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Why Financial Health Should be a Priority

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Why Financial Health Should be a Priority

  By Polly Ker – Mortgage & Protection Adviser

New Year’s resolutions give us all a great sense of pre-achievement as we announce them, watching yet another year come to an end. Most resolutions are based around health or appearance; how we look, how we feel; spending money on trying to improve ourselves with dieting plans, gym memberships, fit-bits and personal trainers…it costs to be a better version of ourselves.

Whatever the resolution, around 80% of us will fail as early as February, according to a study by U.S. News[1]. Another waste of money and another year where nothing has changed.

There is one resolution that you can focus on this year to improve your happiness, your quality of life and increase the possibility of sticking to future resolutions, whilst not feeling like you’re wasting more money:

A Resolution for Financial Health.

Much like dieting, financial control is about self-discipline but if we focus on a financial resolution by planning and breaking it down into manageable, simple steps to improve our financial well-being, it could pave the way for future resolutions to succeed.

Here are some simple steps you can take to improve your financial health for now and for the future:

Spend Less and Budget 

It might sound simply ridiculous when living is so expensive but spending less than you earn is a massive stride forward in financial health. The best way to ensure you do this each month is by producing a budget and sticking to it. Around Christmas, there are an astounding number of us who don’t even consider a budget when shopping; about 45% don’t bother, according to Statistica[2].

If you work from a budget starting at each pay day and looking at what needs to go out of your account, what’s coming in and allowing a contingency figure for any unexpected fees, you’ll be able to see how your leftover funds can provide wonderful potential for improved financial health.

Pay More Off Debts 

Whatever weighs you down, with the extra you have after your budgeted expenses have been paid, pay a little more than usual off your debts. Whether it’s a credit card, an overdraft or a loan. Paying off more than usual means that you’ll be rid of the burden quicker. It might not seem like a huge gain for the short-term but come next new year’s, you’ll be in a better position that you expected to be. It’s a win, win.

Invest 

Providing you’ve stuck to your budget and accounted a little extra for paying off more on those debts, there are so many great opportunities. Those surplus funds are wasted gaining no interest in your current account. It might fill you with happiness to see a good-looking bank balance but remember, they’re just numbers on a screen. Keep what you need in your account and invest the rest.

There are many options for investing your money; from deposit accounts to the stock market, there’s something to suit you; whatever your level of risk-taking and funds. A good financial adviser can help you make the right choices.

Plan for Pension Age 

It’s not always high on your list of priorities but putting some money into a pension is like ensuring you’ve got a parachute when you jump out of that aeroplane – we all guess we need one at some point but when really need it and we haven’t got it, we’ll regret it. There are so many great pensions available these days. You don’t just have to rely on your workplace pension, because it might not give you the quality of life you want when you reach retirement.

According to the Office for National Statistics, in 2016, the number of occupational pensions (both private and public sector) rose to almost 40 million, a record increase of over 17% from the previous year. More and more of us are seeing the value in having a pension to continue with a good standard of living into our senior years.

Review your Insurance 

The wrong insurance deal can be costly or sadly ineffective when you need it most. From life insurance and critical illness cover to insurance for your cat, if there’s one thing you want to avoid wasting money on it’s the wrong insurance. The right insurance will protect you, your family or your pets and possessions against a big financial loss following an illness or an accident. By speaking to the right financial adviser, you can save money and prevent heartache if your insurance deal goes wrong.

By breaking it down into simple steps, making your financial New Year’s resolutions isn’t as daunting as it might seem. Simple changes to your lifestyle and making sure you plan can mark the difference between good financial health and a very bad situation. Becoming disciplined with money brings with it options and opportunities whereas “living to your means,” can create financial difficulties and unnecessary stress when life’s unexpected bills arise.

[1] https://health.usnews.com/health-news/blogs/eat-run/articles/2015-12-29/why-80-percent-of-new-years-resolutions-fail

[2] https://www.statista.com/statistics/646974/christmas-shopping-stick-budget-uk/

[3] https://www.ons.gov.uk/peoplepopulationandcommunity/personalandhouseholdfinances/pensionssavingsandinvestments

 

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