The future is something that you might take a ‘I’ll cross that bridge when it comes to it’ attitude towards, especially if you’re still relatively young. However, with the UK falling out of the top ten for pensions for the first time ever in the Mercer Global Pensions Index and increased life expectancy meaning we’re likely to live longer, people will actually have to save more of their earnings over a longer period of time to help cover the cost of retirement.
No doubt, you’re now probably wondering what this means for you and whether or not it’s time to start putting money away for the future?
In short, the answer is that it’s never too early to start saving, whether that’s through a pension, making sensible investments or both. By planning for the future and putting money away, you can get peace of mind that when you’re older you’ll have the cash to continue to enjoy life. It’s also good practice to monitor your finances using your credit report and save cash to cover the cost of life’s key events, whether that’s getting married, buying your first home, having a baby or any one of the number of things we all want to achieve.
However, research from Aviva has recently shown that lots of people aren’t being proactive about saving for the future, with just 44% actively saving. This is despite the fact that 59% told Aviva that they worried about having enough savings for retirement. In fact, just 13% said they had no concerns about whether or not their savings would last.
Fear is the most widespread among 35-44 year olds, with 73% saying they are worried about their retirement savings. This is closely followed by 25-34-year-olds, with 70% admitting concern. Among this age group, more are worried about having enough money once they stop working than the cost of raising a family, buying a home and paying off a mortgage.
Simple steps for saving
To help make sure you’ve got enough money to cover the cost of retirement, there are a few easy things you can do to make a big difference and take control of your finances.
First thing’s first: If you struggle with motivation when it comes to saving, you need to get in the right frame of mind. A simple trick is to set little goals, so you know you’re working towards something and not simply putting money away. This might be something like having at least one holiday a year when you retire, or something simple such as still having enough money to indulge in your favourite hobby.
Once you’ve got yourself in the mood for saving, you can start to develop positive financial habits that are going to help you in the future. These include:-
- Setting up a pension: Check to see if your company offers a pension scheme where they pay into it as well and take them up on the offer. If they don’t, shop around to see what scheme is the best for you based on how much you want to pay in, interest rates and withdrawal options available to you when the time comes.
- Start budgeting: One of the most effective and simplest ways to get a handle on your finances is to set monthly budgets and review them regularly. This will ensure you get all your essentials covered and have a clear idea of how much money you have left over for you to enjoy. Unfortunately, according to Aviva, just less than 1 in 3 adults review their budget each month to see where they are and if they can afford to save more. Getting into the habit of setting and managing budgets could make a big difference both in the long and short-term.
- Check your credit report: Your credit score and report are there to help you understand your financial position. Sign in regularly to your Noddle account and check your financial account details, short term loans and any outstanding debt. This information will help you make decisions about spending or taking on existing credit.
- Proactively clear bad debt: It’s hard to save when you’re dealing with bad debt. That’s why it’s important to have a plan in place to clear it and get back onto firm financial footing. Read our blog on clearing bad debt to help.
- Open up an ISA and make small, regular payments: If money is in your current account, it can become way too tempting to spend it, even if you have the best of intentions of saving it. By opening up an ISA and making regular small payments into it, over time this fund will build and gather interest. As you’re only making small payments, you shouldn’t feel the impact. However, be sure to look around to find the best rate ISA.
Being financially prepared for your future
By biting the bullet and starting to save as soon as possible, you’ll be taking the first steps to ensuring that when the time comes to retire you won’t have to worry about money. While this might not seem like something you should be concerned about now, the longer you have to save, the comfier you’ll be once you stop work.