You don’t have to be well-versed in financial planning to understand the value of saving money regularly, and putting it toward your future financial goals. Young or old, in regular employment or still balancing studies with part-time work, we are all aware of the little angel on our shoulder telling us to squirrel away what we can – to do something that benefits our future selves, rather than funding those non-essentials we want right now.
In theory, it all sounds quite straightforward. Pay your way now, all while working to fund your future self.
And, to a certain extent, once you get into the routine of making regular contributions to your savings, the basics of saving money aren’t too difficult to grapple with. What can be tricky, however, is knowing whether or not your savings are doing as much for you as they possibly could. In other words, a lot of regular savers don’t realise that they are missing out on an opportunity to generate a much better return on that time and money, and that your savings don’t have to just idle away in an account until you’re finally ready to make a withdrawal.
Open your mind to investing
Last year, the Financial Services Compensation Scheme (FSCS) found that less than 40% of UK adults holds investments with a value between £100 and £50,000. Considering the value they can offer to people looking to maximise their savings, and strengthen their financial outlook, this is a big shame. Rather than leaving money to sit idle in a savings account, investors can put their money to use and, often, see a good return on that investment further down the line.
In part, this is likely down to the stereotypes that still surround investing. A lot of people presume that, to be ‘an investor’, you’ve got to be some kind of highflying individual, with thousands and thousands to put on the line in the hope of seeing a staggeringly high return in the future. You’ve got to have a head for numbers, and a stomach for risks.
In reality, this is very far from the truth.
Interestingly, however, the FSCS also find that 44% of those UK investors lamented their decision not to do more research into the investments they made. Many made these decisions (seemingly) lightly, while they were watching TV or travelling home for the evening.
In a way, it feels like non-investors have polarised ideas of investing. On the one hand, it’s a remote idea – on the other, it’s something to do in a spare ten minutes while the adverts are on, or the kettle is coming to a boil.
Investing can benefit so many different people – but, whether you’ve got £1,000 to invest or £100,000, you need to back-up your enthusiasm with clear, strong, informed financial planning advice. There are so many ways for you to invest your money, from bonds and Enterprise Investment Schemes (EIS) to cash ISAs and pensions, and finding the right thing for you – something that aligns with your risk tolerance and your financial goals – is a job for the professionals.
Find ways to make regular contributions that align with your financial situation
We all want to be able to boost our savings as much as possible, wherever possible, but the only way to make sure that your long-term savings plan will always fit with your financial state of health is to get into the habit of making smaller payments more regularly.
That’s not to say that you shouldn’t drop a larger, lump sum into your savings as and when the opportunity arises, but that those one-off contributions should be underpinned by a long-term, sustainable strategy for gradually growing your savings bit by bit. When you can get on track with this, you can start to make headway diversifying your investment portfolio, ensuring your pension lives up to your lifestyle goals, and making sure that your family is provided for after you die.
What you are able to contribute on a regular basis will depend entirely on your financial situation and current lifestyle, but the key is not to reach a particular number – it’s to make the room for saving to become a part of your monthly expenditure.
Yes, it means giving up some disposable income each month, but the long-term benefits are clear to see.
Don’t just think about your financial future
Most of us hope that our savings will go on to help our loved ones. Whether we want to provide a safety net to protect them when we are no longer there, or to provide them with a lump sum for a house deposit – or another big investment – when they are ready to enter a new stage in their lives, our savings are rarely just for us.
That’s why, when you’re looking at how you can get the most out of your savings, you also need to consider how your loved ones will get the most from you, too.
Inheritance tax planning is a big, broad, and complex subject. Many estates – the collection of money and other assets we leave behind after we die – will be liable to pay some inheritance tax, but there are many ways to reduce your liability for IHT and make sure that your assets support your family as much as possible.
Whether you’re looking to grow your savings for a definitive goal, like buying a house, or simply working to ensure that ‘future you’ is able to live on a much more solid bedrock of financial stability, ensuring that your savings are doing as much for you as possible is absolutely key. Whatever your goals, we can help you to work through your finances as they stand, and look into options for investments and maximising your wealth over time.
Get in touch with our team to find out how we can help you. Our advice is totally independent, which means all of our recommendations are genuine, informed, and tailored to you.
The value of investments can fall as well as rise and you may not get back the amount originally invested.