There are benefits to living in the moment, but when it comes to your finances, it’s important to think about the future too. If you’ve decided that you’d like to start planning for the future, here are some essential considerations.
Whether you are in your 20s, 30s, 40s or 50s and beyond, it’s crucial to consider your income. How much do you earn, how long do you plan to work for and is your income stable? If you have a salary and your job is secure, it’s easier to budget and save than if you’re a freelancer or you’re self-employed, for example. Assess your income now and think about how it may change in the months or years ahead. Try to save a portion of your salary each month by reducing expenses and using a budget to monitor spending.
Where you are going to live
For most people, mortgages and rent make up a large proportion of their outgoings. As you think about the future, it’s helpful to consider where you are going to live when you get older. Are you planning to buy a house and move up the property ladder, are you looking for a forever home for your next move, do you plan to downsize, or are you considering options like over 55 communities once you retire? Life doesn’t always pan out as you anticipate, but it’s beneficial to explore options as you get older, especially if your financial situation or personal circumstances change.
Most of us go through periods and stages in our lives when our outgoings increase and decrease. For many, this is most evident when they have children. If you are planning for the future, and you have young children, or you’re thinking about starting a family, you’ll need to factor in the cost of raising kids and supporting them financially. You may also decide to save to support grandchildren in the future. Alternatively, you may not want to have children and your outgoings may decrease with time if your salary increases and you pay off your mortgage. If you have dependents, it’s wise to ensure that you have comprehensive life insurance.
Saving for retirement
Retirement age may seem a mile off if you’re only in your 20s, 30s or 40s, but time flies, and it’s always best to be prepared. If you’re employed, make sure you understand the ins and outs of pension schemes and saving initiatives. If you don’t have a pension, it’s advantageous to research savings accounts and schemes you can use to boost your retirement pot. You might also want to think about investing if you want to make money. Options include bonds and stocks and shares, real estate investment, cryptocurrency and commodities. Carry out extensive research before investing, set a budget and seek professional advice.
Financial planning is advantageous for adults of all ages. If you are keen to plan for the future, analyze your income and outgoings and think about where you’re going to live and how you’re going to save for your retirement. Try to save money when you can, use expert advice to help you make decisions about your future and explore investment options if you want to increase your income.