In our 20s, not having savings can be common. Buying a house can seem a long way off and life is often lived for the moment. But by 30, not having any savings to speak of can start to panic people.
It’s not uncommon to have no savings at 30. The key thing is what we do about it.
Get a saving habit, immediately
Saving is partly a matter of habit. If someone has no savings at 30, most likely that habit has not formed even three decades into life. However, it can be surprisingly simple to change that.
A lot of people don’t save because they feel they can’t afford it yet. I would first seek to get into the habit of saving, and build from there. That’s why I would set up a Stocks and Shares ISA and arrange for a regular transfer into it each month. Even if I started small, I could increase the monthly payment later.
I’d also start to decide what shares to buy with the savings once they got to the right size. To start with I would focus on shares with a long history and track record of keeping their value over many years. So I would look at shares in a company such as Unilever or the shipbroker Clarkson. Both have proven resilient over decades in the stock market. Once my savings were larger and I felt more confident investing, I would start to look at a wider range of shares. I’d research some newer growth names like S4 Capital.
No savings at 30? Then set a savings target!
I would set a savings target. Then, I would work out month by month from now until then how much I need to save – and how I will do it. For example, maybe I need to earn more, cut back my expenditure, or both. I’d focus on a plan that was realistic and achievable. Then I would monitor my progress each month.
I’d put my savings to work
Savings are useful but I wouldn’t let them just sit there. I would rather put them to work for me by generating some income. That is why I would invest in a share that pays out a high dividend, like Imperial Brands.
The company owns tobacco brands such as Winston and Lambert & Butler. It has a strong cash flow and its shares currently yield over 9%. So if I saved £100 in my Stocks and Shares ISA, investing it in Imperial Brands would pay me an annual income of £9. From there, I would soon have savings that were producing an income.
Another high dividend-paying company I would consider investing in is Legal & General. It paid dividends through the pandemic and has a long history of dividend payment. Its shares offer a dividend yield over 6%. The company recently affirmed a five-year plan to continue raising dividends.
A couple of simple steps would soon have me on the way to building a savings pot even from a standing start at 30.
