want to plan for the future. The simple trick is to find the right balance for you, but with that easier said than done, here are some things to consider when starting your graduate life in London.

London needs to be experienced – but plan carefully!

There is a reason that young people move to London. There’s always something new and exciting to try out, but the London lifestyle can get very expensive.

As a tip, I tell my clients to give themselves a budget at the start of the month for their general spend (everything outside of bills and fixed costs). Once you have your “spending money” for the month, split this weekly according to your plans that month.

The most important thing is to focus on your own situation and not compare yourself to your friends. Find a budget that suits you and stick to it.

Rent! Find a happy medium between cost and convenience.

As most new grads biggest expense in London, finding the right rental situation is key.

I have been working with a recent graduate, Jack, for a while now. When we first spoke he was struggling to save. We had a chat about his fixed costs and found that his combined cost of rent and commuting was a very high proportion of his income. It turned out that he was paying for a premium flat as well as commuting from one side of London to the other.

We discussed his priorities and Jack decided that he would still like to live in a premium flat but that he wanted to live in an area that was slightly closer to work. This reduced his commuting costs, allowing him to increase his savings, and cut his commuting time dramatically meaning he wasn’t as tired at the end of the week!

This is just one example - when looking at your own situation think about what is important to you when you are renting.

For Jack, the most important thing was to have a nice home to come back to.

3 key things to think about when planning where to live

  1. Location – Generally speaking, the closer you are to central London, the more expensive rent will be. Another aspect of location you should consider is the commuting costs.


  2. How many people you’re living with - Living alone does have its perks, but usually tends to cost a lot more than living with others. Generally, the more people you live with, the cheaper the rent (but longer queues for the shower in the morning!).


  3. Property/Room type - House shares, apartments, flats, live-in landlords, en-suite rooms. All of these have their own quirks carrying their own price tags.

When you are considering a place to rent, and trying to keep costs within your comfort level, small compromises here and there can make a big difference.

Tips and tricks to make sure you’re still saving for the future

While rent and setting a budget for your flexible spend can help, here are some additional tips that can help you to make sure your future plans can be achieved!

  • Build savings pots for one off costs - Christmas, Birthdays, Weddings, Hen dos and Stag parties. These costs generally don’t happen every month. But the one month that they happen, they can throw your budget out the window. I tell my clients it’s worth building a pot each month so that when these one off costs crop up, you don’t have to worry about dipping into savings.


  • Pay bills and fixed costs at the start of the month - Having all of your costs coming out at the same time in the month, and soon after being paid, can help you to visually see how much money you have to spend on the fun aspects of London.


  • Season tickets - Travelling on trains, buses and the tube is part and parcel of the London life. Season tickets tend to be cheaper than paying for individual journeys. The longer season ticket you are happy to buy, the cheaper each journey tends to be. Some employers also offer season ticket loans which can help you to pay for any annual season.


  • Railcards and Oyster cards - You are able to put your railcard onto your oyster card and you can save ⅓ off of the cost of your journeys! This is only at offpeak times but can cut down the costs of individual journeys, daily caps and day tickets.


  • Maximise matched pension contributions - With pension contributions, the minimum contributions are 3% from the employee (set to increase as of April 2019 to 5%) and 2% from the employer (set to increase to 3% as of April 2019). Some employers though are happy to match your contributions up to higher levels. This means you’re essentially doubling the money you’re putting into your pension with no added cost for yourself. Try to at least contribute up to your employers max matched contribution.


  • Opt into salary sacrifice schemes - some employers offer additional employee benefits where you can pay for certain things through salary sacrifice. Your employer would deduct your salary by the cost of the item (usually up to a limit). This would be done before you are taxed, effectively making a saving on tax and national insurance and bringing the cost of the item down by 20% (basic rate tax payer) or 40% (higher rate tax payer). Examples of things that can be paid through salary sacrifice are bikes (cycle to work scheme), child care (child care vouchers), company cars, car parking spaces for work and financial advice (pension advice vouchers). It is important to bear in mind that this may affect the amount of benefits you can receive (maternity pay, income support) and also mortgage applications.

As a new graduate in London it can often feel like it’s difficult to navigate, and to feel in control of your money.

The key is to plan ahead and find the right balance between fun and function that suits you and your lifestyle.