By the time you get to your 30’s, you are probably starting to realise where your career is going, and how things are going to pan out from a financial point of view. It’s a time where your parent’s words that you would never have as much money as you had in your 20’s suddenly has an alarming ring of truth, and retirement now suddenly doesn’t seem as far off as it once was. It’s also a time of big commitments – the house, children and keeping up with your friends. Your 30’s are going to be expensive.
Financial planning in your 30’s is about looking in detail at your current financial position, defining where you want to be in the future, and developing the strategies to help you move towards your objectives.
So, what is your idea of financial independence? What will you need to achieve financially for it to have been a success? It is about a personal set of goals, specific to you, and how you intend to enjoy your future.
It is our role as Wealth Strategists to help you take the guesswork out of the equation and guide you towards these aims. People do not plan to fail; they simply fail to plan.
So, what are the main strategies that could help you get to where you need to go?
Financial planning is like building a house. And this means that it is important to get the right foundations in place to make sure that whatever is built on top stays there.
Protection planning is the equivalent of digging the footings for your house. It may seem boring and it quite probably won’t be you who benefits most from this planning, but implementing life cover, critical illness cover, and even income protection means that your position is covered, whatever happens in the future.
It protects your family in the event of death or illness, pays for mortgages, and maintains the family. Sorting this out now is very cost-effective, enabling you to take out the cover you need whilst you are still fit and healthy. Once in place then you are bullet-proof and can make your way to far more interesting financial decisions. How much you take out and getting the most bang for your protection buck is where your Wealth Strategist comes in again.
Budget Planning is another of the must-dos that you need to get sorted. From day 1 it is important to have a budget and stick to it. The more you understand what comes in and what goes out, the better you can plan. A great tip is to open a second account, which is designated for use only when out enjoying yourself. This means that you can only spend what you have allocated for that month and no more. Wealth Strategists are trained to help you optimise your finances and to make sure that you are not, inadvertently, wasting money.
In your 30’s the idea of retiring suddenly starts to look more attractive and also significantly closer than it did in your 20’s. The good news is that recent pension regulations mean that your employer has to pay into a pension for you. Unfortunately, your employer is unlikely to contribute enough to keep you in the style to which you would like to become accustomed, so you need to think about making additional contributions.
Luckily, pensions offer significant tax breaks. The main thing to appreciate is that money saved now will cost you significantly less than money saved later on because of the enormous power that compounding has on your investments.
Once you have started paying into your pension, it is vital to monitor how your investments are doing. The performance of your investments is the largest determinant in how much you are going to have at retirement. Workplace schemes often default into funds and strategies that may not match what you really need for your personal situation. Again, this is something that a Wealth Strategist will be able to explain to you.
If you have money left over after that then you need to be thinking about investment planning. Bank deposits are paying little to no interest at the moment, meaning that the purchasing power of your hard-earned savings is going down in real terms.
Luckily, the Government gives you an ISA allowance of £20,000 each year, and this is a great way to generate tax-efficient growth. Whilst ISAs may be the most commonly known vehicle, there are also more specialist investments that could be of interest, with further tax breaks and incentives.
As you can see, your 30’s can be a potential financial minefield. However, they can also be the time when you sow the seeds for a secure financial future and start to look towards a time when you can achieve financial independence.
Working with a Wealth Strategist will undoubtedly make all of this more likely to be achievable. If you would like to find out how then please contact us and you can speak to one of our expert Wealth Strategists at our expense.