While the government remains heavily focused on avoiding a no-deal Brexit scenario, they appear oblivious to the fact the nation faces a social care timebomb.
According to recent research, only one in 10 Brits aged over 55 has set money aside to fund their retirement and pay for any care that they may require in later life. This represents a huge issue, particularly as the retirement age continues to increase while the value of the State Pension dwindles.
With an exit from the EU hardly likely to help the government end their austerity measures, the situation could also get worse before it gets better. In this post, we’ll look at how you can take charge of your finances and create a comprehensive financial plan for the future.
Start with a Financial Budget
As this handy flow chart shows, every good and comprehensive financial plan starts with a budget.
After all, this affords you an insight into your real-time financial circumstances, while helping you to highlight areas in which you could make significant savings.
It’s important to include all of your monthly outgoings in this plan, such as food, rent (or mortgage) and utilities. Then factor in your income too, in order to create a fixed amount of disposable income that’s available to you each month.
Just remember to deal in pence rather than pounds when creating your budget, as you’ll need to understand exactly how much money you have at your disposal once the bills have been paid.
Commit to Savings and Create an Emergency Fund
Once you have a fixed amount of disposable income in mind, the next step is to deploy this in the most effective way.
You should definitely strive to commit as much of this as possible to savings, as this helps you to incrementally build wealth while creating an emergency fund that can sustain you as your financial situation begins to improve.
Of course, there are reputable lenders such as Likely Loans that can provide financial assistance in the event of an emergency, but it’s far better to save cash and build your financial reserves gradually.
Ideally, you should aim to save a minimum of 10% of your overall earnings if possible, as you look to create a viable source of wealth over the course of the financial year.
Increase Long-term Income and Pay Down Debt
With some initial savings behind you, you’ll find it easier to manage your finances and cope with the stresses of everyday life.
You should not rest on your laurels, however, as you instead focus on increasing your long-term income and reducing your overall debt burden.
One step is to make sure that you’re making the most of your workplace pension, by making the maximum contribution and ensuring that this is matched by your employer. This minimum employer contribution is set to increase to 3% from April 6th, 2019, and this is something to bear in mind when saving towards your future.
In terms of debt, be sure to obtain a copy of your credit report to determine your overall burden. This way, you can take actionable steps towards paying off your debt, while highlighting any errors that may be distorting your overall credit score.