Getting a hold of your finances isn’t exactly the fun you imagine having in your 20s and 30s. Hear me out please, I can assure you you’ll thank me for it later.
Just simply have a plan
The sooner you get a financial and personal plan in place, the better the chance you will have of achieving what you dreamed of in 10, 20, or 40-years’ time. It’s the old saying, ‘a goal without a plan is just a wish’. In general, nothing will happen without action and the best way to push action is with a plan. The first stage in creating a financial plan is setting financial goals and gathering all the details about your current circumstances, policies, and plans. Some of the next ideas will help support the creation of your financial plan.
Make tracking your finances and budgeting a habit
Tracking your finances makes it easier to save and spend in the future. It’s important to know what comes in and what goes out every month. Knowing your position makes it easier to apply a budget. Before you spend money on something – whether a holiday or a material item – always ask yourself ‘how much can I truly afford to spend?’ Do the maths and work out exactly how much you require to save each month to afford it. When you have an amount set aside for expenses, you will notice you are saving money without thinking much about it.
Have a rainy day fund
Why do we need it? The classic examples are a new boiler, a leaky roof, or unexpected car repairs. Work out how much you need to save to give yourself a healthy cash buffer – between three and six months’ worth of outgoings is a good starting point. Try to put aside a little every month, small amounts can quickly add up. This is money you need to be able to access but you don’t want to have to access. Make sure you’re getting a good rate of interest on the cash you save but don’t lock it away.
Invest both your money and in yourself
At some point in your 20s or 30s, it is likely that you have been working for a few years. You could save but just saving won’t necessarily generate wealth. If you want to celebrate the fruits of your labour, investing in a long-term instrument is the best way. Investing can be intimidating; the risk and appropriateness of a product should be carefully considered however it shouldn’t deter you from taking the leap as early as possible. Investing in yourself, self-educating, taking up a class, and looking into health can grow on you and make the best out of you and your finances in the future.
Protect yourself (and your family)
Zzzzzzz… Let’s face it, talking about protection is not fun or sexy, in fact, it’s a bit of a bore. However, should the day ever come where you need to use it, you’ll be thanking your lucky stars you got on with it. It’s worth checking out Chris Wilson’s blogs on Critical Illness and Income Protection. The bottom line – take action, get some quotes to see how much different types of protection cost, and check what cover you might already have in place through your employer.
If you are looking for more direction when forming your financial plan so you can meet your goals, please get in touch with our Financial Advisor Rachel McCallion today, either by email: email@example.com or by phone: 07507 792 078
You can also visit our Financial Services page here.