Everyone knows that they should be actively planning for their financial future. However, knowing what needs to be done and actually doing it are two very different things. Experts and analysts are now predicting that today’s university graduates won’t even be able to retire until they are in their mid-70s, and that even assumes a fair amount of saving in the here and now.
Faced with statistics like that, it is more important than ever before that today’s rising professionals get serious about saving money and planning for their financial future. Along those lines, we’re going to look at some tips for getting started planning your financial future:
Learn to distinguish between needs and wants.
This is a core consideration for anyone struggling to save for the future. It is absolutely imperative that you learn to tell the difference between things that you need and things that you would just like to have. Without a clear grasp of these essentials, you are going to struggle with budgeting for the present—let alone with saving for the future.
Learn to be consistent.
For younger people who are just getting started with saving, it can be difficult to establish a consistent lifestyle. People in their 20s are likely to spend lots of money right after payday, only to slip into a much more Spartan lifestyle near the end of the month. This is the recipe for living paycheque to paycheque, and it is not going to lend itself well planning your financial future. Indeed, when you run out of money every month, there is really no point in making plans at all. Once you develop some financial consistency, you’ll be able to add savings to your monthly budget.
Make the most of employee benefits
It is essential that you are aware of all of the potential benefits that are available to you through your employer. Specifics vary depending on the company you work for and the position you hold. Some employers will offer to match investments that you make from your paycheque into a retirement savings account. Find out the upper limits that they will agree to match, and make sure that you are paying at least that much every year. Failing to do so is literally turning down free money. If you are afraid that you cannot afford to tuck away that much money each month (due to cash flow concerns), schedule a consultation with a employee benefits consultancy such as Jelf Group PLC Company for some professional insight into your specific situation.
Accumulate cash reserves
Any well-organised financial plan is going to be built upon a base of cash reserves. Most financial planners recommend setting aside an amount equivalent to between three and six months’ wages. This should be viewed as an emergency fund that you can fall back on should something happen. In other words, any savings for big purchases, holidays and spending sprees should be considered separate from these cash reserves.
Pay down debt
One of the biggest hindrances to your financial future is your current burden of debt. Any borrowed money that you owe on today is going to compound with interest until it is paid down. Along those lines, paying down one pound of debt today is going to save you from owing more than a pound in the future (i.e. that original pound plus interest). The results can be surprising (and are dependent on the interest rate); however, it’s safe to say that paying a few quid per month now will save you from owing thousands in 10 years.
About the Author: Jelf Group PLC Company is a consultancy firm that provides individuals and businesses expert advice on financial planning as well as insurance, employee benefits and healthcare.