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You might feel like financial advice is something that’s a long way off. It’s something that’s reserved for middle-aged people with complex finances, right? It’s not something that you necessarily need to think about until you have investments, shares in your name, property, a will…
Wrong. In fact, financial advice can be incredibly useful at any age. As soon as you start earning a wage, having an expert ear on hand to advise you on all things financial can be essential, ultimately saving you money, helping it grow, and giving you a plan for the future.
It doesn’t need to be daunting, either. In fact, there are lots of places that can offer financial advice for free, whatever your circumstances.
Here’s a guide to the financial advice that you might need at any point of your life.
Your 20s are about fun, building a career, and nothing thinking too much about money. Others find themselves taking steps towards homeownership and parenthood within this decade, too.
Whatever your personal circumstances, it’s important to start thinking about your future finances in your 20s. If you fail to, you’ll likely be on the back foot as you enter your 30s and find yourself with more responsibilities.
So, what should you be thinking about when it comes to finances in your first decade of adulthood? Well, you should start trying to save at least a small amount each month. Set up an ISA and have a small amount leave your current account and be paid into it each month. Use this to build your emergency fund for things like getting together a rental deposit or being made redundant. If you can spare a bit extra, set up an equities ISA too – this is your first foray into investing!
Your 20s might be when you need to seek advice from a mortgage broker, too. If you’re looking to buy a house, a mortgage broker can give you free advice. You can get advice from more than one broker, and you’re under no obligation to use them for your mortgage.
If you start your own business in your 20s, you’ll need to work out how to file your own taxes. It always pays to get some advice in this situation. Again, you may be able to get free advice without obligation. If your self-employed income is your main income, though, you might want to consider hiring an accountant.
Finally: seek advice about your pension. Yes, in your 20s! A workplace pension is a fantastic way to build for your future – but consider setting up your own private pension, too. This is definitely advisable if you want more control about where your funds are invested, too – some workplace pensions may not offer, for example, ethical funds. Being young, you can select a higher risk profile- you’ve got a LONG time to ride out the bumps of the investment markets and recoup losses through reinvestment.
In your 30s, your responsibilities increase – but, usually, so does your income (at least a little… we hope). You may have a wedding to pay for at some point. If you have children, you might want to start saving on their behalf – into a Junior ISA, for example. It can be helpful, in this case, to get some financial advice on the best products for your family. It’s also the time when most people buy their first home – or upgrade their home to accommodate a growing family.
Later in the decade, you might want to start thinking about your children’s future plans: will you decide to pay for private school, for example? Should you start putting away some money to see them through university?
You might want to increase your pension contributions too, especially if you’re now on a higher wage than you were when you started paying into your plan. A great time to do this is when you get a pay rise: put the difference between old and new salary into your pension each month. You won’t notice the money going away (as you’ll be used to your current salary) and it’ll build your retirement nest egg much faster.
If you’re in a comfortable financial position, consider putting more into your investment portfolio. This could mean stocks and shares, but also property investment or even buying art, antiques, or other collectibles. Remember to continue to pay into your equities ISA and emergency cash fund, too!
You should also make or update your will, in order to ensure your assets are protected and will pass onto your children in the event of your death. All of these things can be made significantly easier if you seek out financial advice rather than trying to manage everything yourself.
In your 40s, many of the financial concerns that you had in your 30s still apply: seeing your children through university, for example. Your next home may be on the cards, too – and your retirement plans should start to become a bigger part of your financial plans.
In this decade, it’s time to seek financial advice for your current and future plans. Your pension portfolio, for example, might be better with another provider. That means it might be time to arrange a transfer from your workplace pension into a private pension (but keep your workplace one open to continue receiving the benefits of free money!).
Those with children will be thinking about university and future options for them. Hopefully, you’ve already been saving for them with a Junior ISA – and now’s the time to think about setting aside more for them to help pay for the upcoming major life events.
Your 50s might be the point at which you find your children flying the nest, meaning you suddenly have more cash that you’ve had for years. This might be the decade in which you start kicking back, thinking about your plans for after retirement, and enjoying some peace and quiet.
Alongside this, you should seek out some advice on your retirement options.
Talk to a financial adviser about your pension options, including moving your investments into a lower risk portfolio. Remember, you can take your private pension from age 55 at the moment (age 57 in a few years’ time), but can carry on working. So, it might be time to consider reducing your working hours to phase into retirement. Taking income from your pension while you’re working could impact your tax liabilities, so definitely speak to an adviser first.
You might end up thinking about your children’s property deposits in this decade, too. If a house deposit is something that you plan to help them with, seek advice early. You’ll need to be sure how much you can afford, and how this could relate to your eventual inheritance tax bill.
The State Pension age is currently 67 in the UK, so it’s likely (although not definite) that you’ll reach retirement in this decade. There’s a lot to think about here, and it’s strongly advised that you seek out help with your options.
All of these questions have answers, even if they seem complicated at the beginning. Don’t be afraid to seek out the advice that you need.
You could also choose to defer your State Pension. Doing this means you’ll get more money per week than if you’d claimed at the first age you were eligible. If you’re still working, for example, it often makes sense to defer a year or two for tax purposes.
When finding advice for your pension, remember you don’t have to speak to your pension provider for help. It’s the first port of call, of course – but you have the right to speak to an independent pension advisor to make sure you’re getting an unbiased recommendation. They’ll be able to talk through your options, such as annuities versus drawdown, and help you make a plan for your pension income as well as for funds you want to leave invested for a while. Find a reliable independent advisor for free through VouchedFor.
Nobody wants to think about what happens when they’re older and a little less independent – but it’s important to plan for it financially. The cost of long-term care easily racks up – especially as your main home is taken into account in means-testing. That means that, if you own your home, it’s highly unlikely you’ll qualify for any financial help for your care. (There are exceptions, such as if you’re living with your spouse or a dependent).
Even if you need temporary care home care – such as for a month after a hip replacement – the cost adds up. Average care home costs are £3552 a month for those in nursing homes! Do you have savings stashed away to help with these costs? (If you don’t have any savings and don’t own your home, there is financial support available to help. However, it may restrict things like your choice of care home).
Care doesn’t always mean ‘care home’, either. You might find you need an extra helping hand once or twice a week to manage your laundry, house chores, and grocery shopping. This type of support is often essential for those without nearby family members to help, and it also helps stave off loneliness.
You can’t just give your money to your children and loved ones in order to qualify for financial help for care, either. This is called ‘deprivation of capital’ and means you’d still need to foot the bill. That’s why it’s important to plan now if you want to provide your family with financial gifts on a regular basis. Otherwise, if you’ve given away money shortly before applying for care cost help, you could be considered as still having that money!
If you haven’t already done so, it’s also important to set up Power of Attorney, too. This means that, should you become incapacitated in some way, someone else can make important decisions (such as the healthcare you receive) on your behalf. Many people ask the executor of their will to have Power of Attorney.
It’s also time to consider living gifts if you want your loved ones to avoid hefty Inheritance Tax bills. You can give your family members up to £3,000 each in any tax year (and if you didn’t give to them last year, you can use that allowance, too). Encourage your children to set up Junior ISAs for your grandchildren. With these, you can pay in up to £4,386 a year (tax-free) and they’ll be able to access the money when they turn 18.
When you’re revising your will, thinking about care costs, and considering financial gifts, things can get very complicated when it comes to tax laws. That’s why it’s really important to speak to a financial advisor in this decade of your life, to make sure you’re protecting your own financial future as well as being able to provide in the most tax-efficient way for your family. We like VouchedFor, a leading review site that lets you find a reputable advisor to help navigate the complexities of estate planning.
There are lots of organisations that can give you free advice on your finances, whatever your circumstances. They include:
You might also find that debt follows you from decade to decade. The good news is there is plenty of free debt advice available, to help you get out of the debt spiral and save for a better future. Read our article on free debt advice for more details.
Of course, making extra money – and finding ways to save on your spending – leaves you with extra capital in every stage of your life. Read these next to find out how to maximise your financial freedom.