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How to develop better financial habits in 2020
While many people may concentrate on their physical and mental health at the start of a new year – joining a gym, eating more healthily, giving up smoking or practising mindfulness – it is equally important to focus on financial health. And the two are not mutually exclusive.
A study by N26 bank revealed that 9.5 million people have suffered from mental health issues as a result of financial anxiety. Though the importance is often overlooked, concentrating on developing better financial habits can have a huge impact on improving your overall wellness.
Whether it is debt issues, saving for a house deposit, protecting your income if you are self employed, or saving for retirement, small concerns can escalate into larger anxieties without the proper information and advice.
A study commissioned by Openwork network found that nearly a third of adults worry they do not know enough about money and more than a quarter feel unsure about their financial situation.
According to the findings, only 12% of adults see an adviser regularly – 15% of men and 10% of women – while 53% of adults said they would benefit from financial advice, that figure rising to 61% of under 35s.
Speaking to an experienced adviser can help to manage financial anxieties, providing potential options for alleviating debt, the most appropriate ways to save for your individual circumstances, and how best to protect the future of you and your loved ones. Seeking advice at an early stage can put your mind at ease and equip you with the knowledge and options for a more healthy financial future.
While focusing on one area of your finances may seem more urgent than others, it is important to maintain a strong overview of all your financial needs and to address each one individually.
Reassessing current priorities and habits
Stepping back and evaluating your financial ambitions can help to gain clarity. Are they achievable given your current circumstances and habits? Have your priorities changed over the years, perhaps to focus more on dependents, and do your habits need to change in order to make your new ambitions more realistic?
Assessing your current habits is the first step to improving them. Utilising spreadsheets or spending apps will help to keep track of your day-to-day expenditure and identify where you may be able to cut back. If you have any debts, it is particularly important to seek advice to try and develop an action plan that offers the most affordable approach to paying them off.
For existing savers, it is worth regularly re-evaluating whether you are saving enough to achieve your financial goals and whether your money is being invested into the most financially savvy products. For those new to saving, an adviser can help to explain the different options and which ones would best suit your requirements.
Planning ahead can offer peace of mind that your future, and your family’s future, is secure. From ensuring you have money put aside in case of emergency, to saving for a one-off outlay such as a house deposit, wedding, or holiday, a financial adviser can help you adopt wise saving habits to achieve your ambitions.
Whether you are looking to regularly pay into a savings account or ISA, or invest a lump sum, there are a multitude of options on the market, with varying rates of interest and varying degrees of risk and accessibility.
From ISAs and NISAs to investment trusts, unit trusts, investment bonds (both onshore and off), investment portfolios to specific savings for children and grandchildren, it is important to ensure you choose the most appropriate products with the best rates on offer. Some accounts can be opened with as little as £1, so there is no excuse to put it off.
Most UK businesses now have an employee pension scheme, and you will be auto-enrolled into that scheme should you meet the requirements. This means that a percentage of your salary goes into the pension each month, as well as a set percentage from your employer. Pension schemes vary widely, and it is important to fully understand your scheme, and all the benefits relating to it, in order to calculate whether you are adequately preparing for your retirement. If you have any doubts speak to your employer and request to see the full details of your policy.
The current state pension is set at just £168.60 per week, so if you are not enrolled in an employee pension scheme, or that scheme does not support the post-retirement lifestyle you plan for, a private pension allows you to further take control, saving for your future in a tax-efficient manor.
Speak to a pensions expert to help calculate if you currently have adequate provisions for your retirement plans, and how you can adjust your contributions or products in order to better suit your goals. Monthly payments can be set at a level to suit your situation, and often adjusted as that changes, so it is important to continually assess whether your agreement still meets your needs.
With upwards of 150 independent lenders in the UK marketplace and more providers and products than ever before, the mortgage landscape is a complex one. Whether buying a new property, looking to make sure your current mortgage offers the best rates available, or hoping to remortgage in order to release capital, it is best to seek advice in order to gain a better understanding of which options provide the best features and rates for you.
With variable rate, fixed rate, flexible, offset, capped rate, discounted rate, stepped rate and cash-back options to choose from, finding the right mortgage can feel like navigating a minefield, but making the right choice can result in a significant saving, so it is important to continually assess if your current product suits your needs.
It can be a precarious position to feel unsure of what might happen to you or loved ones in case of long-term unemployment, illness, injury, or death. While you may not want to think about life assurance and the “what ifs”, protection planning is essential to ensure that you and your loved ones are safeguarded against the worst-case scenario.
A comprehensive protection plan can help offer peace of mind, typically providing options such as life cover, critical illness cover, income protection, mortgage payment protection and private medical insurance. It is wise to seek tailored advice for your situation to ensure you and any dependents are fully protected should the unexpected happen, leaving you unable to work and maintain your finances.
An adviser can help curate the best package to suit your budget and requirement, offering the most comprehensive level of protection within your means and allowing you to rest assured that your have made the best possible provisions for your future.
Making small changes to each area of your finances can have a huge effect. Whether it be lowering your monthly mortgage payments and re-directing that money towards a protection plan, investing in a product that offers higher interest or growth potential for your capital, or starting a specific account for your children or grandchildren to ensure you are saving for their future, changing your habits and developing more healthy ones can ease anxiety and become an important step towards both financial and mental wellbeing.
To speak to one of our experienced advisers, contact the team at Vintage Wealth Management today, and let us help you to take control of your finances in 2020.