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Aspiring Lawyers - Applications & General Advice
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How do young lawyers manage their finances?
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<blockquote data-quote="HorsesForCoursesNeighNeighNeigh" data-source="post: 90236" data-attributes="member: 8899"><p>First thing I would do is work out what I'm actually taking home using this tax calculator (I use the below one as it allows for postgrad loans too):</p><p>[URL unfurl="true"]https://www.thesalarycalculator.co.uk/salary.php[/URL]</p><p>You'll probably have a BIG shock when you see just how much tax reduces your salary (NB this calculator doesn't include council tax, not sure if it contains latest NI changes). Read up on the latest government policy on pensions as well as your company's policy--you get a certain tax free allowance and companies will have their own policies on how they match your contributions. Try different figures with a tax calculator to see if upping your contributions would work for you (it's probably something that will be a lot more helpful as a highly paid associate then as a trainee TBH). Also remember to claim the working from home tax relief if applicable.</p><p></p><p>You're probably looking to buy as soon as possible, assuming you're renting now. Check out government help to buy ISAs which give you an extra chunk of money if the property is under a certain price (450k for London): </p><p>[URL unfurl="true"]https://www.gov.uk/affordable-home-ownership-schemes/help-to-buy-isa[/URL]</p><p>Also sign up for Clearscore now to check your credit score. You'll want to register to vote, get a credit card, put all your bills on direct debit and get a phone contract to maximise it. Always good to do this years before you want to buy, to avoid nasty shocks.</p><p></p><p>Assuming you're in London, property is obviously expensive but on a legal salary it's doable alone if you save. Assuming your credit score is fine, you should be able to borrow maybe up to 4.5-4.7 times your salary (depending on your type of contract--when you're permanent you're much more attractive to mortgage companies, also depending on ratio of deposit to borrowing--a broker can tell you or an online calculator). Exact amount will vary depending on your expenses, etc (basically don't get yourself into any expensive car hire agreements!), but let's say you're on £80k as an associate and have saved £50k, you might be able to borrow around £360k, look to buy a house at £400k and have the 10k for costs (lawyers, stamp duty, broker) and contingencies. I think some firms offer mortgage brokers and similar as work perks.</p><p></p><p>So I'd start by deciding what I want when--how motivated are you to buy, how much are you willing to save? Or are you more relaxed about that and wanting fun for a few years? Then make a budget and plan around that. I'd advise putting your savings on direct debits for after you get paid, get all your bills automated.</p></blockquote><p></p>
[QUOTE="HorsesForCoursesNeighNeighNeigh, post: 90236, member: 8899"] First thing I would do is work out what I'm actually taking home using this tax calculator (I use the below one as it allows for postgrad loans too): [URL unfurl="true"]https://www.thesalarycalculator.co.uk/salary.php[/URL] You'll probably have a BIG shock when you see just how much tax reduces your salary (NB this calculator doesn't include council tax, not sure if it contains latest NI changes). Read up on the latest government policy on pensions as well as your company's policy--you get a certain tax free allowance and companies will have their own policies on how they match your contributions. Try different figures with a tax calculator to see if upping your contributions would work for you (it's probably something that will be a lot more helpful as a highly paid associate then as a trainee TBH). Also remember to claim the working from home tax relief if applicable. You're probably looking to buy as soon as possible, assuming you're renting now. Check out government help to buy ISAs which give you an extra chunk of money if the property is under a certain price (450k for London): [URL unfurl="true"]https://www.gov.uk/affordable-home-ownership-schemes/help-to-buy-isa[/URL] Also sign up for Clearscore now to check your credit score. You'll want to register to vote, get a credit card, put all your bills on direct debit and get a phone contract to maximise it. Always good to do this years before you want to buy, to avoid nasty shocks. Assuming you're in London, property is obviously expensive but on a legal salary it's doable alone if you save. Assuming your credit score is fine, you should be able to borrow maybe up to 4.5-4.7 times your salary (depending on your type of contract--when you're permanent you're much more attractive to mortgage companies, also depending on ratio of deposit to borrowing--a broker can tell you or an online calculator). Exact amount will vary depending on your expenses, etc (basically don't get yourself into any expensive car hire agreements!), but let's say you're on £80k as an associate and have saved £50k, you might be able to borrow around £360k, look to buy a house at £400k and have the 10k for costs (lawyers, stamp duty, broker) and contingencies. I think some firms offer mortgage brokers and similar as work perks. So I'd start by deciding what I want when--how motivated are you to buy, how much are you willing to save? Or are you more relaxed about that and wanting fun for a few years? Then make a budget and plan around that. I'd advise putting your savings on direct debits for after you get paid, get all your bills automated. [/QUOTE]
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