Planning for the future
Whatever stage of life you’ve reached and whatever plans you may have for the future, the sooner you start planning the more likely you are to achieve your objectives. Here are some major events you may need to plan for:
- Buying a house
- Getting married
- Starting a family
- Funding private school or university
- Helping a child with their first car or house deposit
- Providing income in retirement
- Care costs for yourself or close relatives
- Passing on your wealth to the next generation
- Financial planning
Many people fail to plan their finances in a way that ensures their financial security.
Follow these simple steps and you will start to take control of your finances and ensure your current financial situation is in good order:
- Identify your goals – Think about those priorities that are most important to you and your family and start to plan for them. In the short term this could be a holiday, whereas in the long term it could be retirement planning. Establish the costs of your goals and apply timescales.
- Work out your budget – Draw up a budget and make sure you stick to it. You should spend less than you earn, but if you don’t, then try to cut your costs or increase your income. To help you to do this, we’ve got a handy budget calculator.
- Debts – Borrow only what you really need and ensure you understand the true cost by checking interest rates and fees before borrowing. Work out how you will pay your debt off as quickly as possible, paying off your high interest debts first
- Emergency cash – Use a savings account to build up an emergency fund to cover things like house and car repairs. Ideally, this fund should contain at least two or three months’ net income
- Start saving - Once you have paid off your high interest debts and have got some emergency cash, start saving on a monthly basis for your short to medium-term goals, such as a holiday, a new car, or for Christmas
- Ensure you are protected – Make sure you and your family have the right amount of cover against illness, accident, death etc otherwise your finances could be seriously impacted
- Retirement Plans – Make a financial plan for retirement. Do you have access to a workplace pension scheme? Even if you still have debt, seriously consider joining it, especially if your employer will make a contribution too
- Consider investing – Investments are not just for the rich. Investing allows your money to work harder for you over the long-term. Investing a small amount of money regularly from a young age could leave you better off than investing a bigger amount in later life. For example, investing £100 per month from the age of 25 to age 65 (£48,000 total investment) could produce a pot of almost £145,000 (assuming growth at 5% each year after charges). But, if you delayed investing until you were 45, and invested twice as much (£200) each month until you reached 65 (£48,000 total investment), you’d only have a pot of £79,500 assuming the same rate of growth even though the same amount was invested overall
- Spread the word – Teach your children and grandchildren about money while they are still young; the earlier they learn, the better they will be at managing their money.
Retirement is a time of life to look forward to – it could be a chance to take up new hobbies, spend more time with family and friends, or travel the world.
Retirement may feel as though it is a long way off, but it is never too early to start planning. Scottish Widows, who are part of the same group as Lloyds Bank, are our pensions experts and have a wealth of information and tools on their website, regardless of how close you are to retirement.
Their ‘Change your life in an hour’ guides could help with your retirement plans. Please note that the following links will transfer you to the Scottish Widows website. We are not responsible for any of the information held on their site:
- I will be retiring in over 15 years
- I will be retiring in 1 to 15 years' time
- I am retiring in the next year
A wide range of helpful guides on retirement planning and budgeting are also available from MoneyHelper.
Investments can help you with your long-term goals, whether it's early retirement, a holiday home, or just making sure you'll have enough income when you retire.
In planning for your retirement you may want to consider the following:
- Think about how much income you would need in retirement. Work out what your likely expenditure will be.
- Ensure you understand any existing workplace pension provisions you may have. This includes working out how much you are likely to receive and how you could boost any future pension income. Your pension scheme administrator can help here.
- Ensure you understand any other pension benefits you may receive including any personal pensions, potential state benefits or previous company schemes and when you may receive these.
- Investing for the longer term in growth funds, with a view to retirement or into a Self–Invested Personal Pension.
Investing for children
All parents and grandparents want to provide the best for the younger members of their family, and rising house prices and university fees today mean that they may really benefit from a helping hand from you in the future.
If you want to consider a private education, or help them out financially when they start university or move out on their own, the earlier you start saving, the more you’ll be able to accumulate for them.
You could consider:
- A managed growth fund, which focuses on increasing your capital
- Investing for the long term in a Junior Stocks and Shares ISA
- A life, critical illness or earnings cover protection if you’re planning to cover school or university fees out of your income.
Important legal information
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Eligible deposits with us are protected by the Financial Services Compensation Scheme (FSCS). We are covered by the Financial Ombudsman Service (FOS).