Saving for a better financial future
Many young adults who later reach their 30’s express their regret at not getting to grips with their finances in earlier life. In fact, many ‘30 something’ year olds find themselves in a position where they wish to ‘move forward’ financially and unfortunately are not in a position to do so. Whilst your early years of employment set the foundation for looking after yourself, even if it’s on a very basic level, this is then followed by your 20’s which is commonly deemed to be the time to go out enjoy life and if you’re lucky, see the world. What follows this though is often a desire to set down roots and start planning towards a more solid financial future. Whilst of course the old saying is true; money cannot buy happiness, it is also true that a lack of it can lead to restrictions in your life goals and future plans. It is for this reason that many people in their 30’s reflect upon their earlier years of earning and wish they had done things slightly differently. In reality saving money is something we can all do but often choose not to. That may sound like a bold statement but in the cold light of day, it would be difficult to justify otherwise. What is also true is that often when we have the biggest potential to save for the future; we are least likely to do so. As we get older and our responsibilities grow in size and value, whether through leaving home, supporting family members or the repayment of credit based commitments, of course our ability to save lessens. In contrast in the earlier years of employment, generally we are much more likely to have a higher level of disposable income.
There is some comfort to be had in the fact that many of us fall foul of good spending habits throughout our lives and to reach your 30’s having saved only a little, is not uncommon by any means. The good news is that it is never too late to begin investing in a more financially stable and secure future. Whether you are in your 20’s or 30’s there are lots of different ways of planning for your future which can be approached in a variety of different degrees. The bottom line is no-one is saying you need to give up all the things you want to do today in order to save for tomorrow but rather allow room for some logical and thought through planning. One of the simplest means of saving for the future, which requires very little effort at all and this is the use of budget planning. All this means is being fully aware of what you spend each month and where, then adopting a sensible approach to how money spending could be reduced and then saved. Speak to your bank concerning the different type of savings accounts they have available or use the site Best Savings Rate which details current and up to date deals on offer. It may be that realistically you are only able to reduce your spending each week by £50.00 but in one year alone; this amounts to an impressive £2600.00. Setting a five-year plan at this rate would mean a savings account worth £13,000.00 at the end of the term. Another example currently available is the Help to Buy ISA which could see as much as a £50.00 contribution for every £200.00 saved over a capped period of 3 years.
Aside from the physical act of saving money those entering their 20’s are often amongst the most likely to borrow money via the means of credit based facilities. Whether this finance to purchase a car, a holiday or just general credit borrowing to enable small time purchases, doing our 20’s we can be more likely to use such sources. Whilst ever credit is affordable and manageable, there is an arguement its use is acceptable. However, it is also important to keep in mind how long these credit commitments will be active and therefore whether the overall cost is worth the purchase. Whilst it may for example be perfectly affordably to repay a car loan at £130.00 a month, if the agreement is over 5 years and during this time you decide you wish to start saving for a house; that’s £130.00 less which will be available.
Representative Example: Representative 1286.98% APR on a loan of £300.00 with 5 monthly repayments of £101.03 Total amount repayable £505.13 Annual interest rate (fixed) 290%
Warning: Late repayment can cause you serious money problems - For help, go to moneyadviceservice.org.uk
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Author: Internal Customer Services Agent