With university now back in full swing, you’re officially back to the books with your dissertation looming. These next few months will fly over and before you know it, you’ll be a graduate — however, before you get there, it’s wise to think about financial planning.
Once you leave university, your circumstances and needs will change. Whether you’re saving for a car to help with the commute to your new job or your first proper home, you’ll likely have your own goals — and with careful financial planning, you could meet them.
Here, personal pension provider, True Potential Investor, share their tips for managing your financial goals:
Identifying your goals and making sure they’re manageable and achievable is the first step.
While you may be saving for a house, a car or that dream holiday, you may also want to start putting money aside for your pension. A survey by True Potential found that UK people are on course to receive just £6,000 per year in retirement. In reality, £23,000 per year is needed to ensure a comfortable retirement.
How much do you need to save or invest and over what timeframe? By ironing out the details and having a clear overview of how you’re going to achieve your goals, they become harder to fall behind on. Make sure you remain realistic — too great an amount over a shorter timescale can place a strain on your finances.
Paint a picture of your current financial situation, so you can work out how much you can realistically save each month. List your incomings against your outgoings — it may be easier to manage if you group your expenses together, e.g. housing, utilities etc.
Don’t be tempted to brush expenses to one side — look at where you’re spending and potential areas you can save. Then draft up an amount that you can comfortably save towards your goals each month.
Once you know how much you’ve got to put aside, choosing the right product is the next step. Cash Individual Savings Accounts (ISAs) offer a tax-free way to save, so you won’t pay tax on any interest or gains the account generates.
If you’re looking to invest a significant amount, Stocks and Shares ISAs are another option. The amount you save is invested in bonds, property or stocks and shares, which have the potential for greater returns than a cash ISA. However, there is a certain level of risk involved, so you could get back less than you invest.
Overall, the saving or investing option you choose should be based on what you’re saving for, the return you’ll require and level of risk you’re comfortable with.
With investing, your capital is at risk. Investments can fluctuate in value and you may get back less than you invest. Tax rules can change at any time.