Posted on: 20th April 2021
Across all age groups, there is always a consideration for having the best outcome when it comes to any form of financial planning and the issue of how to be financially smart in your youth.
It can be a worrying situation as you get older and start to see the chances of retiring early becoming slimmer and slimmer. To get the best outcome and be in a better financial situation as you travel through the ages towards, there are some things you should take full advantage of.
Over your lifetime you will be presented with a slew ofschemes to take advantage of.
Whenever you begin employment with a company, they may have a pension scheme in place, and if they do not you should enquire as to why. It is a law that a pension scheme is set in place and paid into by you, your employer, and the government. Even if an employer does not have to enrol you by law, you can still join their pension scheme and the employer cannot refuse.
Companyare a legal work requirement in the UK for your workplace, allowing employees older than 22 that earn more than £10k per year. The legal minimum contributed to your pension is 8% of your yearly salary, encompassing 3% paid by the employer and 5% from the employee.
When it comes to state pensions, you will need a full 35 years of qualifying contributions to get a full pension. Currently, the state pension age is set to be 68 years old by 2037 (although this is constantly under review according to gov.uk).
The great tool at your side is the help and guidance of independent financial advisors in Cheshire, who can help to shape your financial plans and strategies.
You may be intimidated by the fees of a financial expert but in truth, the mistakes that can be made with your finances and investments can far outweigh them. A financial advisor is there to advise you on your financial decisions, meaning that they solely operate to make your situation better from a retirement, pension andstandpoint.
In addition, they also operate in other avenues such asadvice and other financial standpoints that come along.
Once debts are out of the way, the requirement of building your savings begins.
Many younger workers may not value the benefits of a savings account or cash ISAs when taking their first independent financial steps, but it can certainly provide a much brighter outlook for your money in the long run.
accounts are a great way of safeguarding your money and protecting it even if your bank goes under, however, the savings rates can tend to be a little light at around a few percent periodically. The good news is that your money will be protected against the seesawing markets.
Cash ISAs are saving products that protect against tax and pay out a little interest, although you will find that you will have to lock the money away for a significant period of time to get better rates. However, this is a great option that will pay more than regular savings accounts and be safe from the taxman.
A Stocks and Shares ISA is another option that provides you with avenues to buy units in funds, company shares, bonds and other assets. However, these provide more of a risk due to asset prices rising or falling. They provide an opportunity for earning more than you would with cash and are also exempt from taxation.
Lifetime ISAs are a way for young people to help get themselves on the property ladder or even stash away savings for retirement. Here, young people can make a saving of around £4k a year in cash or investments and the government will top up 25% to new contributions until you are 50.
The best advice and guidance for younger workers wanting to take the smart path for their financial future is discussing their overall plan with independent financial advisors in Manchester.
Contact the team at Haven IFA for a long-term strategic plan that allows you to successfully build towards an easier life ahead by learning how to be financially smart in your 20’s.