It’s never too early to get into the habit of securing your financial future.
Being an entrepreneur and owning your own business often means making sacrifices. Every penny earned that can be reinvested in the business generally is, and personal financial planning falls by the wayside. It’s just one of those things you’ll worry about later.
But when ‘later’ comes around, and you haven’t planned for it, you’ll certainly wish you had.
Wealth and financial planning doesn’t need to be a burden; instead, it can chase that cloud of uncertainty from the horizon as you pursue your business goals, knowing full well that your financial future is secure.
And the good news is, there’s not a lot you need to do to get the ball rolling. In fact, we’ve boiled it down to just five steps – that anyone can do – to plan for the future.
1. You Need a Pension
First thing’s first, you need a pension. And if you have a pension, it’s a good idea to consider upping your contributions as you start to earn more money.
When you’re young and you’re fit and healthy, it can be easy to overlook the importance of a pension. But having enough to live on when you retire is a very real concern for many, and it can be avoided if you take the right steps now.
The amount you need to put aside will vary, depending on your situation. You should consider for how long you intend to work, how your salary might increase (or decrease) over the course of your working life, and the standard of living you’d like to achieve in retirement.
And if you haven’t started contributing to a pension, a good rule of thumb is to half your age and use the answer as the percentage of your earnings that you should save. So, for example, if you’re 32 then you should put 16% of your yearly salary into your pension.
The older you are when you start, the more daunting that number can appear, but with the right advice and planning you’ll soon start filling your retirement pot.
2. You Need to Budget Better
With a pension set up and a percentage of your earnings being funnelled into it, you now need to learn how to budget better.
And the best way to do it is to sit down with a pen and paper and list all your outgoings. Clearly, you’ll need to feed and clothe yourself (and your family), heat your home, and pay your bills. But do you need 5 takeaway coffees a week? Or Chinese food every weekend? Or Netflix AND the full Sky package?
Start cutting out the needless little costs that add up over time and you’ll soon see that you do in fact have more expendable income than you perhaps realised.
3. You Need to Pay Off Your Debts
Next, fight the urge to use some of that newly discovered money to immediately go on holiday, and instead pay down and pay off your debts.
Start with the debt with the highest rates of interest, as the longer they go unpaid the more you’ll owe. And consider transferring any credit card debt you owe to a balance transfer credit card with a lower interest rate, or 0% APR introductory rate.
This will see you debt-free faster, and ready for step four.
4. You Need to Start Saving More
Sticking your money into an ISA might not see you on course for an early retirement, but getting into the habit of simply saving money is a good one to form as early as possible.
If you can put aside even £100 a month, that’s still £1200 plus interest in a year’s time. And remember, you have a £20,000 tax free allowance when depositing savings into an ISA. It makes sense to take full advantage of that.
5. You Need to Invest
We now arrive at step five, and it’s something that – like pensions – can feel quite serious and ‘grown up’ for many individuals. But learning to invest your (surplus) money could yield better returns than a savings account.
You don’t need to be Leonardo DiCaprio in The Wolf of Wall Street to dip your toe into the world of investment. Nor do you need to snap on a set of braces in the style of Gordon Gekko before you start trading in stocks. Instead, start small by using a trading platform like Nutmeg, or by using a stocks and shares ISA.
You just need to remember that there will always be risk attached to investing, but with the right amount of research and advice, there’s no reason why it should be intimidating.
Need Some Help Getting Started?
The best thing you can do when it comes to wealth and financial planning is to speak to an expert. Here at Ten Forward, we can help you take the first step towards a more secure financial future.
Contact us today and speak with one of our friendly advisers.