I earn £45K, rent in London but still have £42K savings in in 20s – how the 50-30-20 technique helped me cash in

GROWING up, Fiona Maguire had no women to look to in business with most of the ladies in her family being homemakers.

But now, the 27-year-old from Michigan, US, who now lives in Islington, London, has become an entrepreneur.

Marcus Hessenberg

Fiona Maguire

Watch Talking Money on YouTube here and catch it every Wednesday

Speaking to Fabulous for our new Talking Money YouTube series, Fiona reveals how she made her own cat food business and has £42,000 saved at just 27.

“I make £45,000 per year making cat food. I do try the cat food as well,” she adds. “It really just tastes like turkey mince or beef mince.”

The expat now reveals how she makes £45,000 a year and how she saves it using her spending rule.

Fiona says her upbringing is the main reason she owns her own business and sticks to a tight budget.

She says: ” I was always very conscious of the money that I spent because it was my parents. So I wanted to spend it wisely.

“Now that it’s mine, I think I’m probably even stingier with it or even more careful with it.”

Even as a youngster, Fiona was curious about finances.

“I always would ask my dad how much he makes just out of curiosity’s sake,” she explains.

“And he would always start his answer with, ‘Don’t tell anyone at school, but this is how much I make.’”

Fiona Maguire

She thanked her dad for teaching her about finances[/caption]

From an early age, she knew money was a taboo subject and also grew up with a family where most of the women didn’t work – making it hard for her to relate.

“I also grew up in a family where most of the women didn’t work,” Fiona says. “So all of the salaries and money conversations that we were having were always around dad’s money.”

Now the owner of a cat food business, Fiona admits she’s willing to put her money where her mouth is and try it herself, her favourite being the new fish dish.

I think I’m known for being more savvy or budget conscious than most of my friends.

Fiona Maguire

“My favourite recipe that I’ve developed is probably one that I’m working on now, which is a new fish recipe for my cat food company,” she explains.

“It’s been a really exciting project because I’ve basically gotten to redesign it from the ground up and I’m very excited to see how it does.

“I do try the cat food as well, not because I have to, but mostly just because the human palate can be a really useful tool for evaluating the product because it is 100% meat and human grade. So it’s not as off-putting as it might sound.”

Despite working and living in central London, Fiona is still able to put away £500 a month and now has a safety net of £42,000.

She says: “I think I’m known for being more savvy or budget-conscious than most of my friends. It can be really difficult to make sure that you kind of have enough for everything living in London.”

Fiona Maguire

Fiona owns a cat food company – and even samples the dishes herself[/caption]

Saving Rules

To help Fiona keep on top of the cost of living in London, she has a strict budgeting system in place and makes sure every penny is accounted for.

“I have £42,000 in savings already in my 20s. I am a young millennial super saver,” she says.

She uses a system she calls the “50-30-20 approach to budgeting.”

Half of her monthly paycheck goes towards rent and bills, 30% to things she wants and 20% is saved.

She’s able to put aside £500 a month easily by having it automatically transferred on pay day every single month.

But like any 20-something-year-old, Fiona still wants to enjoy life in the city and travel.

I’ll always go to the cheaper grocery store, always go to the cheaper gym as much as I would love to go to Third Space.

Fiona Maguire

“Holidays are definitely where I spend the most of my money,” she says. “I like to save up my time and my money and go on big trips, kind of once or twice a year. I probably spent £2,500 on a trip to Brazil in December last year.

“And I’m going to Valencia for a friend’s 30th birthday. I estimate I’ll need £500. So I basically divided that out and decided to set aside £72 a month to reach that goal.”

Beauty buys were also a non-negotiable for Fiona who spends £60 on products a month, plus an extra £80 on going to the sauna and getting a massage.

She also splurged £500 on laser hair removal last year which she said was one of her biggest single purchases.

While the cost of living in London is the highest in the country, and the eighth most expensive in the world, Fiona makes sure she can live comfortably.

“I have just adjusted my expectations of what I can afford as a result of living in London, but it’s 100% worth it,” she says.

“I’ll always go to the cheaper grocery store, always go to the cheaper gym as much as I would love to go to Third Space.”

Money Guilt

Despite exceeding the average amount of money saved in the bank for her age range (which is £1678 according to the ONS) Fiona still battles with money guilt.

“I have more money anxiety now as an adult, just because all the choices are my own.” she explained.

“I think I would like to get to a point with my finances where I can spend without so much stress. I am very happy financially where I’m at now, but I’m also very, very careful with what I buy,” Fiona adds.

“I think my only bad money habit now is just having a little bit of anxiety when I spend money that I don’t think I need to.”

Fiona hopes to be able to buy her own house within the next 10 to 20 years and often speaks to friends about finances and how to navigate it.

Like many of us, Fiona grew up thinking asking about money was improper but now realises how beneficial it can be.

“I talk about money with both of my flatmates now, which is really helpful because we can kind of compare our different industries, our experiences, where we’re at in our career level,” Fiona says.

“The older I get, the more I realise talking about it and kind of understanding your relationship with it is really important.”