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How should we save?

Wedneday 10 November in Business

Since the coronavirus pandemic struck, our spending habits have been a little shook up. As travel came to a grinding halt around the world in 2020, we spent more time at home, and less splashing out on the usual expenses such as meals out and other fun activities. Whilst we may have had more time to re-evaluate our finances, the new normal seen an increase in some prices.

But is this plausible for what we can afford? Managing Director of Chartwell Financial Planners Limited, Jo Dugdale, told Islandlife.im some top tips on how we can handle our money better:

Is there a set rule as to how I should save?

Generally, we advise a minimum of three saving pots:

Managing Director of Chartwell Financial
Planners Limited, Joanne Dugdale

As soon as you have a sufficient emergency pot you should then look to the long term. With interest rates low you are unlikely to get any return on a cash holding so to make best use of your money it is necessary to invest outside of cash for the long term

A pension is the most tax efficient way of saving for retirement and if you keep adding it will increase significantly over time, but of course you can’t access it until later in life.

As we’ve seen with covid, a lot of us are working from home and seemingly have ‘more time’ on our hands. Does this give us more time to save and plan for the future

The coronavirus pandemic and its level of uncertainty can be considered as one of many drivers for people taking control of their financial planning. The pandemic bred uncertainty, and uncertainty brings caution. Naturally!

Caution has been a positive as its highlighted how important an emergency fund and financial protection actually are. As we watch the economy get back on its feet, we’re noticing how people are becoming more confident in the way they plan for the future.

Why Save?

Enjoy greater security – having savings removes a lot of life’s uncertainty

Your choices in life increase greatly; change jobs, start a business, go travelling, you may be more likely to take risks or try new things.

At some point you won’t want to work or you might not be able to due to ill health

Is too much saving considered to be unhealthy? Can we over-save?

Absolutely! We can definitely over save and we always instil that financial planning is all about balance.

We only get one life to live – yes, we have to plan for tomorrow, but we also have a duty to enjoy ourselves to make the most of the present.

How can I save better?

Money is required to do 2 things; to pay for what makes you happy, and ensure you always feel financially secure.

It is important to understand what makes their life happier and allocate their money accordingly.

Start by being mindful of what you spend your money on and question whether you are getting value. If you find yourself spending £100 a month on a TV subscription you barely use, could the money be used for something you value more.

If you find a surplus after this exercise, start building up your savings and you will feel that sense of accomplishment and reassurance that you have enough funds to combat any of life’s outcomes. There is a real joy in knowing you have more options in life with money behind you but you can’t sacrifice doing the fun things you can do now. It has to be a balance and that is what we help clients figure out.

Keen to find out more financial planning tips? Jo Dugdale and the team at Chartwell Financial Planning are experts – you can contact them by emailing [email protected].

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