Article by Sharon Bonfield, Marketing Proposition Manager St James’s Place
A staggering 24 million of us feel ‘financially vulnerable’, according to research from the Money and Pensions Service’s (MaPS) Financial Wellbeing Survey 2021.
The chances are, thoughts of ‘will I ever be able to retire?’ or ‘what if I need money fast to cover an unexpected bill?’ often crop up. Without taking steps to manage our finances, it can leave us feeling powerless.
You don’t need to have lots of financial knowledge or understand technical details about products, you just need to know you’re doing something and making good decisions to get you on the right track to meet your short and long-term needs. That in itself creates the sense of confidence that you’re building something.
A large part of financial wellbeing is about building confidence.
First, take some time to understand what’s important to you and then try setting some personal goals linked to your life milestones, for example, stopping work before you’re 60 or starting a family.
The goals that you set yourself should be based on your personal values. Who you are and what you believe in. This is how every personal financial plan is built.
None of us will ever have the same set of goals, so every financial plan should be personal to you.
Once you understand what your financial goals are, next it’s time to take a step back and look at your present financial landscape – cash, savings, ISAs, employer pensions.
The tax relief available on pension contributions is a generous government incentive to save as much as you can. If you’ve taken out a workplace pension, it’s likely that your employer is paying into it too. This is an effective way to meet your longer-term objectives.
You can also build up your ISA investments over that time, while property may play a part as well.
As well as long term savings plans, you’ll perhaps need to have cash you can access as an emergency fund. This money will be serving a different purpose and meeting a different objective, even if you feel that pot of money isn’t working as hard.
Setting personal goals is all about managing the money you already have to achieve the future you want.
A positive of the pandemic is that more people are aware of the strength of their financial position and what they can do to bolster it. Whilst we’ve seen lots of hardship, we have also seen people taking the opportunity to clear debts, overpay their mortgages, increase their savings and generally build their financial resilience.
According to John Lennon: “Life is what happens when you’re busy making other plans.”
We can’t predict the future, but we can anticipate it. A break-up, an unexpected job loss or medical bill may throw you a curve ball. Our personal goals may change over time and having a plan in place protects you through the difficult times as well as the bumper years.
This lies at the heart of what we mean by financial wellbeing. Having someone to help you identify your objectives, see what you’re trying to achieve and put a plan together to get you there can give you the financial wellbeing that you need and make you feel confident in doing more to address your own needs.
This means you can lean forward into the future – and embrace it.
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