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Saving can be tough when times are hard – and it feels like times are always hard, these days! However, having a plan for a savings safety net is the best way to make sure you’ve got a little extra to fall back on when you need it. We’ve come up with ways to save money as you move through every decade of your life – and when to consider which savings options.
Of course, now you’re reading this it’s unlikely you’re still a child! However, if you have children of your own, the earlier you teach them about saving, the better. Start with small amounts of pocket money and use it to teach your child about budgeting, saving, and expenses.
You can even set up a pension for your child as soon as they’re born! It’s a great tax-efficient way to help ensure they enjoy a hearty retirement themselves. You could open a Junior ISA, too – it’s a tax-free way to build savings they can access when they turn 18.
First jobs, student debt, and a highly demanding social life mean this is the decade we all have too much month left at the end of our money! It may feel like it’s impossible to save when you’re on entry-level salaries, paying your first bills, and enjoying the odd (OK, weekly) night out. However, it’s surprisingly easy to start tucking away cash. Even £5 a week adds up faster than you’d think.
As you can see, a few small changes quickly adds up over time. For more savings tips, check out the FREE Savings Safety Net eBook we created in partnership with Foresters Friendly Society!
This is the time to also:
Now’s the time we all start to plan for things like buying our first home and even getting married. Those are huge costs! However, there are ways to save.
If you’ve had a pay rise lately, stash the difference away in a savings account. You’re already used to living on your old salary – so saving the extra means you won’t notice!
For anyone wanting to buy their first house, a Lifetime ISA is well worth considering. Like the old Help to Buy ISA, you can pay in up to £4,000 a year and receive a 25% bonus on top of that from the Government. If you’re in a couple, you can each have an account, meaning you could save up to £8,000 a year and receive £2,000 free between you. When you want to buy a home, your solicitor will help you access this money to take advantage of the bonus.
A LISA is also suitable for retirement savings, receiving the same 25% bonus – but bear in mind you can’t withdraw any money until the age of 60. If you do, you’ll lose the bonus AND face a penalty fee, too.
Boosting savings in your 30s is all about savvy, tax-efficient planning. ISAs are a great place to start – but if you’ve maxed out your annual £20,000 personal allowance, there are other things you can do. You could, for example, take advantage of a Tax Exempt Savings Plan offered by a mutual – this is outside of the annual Personal Allowance. If you have children, you can set up Junior ISAs or a pension for them.
Another way to boost long-term savings for your retirement is to increase your pension contributions. It’s a tax-efficient way to save for your future!
Saving in your 40s is all about long-term investing, really. It’s a good time to assess your portfolio – what’s currently in your savings accounts and ISAs, plus any stocks and shares you own. If you can, buy-to-let property is a popular way to boost returns on your capital and secure a long-term investment for your retirement (or for your children’s future).
If you have children, it’ll soon be time to send them to university or help them set up with leaving home. Assess their Junior ISA savings, talk to them about their plans, and encourage them to find part-time work to save extra cash for their future.
If you own your property, consider remortgaging. It’s not a solution for everyone – but if you’re out of your fixed-term rate, remortgaging could nab you a much better interest rate. Check your early repayment fees – sometimes they will outweigh the benefits of a lower interest rate – before you do anything. (And, if you’re planning to move house in the next couple of years, consider waiting until then to apply for a new mortgage). Remortgaging could save you thousands of pounds over the lifetime of your loan, leaving you extra money to save elsewhere!
Now’s also the time to start thinking about your retirement plans. Yes, it’s still twentyish years away – but that means investments made now have plenty of time to grow. Your 40s is the time of life you’re more likely to receive lump sums (through inheritance, bonuses, or redundancy packages) – so if you receive a windfall, think carefully about what you want from it. Enjoy some, of course – but consider putting the rest away in an investment that will serve you for a comfortable future. This could mean adding to your pension, for example, or investing in more stocks and shares or an Investment Bond. Of course, as with any investment, you could get back less than you put in – so speak to an independent financial adviser before making any decisions.
The children are flying the nest, your retirement is ten or fifteen years away, and you’re making plans for a comfortable future. If your children have left home, that means you’re likely to have additional money each month. You could use this for them (especially if you want to gift them money to help with things like university fees), or put it away for your future – or split between the two options!
Single people in their 50s are in the prime of financial life. You’ll have a lot of financial flexibility right now – but will also have to weigh up what happens in the future if, for example, you will require long-term healthcare at home or in care. Without the support of a family, the costs of care can quickly rise. So, when planning your retirement funds, make sure you take things like this into account.
You can start withdrawing your private pension age 55 (soon to be age 57). Before you do this, think long and hard about what you want to do in retirement. Taking your private pension while still working could impact your income tax liabilities. However, you could take your 25% lump sum tax-free from your pension pot now and wait to buy an annuity or arrange a drawdown later on. With that lump sum, you could invest in a buy-to-let property, for example. Many people do this to secure a regular income in retirement and provide an asset for inheritance to their loved ones.
Now’s the time to think about things like a phased retirement (to keep earning a bit while enjoying more downtime). You can claim your State Pension in your mid-60s (check your eligibility date here), but deferring it may be an option if you want to continue working past State Pension age. You’ll benefit from no National Insurance contributions when you work beyond State Pension age, so that’s a little extra in your pocket, too!
There are so many ways to save extra cash throughout your life. For more tips, make sure you download our FREE ebook we created in partnership with Foresters Friendly Society, about building a savings safety net for your short, medium, and long-term goals.
We’ve listed only a few ideas in the article above – take a look at these articles next to discover more ways to boost your savings at any age.
A Stocks & Shares investment may provide a higher potential for returns but with slightly more risk so there is the possibility that you may not get back what you have paid in depending on the investment conditions when you cash-in your plan.
The content of this article is for information purposes only and does not constitute financial advice. Foresters Friendly Society do not offer financial advice. If you’re unsure as to the suitability of a product you should seek advice from a Financial Adviser. You may have to pay for this advice.