As we get older, our lives and needs change. What may have been important to you at age 16, is far less likely to be when you’re 60. The demands made on you – and your responsibilities – are probably at their peak when you have a young family and a big mortgage to pay off. But as you get older, those pressures should start to ease, the children go their own way and the mortgage gets ever closer to being paid off. By the time you get close to retirement age, the more affluent you should be – just the two of you and the mortgage is paid. What it all means is that at each stage in your life you need to recognise what your priorities are, evaluate your situation and budget accordingly.
YOUNG COUPLES AND FAMILIES
Becoming a mum and dad brings big financial responsibilities! It has been estimated that it costs £44,000+ to bring up a child from birth to age 18, so having kids is a big, big step in every way. Apart from mountains of nappies, you’ll also be buying toys, pushchairs, and clothing and your food bills and holiday costs will all increase substantially. And what about the occasional babysitter – they’re not cheap! Remember also that if mum was working, that income is likely to disappear once the baby arrives. Careful budgeting will help – if you don’t currently have aBUDGET
, you need to create one. You can also download various free softwares from the internet, an example of this is Quick Books. Your boss will not automatically increase your salary when you have a child, so you may need to reduce your current spending by changing your shopping habits for example. You could consider going to a cheaper supermarket, using market stalls or taking advantage of the savings that are sometimes on offer when you shop on the internet. If you have a garden, what about keeping chickens or growing your own vegetables? You may also have to consider taking on an extra job.
Another aspect to remember of bringing up children is life insurance. If a breadwinner were to die prematurely, while their children were still very young, then the family are likely to be hurt financially as well as emotionally. So you should consider taking out life insurance to pay any bills left behind – including the mortgage – to protect your family’s financial interests; if you already have life cover then you should shop around to check that you are getting value for money from your current insurer.
Being a student is said to be one of the most exciting times in life. It may entail leaving home for the first time and taking on the responsibility for managing your time and money on a daily basis and for looking after yourself. Just for those reasons alone, (there are others) it’s important that as a student you get into the habit of budgeting so you can make the most of your relatively limited financial resources. Cultivating this skill now will not only stand you in good stead for life, it will also help you resist the social and peer group pressures which if you let them, can make a big hole in your finances. Here are some tips to help you manage the situation…
Look after the Pennies
It’s very easy to spend money during lunch breaks on snacks: instead bring your own water, tea or coffee and make your own packed lunches. Have a coffee maker or kettle in your room and watch where you shop so to ensure that you’re getting value for money. Spend wisely and when the time comes to have some fun, you’ll enjoy it even more!
Avoid credit cards
Banks love giving credit cards to students, which encourages the ‘buy now, pay later’ mentality. Credit card interest rates are among some of the highest in the UK and as a consequence, credit card debt is one of the most expensive forms of debt it’s possible to accumulate. Stick to your budget and only use your credit card when there’s no other option and if you do have to use the plastic, aim to pay the debt off in full.
Get a Job
Once your study plan is in place and you have evaluated the related requirements and schedules, you may have some time on your hands and be in a position to get a job. Although you may not be qualified, it is still possible to do jobs such as baby-sitting or child minding, cleaning, working in a bar or restaurant, or if you have a particular skill, teaching aerobics, a musical instrument or languages.
The sooner you start budgeting, the easier it is to plan for and attain financial independence. Rather than borrowing money or using credit cards to pay for things you really don’t need, try to confine your borrowing to acquire assets such as a house, flat or apartment. Those kinds of assets should, over the long term, appreciate in value and can therefore be regarded as investments.
If your children have grown up and left home, you will find these ideas useful: Pay off any loans you may have so that you are not in debt when you retire. If you have credit cards try to minimise their use as servicing those debts will adversely affect your ability to save for your retirement. If you own your home, then you may wish to consider selling up and buying something smaller. Apart from being easier to clean and cheaper to run, your new smaller home may cost a lot less than your larger home sold for, which would allow you to invest the difference in a pension plan or put the money on deposit.
Near, or in, retirement
Because the opportunities for earning extra cash are vastly reduced and their incomes are fixed, retired people are usually very good at living within a budget. However there are some financial advantages of being over sixty, such as free prescriptions, the Winter Fuel Allowance and reduced rail and bus travel costs. Not having to go to work every day also enables retired people to spend more time looking for value for money deals on food, travel and clothing for example. Here are some ideas on how to enjoy a better life in retirement…
Ask for discounts:
credit card companies do sometimes provide reduced interest rates for older people and some of the larger ‘roadside’ fast food chains will discount meals for people as young as 55 years of age. If you look carefully, you will find age-related discounts are available on many kinds of products and services.
Check your Council Tax:
quite often people on pension credits are entitled to a discount on their Council Tax, even if they own their own their home.
Lower your insurance costs:
because your debts are minimal and the mortgage is paid off , you may be able to reduce or even cancel a life insurance policy. If you move house to something smaller for example, your buildings and contents insurance should cost less than before. Some insurance companies offer special policies for older people on travel insurance for example.
Cut down on motoring costs:
If you have a second car, you may no longer need it, so it can be sold to free up cash and the associated insurance can be cancelled. You may also be able to do more walking or cycling, which apart from being healthier also reduce fuel costs.
What about doing some work?
There are businesses that actually prefer to employ older people. Or if you have creative or IT skills, you could market your services on the internet.
Capitalise on the value in your home:
in an Equity Release Scheme (sometimes called a lifetime mortgage, home reversion or home income plan) you can borrow money – which can use for any purpose – against the value of your home but without having to move. The loan is repaid from the sale of your home after your death. But take care! It is essential to take independent financial advice before entering into Equity Release Scheme.