This content is for information and inspiration purposes only. It should not be taken as financial advice or investment advice. To receive tailored, regulated advice regarding your investments and financial goals, please consult an independent financial adviser here at Suttons IFA in Sale, Cheshire, or in your local area.
Life doesn’t stand still. People often start a career, find a long-term partner, move in together, save for a house, start having children, raise a family through school and maybe university, continue working and begin preparing for retirement. Perhaps some or all of these things happen to you, possibly in a different order.
Regardless, every stage of life comes with its distinct financial opportunities and challenges. Having a robust financial plan can, therefore, help prepare you for each one ahead of time. Mapping out these “life milestones” help reduce the likelihood of nasty surprises catching out your finances in the future. It can also help reduce your potential for wealth preservation and growth over the long term, as you join these various dots together into one coherent plan.
In this short guide, our Sale-based financial advisers will be sharing some of the life milestones we help clients in Cheshire prepare for. We hope you find this content helpful, and invite you to arrange a free consultation if you’d like to discuss your own financial plan with us
T: 0161 969 1703
E: [email protected]
#1 Getting a property
Of course, not everyone wants to get onto the property ladder and not everyone will. For many millennials and other young people, some parts of the UK (e.g. central London) are likely to be too expensive to afford saving up for a house deposit without financial help from family members. Yet for those starting careers in certain areas around Cheshire and Manchester, saving for a deposit is much more realistic.
There are some great saving and investment vehicles which you can discuss with your financial adviser, such as the lifetime ISA (or LISA). In 2019-20, this allows you to save up to £4,000 into your LISA each tax year (i.e. £333 per month) and also benefit from a 25% top-up from the government. To give a practical example, imagine you saved the maximum amount into your LISA over 5 years. That would be £20,000 in savings towards a house deposit, plus and extra £5,000 from the government. This could make a nice deposit on your first property, particularly if you join this with savings with your long-term partner and buy together.
#2 Preparing for retirement, early
It might sound strange to talk about pensions early on in your career, particularly when there are other, seemingly more pressing matters such as saving for a house deposit. Yet it’s important to recognise that most people in 2019 cannot sustain their retirement lifestyle simply on their state pension. Most people need to draw upon additional savings and sources of income. For young people starting their careers, pension savings are likely to be even more important as the cost of living rises and as life expectancies increase.
Starting your pension savings early can give an enormous financial boost to your pension savings, due to the power of compound interest. Simply put, the more time your money has to grow, the more you are likely to receive later. In 2019-20, employed people are required to contribute at least 5% of their salary to a workplace pension via auto enrolment (with your employer also contributing at least 3%). It’s worth asking your financial adviser, however, whether you can/should increase these contributions to maximise your pension income in the future, and whether other pension schemes/options might serve your needs better.
#3 Getting ready for family
At some point in your life, perhaps in your 20s or 30s, you are likely to at least consider having children. Starting a family is an enormous joy but it does come with important implications and responsibilities for your finances. Holidays become more expensive as more seats need to be booked on flights, and rooms in hotels. Homeownership costs can go up as you perhaps move out of a flat and into a house with more bedrooms. Education does not come cheap either with children when you factor in the cost of school trips, uniforms, supplies and, later on, the costs of university. There is also the scary thought that you become financially responsible for small, innocent people who will be dependent on you and your income.
Fortunately, there are many options open to you to discuss with a financial adviser around Manchester who understands this important area of lifestyle planning. One idea would be to discuss getting a legally-airtight will in place, to ensure your estate is distributed correctly to your loved ones if you suddenly died. Another option is to look at your protection strategy, discussing policies such as critical illness cover, income protection and life insurance to ensure your family continues to receive financial support if you become unable to work due to ill health or injury.
As you start having children, it’s also worth considering Junior ISAs and other savings options with your financial adviser to help your offspring with their future university costs, a house deposit or other important financial milestones (e.g. wedding costs). Again, starting early can help ensure that these savings and investments have the maximum opportunity for growth over time, potentially easing financial strain away from you in the future.
If you would like to know more about financial planning or wish to discuss your own financial goals and strategy with us, then we’d be delighted to hear from you.
Please get in touch using the details below, to arrange a free, no-commitment financial consultation with a member of our team:
T: 0161 969 1703
E: [email protected]