Thinking about your financial future may seem overwhelming, but planning ahead is really important for achieving certain life goals.
Although each individual will have a slightly different view on what they want to accomplish in life, there are some common milestones that many of us share. We've outlined five of the financial big ones, along with some useful tips on how to prepare for each one.
1. Buying your first home
Many of us dream of getting the keys to our first home but the deposit required by mortgage lenders can often make it seem out of reach.
First time buyers can now take advantage of smaller desposits with the Help to Buy Scheme, which means you only need a cash deposit of 5% of the property's value. It's important to remember that while your deposit is lower, you'll need to start saving for things like;
- Solicitor's fees
- Mortgage fees
- Stamp duty
If you're looking to save up to buy a home, this short guide can help you through it.
2. Merging your finances
If you're getting married or live with your partner you'll need to think about how to manage your money together. It's a good idea to try to understand each other's attitude to money and figure out a fair way of paying bills.
You may want to keep separate accounts, share everything as a couple, or have a middle ground where you share some responsibilities, and keep others private.
Discussing your finances regularly will help you deal with any issues and hopefully avoid major arguments. Here's how to tell if you and your partner are a good financial match.
3. Starting a family
Starting a family can be very exciting but it is a huge financial commitment. A good first step is to find out what parental benefits you're entitled to through your employer. Then think about how much time you want to take off work.
Childcare is expensive, particularly in the early years. There is government funding available so it's worth speaking to your local council or childcare provider.
Currently, all three and four year-olds in England get 15 hours a week of free early education. If you live and work in England, you may be entitled to 30 hours of free childcare.
Unfortunately life doesn't always go smoothly. It's important to be prepared for events like unemployment or unexpected bills. This could include saving up an emergency cash fund and/or buying a suitable insurance product.
Try and work a small contribution to your savings buffer into your everyday budget.
Retirement may seem like a lifetime away but planning early is crucial. Life expectancy is rising which means your money may need to last for around 30 years after you stop working.
Everyone who pays National Insurance is entitled to the State Pension, but the age you can receive this is rising and the amount you will receive is unlikely to be sufficient for a comfortable retirement.
In the UK, it is compulsory for employers to automatically enrol workers into a pension scheme. You and your employer pay into the scheme and you also get a 25% contribution from the government.
It's also possible to open a personal pension where you can choose how much you want to pay in each month.
Although some of these milestones may seem daunting and a long way off, there are financial solutions and steps you can take to make things more manageable.
Our articles cover a wide range of mainstream financial products and employee benefits. Terms and conditions of each product may vary depending on your provider. Please ensure you check the specific terms and conditions of any financial products and employee benefits available to you from your employer.