It is a new year and a good time to start taking control of your finances and set goals for 2019. We have outlined some steps to get you started.
Many people assume financial planning is only for older generations or people in a certain income bracket. However, financial planning is beneficial to everyone at every stage of life.
Review your expenditure
One of the best ways to take control of your finances is to know how much you are spending each month. Do you know how many direct debits you have? Start by writing a list of your monthly and annual outgoings. Then assess how many of these services you actually use. You may be paying for a gym membership but only go once or twice a month, you may find it is cheaper to buy a day pass when you go. Review each of your direct debits; determine if they are necessary or if the amount you spend could be reduced.
Check Outgoings on Utility Bills
Next, you should review your utility bills. It may be worth contacting your phone and internet providers to see if they can offer you with a better deal. You could also consider switching energy provider. Only 32% of consumers* believe it is worth switching if they will save £100 a year by doing so. However, saving £100 a year into a pension at the age of 25 could provide you with a good start to a comfortable retirement.
Learn more about starting a pension.
Can You Save on Groceries?
Finally, review how much on average you spend on necessities such as grocery shopping and commuting to work. Is there a cheaper grocery shop you could try? Could you buy less branded products? Writing a shopping list and sticking to it is another good way to save money and reduce impulse buys.
Set yourself savings goals
Reducing unnecessary spending will mean you have more money to put towards your savings goals but first you need to define what goals you are hoping to achieve. Our financial advisers often recommend having three types of savings goals: short term, medium term and long term.
Short term goals
You should set aside at least £1,000 for unexpected expenses that includes short-term emergencies such as if your car or boiler breaks down.
Medium term goals
Medium term goals are often what you want to achieve in 1-2 years. For example, saving for a new car or holiday.
Long term goals
Long term goals could be buying a house or saving into a private pension. We suggest that ideally you save at least 10% of your salary every month to fund long term goals.
Your goals will depend on your personal circumstances; our financial advisers can assess your current situation and help you set achievable goals.
Open a high interest savings account
Short term savings must be easily accessible in case you need the money in an emergency, for example if your car or boiler breaks down. It can be hard to make returns on savings in a debit account. However, it is worth comparing interest rates on instant access accounts with different providers, as some accounts will offer more benefits than others will.
Four Wealth Management can help you maximise the returns on your cash savings. Through St. James’s Place, we are able to provide access to Metro Bank, who can provide you with exclusive access to savings accounts including instant access, fixed term and Cash ISAs.
Make the most of your savings
With interest rates at a historical low, it is difficult to make your savings work hard for you when only using a traditional debit account. To help you to achieve a potentially better return on your medium and long term savings, our financial advisers can help you to understand the savings and investment options that are available for you. Typically, you should keep investments for at least 5 years to help maximise the potential for growth. Our advisers will take the time to understand your financial situation, your goals and attitude towards risk and make recommendations suited to your needs.
The value of an investment with St. James’s Place will be directly linked to the performance of the funds you select and the value can therefore go down as well as up. You may get back less than you invested. An investment in equities does not provide the security of capital associated with a deposit account with a bank or building society.
The levels and bases of taxation, and reliefs from taxation, can change at any time and are generally dependent on individual circumstances.
*YouGov, 2016 “Large numbers thinking switching energy provider ‘isn’t worth it’” – 02 December 2016
