Money is the cause of most arguments in married couples. It can be the biggest source of conflict in a relationship, but whether you like it or not, money does make the world go round.
It can be very easy to turn a blind eye to retirement when you are young and in your prime. The world is your oyster, so why should you care about taking out a pension or investing in property? Well, the answer is that you should pay attention to saving for later life.
It is far better to start preparing early, to put yourself in a financial position in which you are stable and comfortable when you finally finish working.
A worrying 22% of UK residents between 30-years-old and state pension age are not putting any money aside for a rainy day. Life expectancy is increasing and as a generation, we are living much much longer. We NEED to put money away for our golden years, and the secret is to plan decades.
So, what should we be doing in our 20’s then?
- Open a tax-free ISA and start saving
- If you have any debts, try to start to cut them down/ wipe them off
- Does your work offer a pension scheme? Set one up
- Enquire about a mortgage
By the time you have reached your 20’s, it is hoped that you have your first proper job. A modest wage is a great starting block to repay any loans or credit card debts.
An ISA is much better than a regular savings account because it has a higher interest rate, therefore you will get a larger payout. Normal savings accounts have an amount of interest cut, whereas cash ISAs are tax-free savings accounts and allow you to keep all your savings’ interest.
How can you start to reduce your debt? Make a list of your expenditures, prioritize them in importance, cut down on the extravagant treats e.g. trips to the cinema, and put a budget in place.
Try to stick to it and really assess your outgoings- are you getting the best rates on your electricity and heating bills? Can you swap brand foods for the supermarket’s own produce? Can you get a second, part-time job at the weekend? Do you have any special skills that you can hone in on, such as knitting or teaching instrument tutorials?
Ask your work about starting a pension; companies of a certain size are now legally required to offer their employees a pension, and they must contribute a minimum of 4%. By starting it now, you will have a bigger pot for when you retire. For advice, check out the Department for Work and Pensions website.
Many industry experts are saying that getting onto the property ladder and securing a mortgage, also has the same financial security.
What should we be doing in our 30’s?
- Assess your outgoings
- Clear your debts
- Join the work’s pension scheme ASAP
- Consider long-term investments
- Purchase property
This decade, you really need to get your act together if you haven’t already done so. If you still think of yourself as a young, free-spirited individual, well then it’s time to wake up and smell the coffee, my friend.
Now is the time to assess your outgoings and put a plan in place. You might have got married, had children, or bought your first property; in which case you have probably attained some debt. Get control of your finances, put a budget in place, and begin to clear off outstanding debts.
Not got a company pension yet? Find out what the interest rate is and what contributions your employer will make on your behalf. Then get one started ASAP.
If you are still renting property, work on getting a deposit together to acquire some property. The longer you leave it, the harder it becomes to be approved for a mortgage because of health reasons. Yes, the property market goes up and down, but the property will always hold its value, or increase, over time.
So there you have the financial goals to which you should be working, at each milestone in your life. Now everyone is different and works at various speeds; so please don’t be taken aback if you are already at one of these points in your life, and have not achieved all of the objectives.
The Money Advice Service is a fantastic website that can help you to learn when and how to start saving for your pension. They can help you to understand the different types of pension, tax options, transferring pension schemes, and managing your finances in retirement.
Do you think that there are any other financial necessities to start in your 20’s and 30’s? Let us know below.
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