Money Saving Expert Martin Lewis On How YOU Can Save More Money Right Now

More than 16 million people in the UK have savings of less than £100. We suspect you’ll agree that’s a pretty worrying statistic.

No idea where to start when it comes to budgeting? Worried about paying off your student loan? Think you’ll never, ever be able to buy a house?

We spoke to Money Saving Expert Martin Lewis to find out his advice on how us young people can play the game and get ahead when it comes to managing our money.  Here’s what he had to say about your biggest financial worries…

Is getting a mortgage as impossible as I think?

If you’re a young person, Martin says that the first thing you should look into is the Help To Buy ISA, “If you've never bought a property before, then you're allowed to put up to £1200 in the first month, and £200 in the month after that,” Martin tells us.

“You save, you can get better interest rates than in a savings account and you can get your money out whenever you want. You don’t have to, but if you then use that towards a mortgage deposit, the government adds a 25% bonus on top of what you’ve saved.”

Is it worth paying off my student loan asap?

“Trying to pay off your student loan more quickly than you can is a mistake,” Martin says.

“Many people worry about the interest on students loans, and they're told, in general, that they have to try and clear it. My big advice is: forget it.

“For a lot of people, the best thing to do is to rip that statement up, and throw it away. Pay your 9% above £21,000 and just see it as an extra form of income tax, rather than as a loan, and get on with your life. 

“I was doing a talk, and there was a woman there with her daughter who, tragically, after university, had a catastrophic illness which left her in a wheelchair with very severe disabilities. The mother and daughter were concerned about the level of interest they were going to have to pay on the daughter’s student loan, so they called the Student Loans Company. They said that they were very scared. They get this statement each month, and there's £200 a month in interest being added. She's not earning, and may never earn. So they asked what on Earth they should do.

“The Student Loans Company said that the only way to reduce interest [on student loans] was, if you've got the cash, to start paying now, and start over-paying. I was apoplectic when I heard this, because that is disgusting misadvice.

“We need to make this really plain. You will only repay your student loan if you earn above £21,000. And the amount you repay is proportionate to that; you pay 9% of everything you earn above. You repay it for 30 years. After 30 years, it's wiped.

“In fact most students, when they get their student loan statements - and it's a very scary document - the interest on that statement you will never ever pay unless you are a really high earner.”

By the end of the month I’m always stuck eating cold beans but I have no idea how to budget.

“Lots of parents tell their young student offspring that it's important they do a budget before they go to university - but no-one ever defines their income.

“Now, I would say [your income is] it's your student loan, plus any money you get from any form of grant, plus any money you get from working, plus any money you get from parents.

“It isn't 0% overdraft. It isn't any other form of debt. So that's what you need to add up to define your income. You can only ever budget if you know what your income is. It's fine if you know your expenditure, but if you don't know your income, you don't have both sides to the equation.”

My work have auto-enrolled me into a pension scheme. Should I opt out to save cash?

“I can almost feel the 'f**k off old man' coming out here. But I can cope with that. Just listen to me, here's the point: if you're working these days, there's a thing called auto-enrolment, which means you have to choose not to contribute to a pension. Don't do that, because you'd be giving away a pay rise.

“If you put money towards a pension, the law also says that your employer must match it to some extent. The actual amounts varies between employers, from 1% of salary to 3% of salary, but by not putting that money in you’re effectively giving away a salary rise, because your employer is obliged to give you money that they don't have to give you if you're not putting money in your pension.

“So even though nobody aged 20 is going to be able to put 10% of their salary towards their pension - I get that - the earlier you put money in, the better.

“The world is changing, we have an ever-growing elderly population, and young people are going into a world where the state is really going to struggle to provide you with a pension, I'm afraid. If you don't want a cold baked bean future, it's worth thinking about it young.”

Martin’s big advice to any young person

“When you’re starting out in the world, my big piece of advice would be: 'don't feel you need to know the answers'.

“Just do understand that you always need to ask questions, and whatever decision you're making, whether it's buying a train ticket, or tampons or an ISA or a mortgage - in every financial transaction that you make - you need to make sure that you've checked out what's available, done your reading so you understand the product that you're buying and you've checked that it's suitable to you, and then gone on and asked yourself the question:

““Am I going to use it? Is what I'm getting actually worth it?"

“You've got to do all of that. When you do it the first time, it's a pain in the arse. But each time it gets better when you learn what you're doing.

“Be careful. Ask the questions, and just understand that in most cases - what you see advertised, or what they're trying to sell to you - is not right for you. It's right for them. Do your research and you'll often find a cheaper and better way to do anything.”

For more savings advice, head over to the Money Saving Expert website here.

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