I’m Caragh, and I’m a content writer for Wealthify. As you’d expect, I spend a lot of my time thinking, reading and writing about personal finances. But this hasn’t always been the case. In fact, historically, financial literacy hasn’t been my strong suit.
If people fall broadly into the categories of ‘savers’ and ‘spenders’, it would be safe to say that, throughout my twenties, I fell firmly into the latter group.
I’ve always enjoyed the experiences money can provide: Coffees and pastries with friends; a meal out with my partner; a trip to somewhere new.
Even during my thriftier uni days, with a hatful of part-time jobs (bookseller, bar staff, teaching assistant), money seemed to enter and exit my bank account on a revolving door basis.
While I’ve never been irresponsible – rent and bills have always been paid on time – like so many people, it’s often felt that money has dictated my behaviour (rather than the other way around).
Fortunately, since entering my 30s, all that has changed for the better. And what’s the secret, I hear you ask? Not a significant jump in income or change in circumstance… but financial literacy.
Jump to:
- What is financial literacy?
- 1. Making a budget
- 2. Building an emergency fund
- 3. Preparing to invest
- 4. Contributing to a pension
- Final thoughts
What is financial literacy?
Financial literacy refers to the ability to understand and effectively manage a range of financial skills. These may include (but are not limited to):
- Budgeting
- Saving
- Investing
- Debt management
- Long-term financial planning
While it’s easy to conflate financial health with your income or the number in your bank account, this isn’t necessarily the full picture. In the same way that fertiliser and irrigation can maximise crop growth, strategic financial decisions have the potential to make your money go further.
Why does financial literacy matter?
It matters because it can help you make strategic decisions about your long-term financial wellbeing.
If knowledge is power, then financial literacy is empowerment. And yet – if you’ll excuse the pun – it’s something many of us have been shortchanged on.
Like so many people, financial literacy wasn’t something I was taught about at school. While we may have tackled equations and abstract exam questions in maths class, we never looked at real-world situations.
In early adulthood, this led to a haphazard approach to money. Whilst I knew I wasn’t handling mine perfectly, it was easy to dismiss financial literacy as something intangible that couldn’t truly help me.
Now, I’ve seen firsthand just how much improving your financial literacy can lead to real, verifiable improvements in your economic wellbeing.
Here’s what I’ve changed since going from finance-silly to finance-savvy!
1. Making – and sticking to! – a budget
Budgeting… It’s good money management 101.
Most of us know we should be budgeting, but how often do we – (in honesty) – stick to it?
Speaking from past experience, every payday started with good intentions, and every month ended with depleted funds.
Here’s how I changed that:
Taking inventory
Budgeting isn’t just day-to-day spending; it’s those regular payments that crop up every month.
While most of us are aware of the big hitters – things like rent, mortgage and bills – it’s easy to miss the niggly recurring payments that ripple between paydays.
For me, good budgeting started with a clear view of what was leaving my account and when. Gym membership, phone contract, monthly subscriptions, et al.
By taking stock of these things (and streamlining where relevant), I’ve been able to set a solid foundation for the rest of my spending.
Addressing lifestyle creep
That brings me onto spending itself.
There are many helpful budgeting apps that allow you to categorise and set targets for your spending, and these are incredibly helpful! But if you’re starting from scratch, I’d recommend starting with simply tracking your spending.
If you’ve ever noticed that, despite a gradual growth in income, you don’t seem to actually have more money, you might be falling victim to ‘lifestyle creep’. This refers to the phenomena where an increase in salary leads to an unconscious rise in spending.
This could look like anything from extra takeaways to more luxurious holidays. But over time, it adds up.
By tracking spending for a few months, you’ll start to get a clearer idea of where lifestyle creep is cutting into your extra dough. And honestly, you might just be surprised to see where that money is going.
Knowing this, you can make more intentional decisions about what you truly value, and what you can do without. For me, that was realising that while one overpriced flat white a week was a nice treat, four or five was probably overkill.
Staying flexible
Whether it’s an arduous exercise plan or strict diet, sticking to a gruelling regime indefinitely in nigh on the impossible. The same goes for strict budgeting.
While it can feel more manageable to look at the year as a whole and engineer backwards from your salary, the truth is that the annual spending rarely splits into twelve equal portions.
This is why staying flexible, and planning ahead, allows your budget to remain resilient.
If you like to hole up at home during the winter, but by summer you’re hitting the pub gardens, you can budget accordingly by saving more during the quieter seasons and increasing your budget for busier months.
2. Building an emergency fund
I always knew I should be saving, but before improving my financial literacy, I’d never heard of an emergency fund.
As the name suggests, an emergency fund refers to savings you set aside to be used in the case of, well, an emergency. That might be job loss, a health issue or your boiler exploding.
While there’s no exact right or wrong amount, a good rule of thumb is to save between three and six months of expenses. This way, if something unexpected does happen, you have breathing room to figure everything out.
3. Preparing to invest
If you’d asked me a few years ago what came to mind when someone said ‘investing’, I’d probably have mentioned the Wall Street “charging bull”, men in suits, and the Financial Times.
In other words, an impenetrable and inaccessible world that had nothing to do with me.
But this couldn’t be further from the truth. Investing is something everyone can (and in my opinion, should) consider.
I’m not alone in feeling this way: 58% of UK adults have invested as of 2026, which is up from 54% in 2025 and 51% in 2024. [1] What’s more, it’s an area that more and more women are gravitating to. At the time of writing, Wealthify officially has more women investors than men!
This is why investing seemed like the next natural step in my own financial journey. To be specific, opening a Wealthify Stocks & Shares ISA. This option appealed to me most as it provides the opportunity for me to grow my money while also protecting those funds from tax. (the current tax-free allowance for ISAs is £20,000 a year).
Crucially, this is part of a long-term strategy. Market fluctuations often scare beginner investors, but the truth is that time in the markets matters more than timing the markets.
What that really means is that, so long as you intend to invest over a 5+ year period, it’s much more likely you’ll ride out market turbulence in the long-term.
Please remember the value of your investments can go down as well as up, and you could get back less than invested.
Your tax treatment will depend on your individual circumstances, and it may be subject to change in the future.
4. Contributing to a pension
When you’re in your 20s – and even into your 30s – retirement can feel far away. Real, but abstract. All little too easy to file as a problem for “future me”.
I know because, for a long time, that’s exactly how I treated it.
In my mid-to-late twenties, I spent around five years working freelance. While that brought plenty of flexibility (and a fair bit of unpredictability), it also meant that things like pensions slipped firmly down my list of priorities.
When your income fluctuates month to month, it’s natural to focus on the immediate: rent, bills, day-to-day living. Long-term planning? That can wait.
It didn’t feel urgent. And without that sense of urgency, it was easy to put off.
But what I didn’t appreciate was that pensions aren’t really about urgency – they’re about time.
The power of compounding
One of the biggest shifts in my thinking came when I properly understood compounding.
In simple terms, compounding is when the returns you earn on your investments start to generate returns of their own. Over time, this creates a snowball effect where growth builds upon growth.
And crucially, the earlier you start, the more powerful that effect becomes.
Even relatively small contributions made in your 20s or early 30s have the potential to grow significantly over decades. Leave it later, and you may need to contribute much more to achieve the same outcome.
Making the most of employer contributions
If you’re employed, there’s another major incentive to contribute to a pension: your employer will usually contribute too.
Under the UK’s auto-enrolment rules, eligible employees are automatically enrolled into a workplace pension. The minimum total contribution is currently 8% of qualifying earnings – with at least 3% coming from your employer and the remaining 5% from you (including tax relief).
In practice, many employers offer more generous matching schemes. For example, they might match your contributions up to a certain percentage. That means if you choose to contribute more, they will too, effectively giving you “free money” towards your retirement.
Looking ahead
These days, I see pension contributions very differently. Rather than something optional or distant, they feel like a core part of my financial foundation.
While I’m continuing to build through my workplace pension, I also supplement this by contributing to a Self-Invested Personal Pension (SIPP). This gives me more control over how my pension is invested, and provides another option for growing my retirement alongside what I already have in place through work.
And while I’m still very much on that journey, one thing is clear – the earlier you start, the more options you give your future self.
Final thoughts
Turns out, getting better with money doesn’t mean cutting out the things I love – it just means being a bit smarter about how I manage them.
If you’re on your own journey to financial fluency, why not check out some of the below resources:
- MoneyHelper – A government-backed resource offering clear, impartial guidance on budgeting, saving, pensions, and debt.
- The Money Charity – Provides tools, statistics, and practical guides aimed at improving financial wellbeing.
- Citizens Advice – Offers free, confidential advice on managing money, debt, and financial rights.
- MoneySavingExpert – A free website from Martin Lewis that can help you make savvy savings on everyday things.
- Wealthify blog – beginner-friendly finance blogs that look at investing, savings and other money topics – as well as Wealthify’s services.
Wealthify does not provide financial advice. Please seek financial advice if you are unsure about investing.
Please remember the value of your investments can go down as well as up, and you could get back less than invested.
Your tax treatment will depend on your individual circumstances, and it may be subject to change in the future.
