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Finance: Stepping off the hamster wheel

PUBLISHED: 12:31 30 September 2014 | UPDATED: 12:31 30 September 2014

Know your finances and create a plan

Know your finances and create a plan

Archant

Mike Williams, director and independent financial adviser at Chamberlain Stean and West in Chipperfield, looks at how simple steps now can help avoid financial regrets later

Planning for the future can feel like a chore. Leading a busy life often means we have more immediate concerns. A word of warning comes from new research from Standard Life and YouGov, which found that almost a fifth of over-55s (18 per cent) say they regret not saving for their retirement early enough. Other financial regrets were accumulating credit or store card debt (16 per cent), not sticking to a budget (six per cent), and not investing in stocks, shares or ISAs (five per cent). 
Julie Hutchison, head of customer affairs at Standard Life, said, ‘This new research should come as a wake-up call to the many people who aren’t saving enough for when they retire. The value in starting to save early is clear in terms of increased potential for growth.’

Whether you have years of earning ahead of you or are approaching or already enjoying retirement, the future requires careful planning. The research also highlighted that parents and grandparents often find they need to de-prioritise their own saving to help support their children and grandchildren with large expenditure such as school and university fees and deposits for first homes. With ever-increasing demands on finances, happiness for tomorrow depends on better planning today.

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The hamster wheel.

Neuroscientist Dr Jack Lewis, commenting on research on the psychology of saving, believes many people have adopted a laissez-faire attitude towards money due to hectic lives: ‘We’re a very busy nation and 
those who are particularly time-poor could really benefit from periodically taking time out to recalibrate their internal balance sheets or risk unnecessarily frittering away their hard-earned cash. It’s a case of telling ourselves that it’s ok to step off the hamster wheel of modern life for long enough to figure out what we really want in the long run. Then set up a savings plan dedicated to your long-term goals.’

Think about the time and effort you put into saving and planning for your annual holiday, which usually lasts only a fortnight. Now think how that compares to the same effort (if any) put into planning the rest of your life.

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Stop spinning, start focusing.

Here are six key steps to motivate you to step off the hamster wheel, focus on what you want out of life and take control of your financial future:

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1. Know your finances.
Build a detailed understanding of your current financial situation. Once you have a clear view of your savings and investments as well as assets and liabilities, you’ve overcome the scary part of not knowing.

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2. Define your goals. 
The fun bit! Think about your personal goals and what you want to achieve out of life. Perhaps a once-in-a-lifetime holiday, putting your children through university or preparing for retirement.

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3. Plan of action. 
Look into ways you can achieve your goals. It may be as simple as saving more regularly into a pension or ISA, being more disciplined on day-to-day expenditure, or adding more to an investment portfolio.

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4. Plan for what-ifs. 
It is important to take steps to prepare for whatever the future may hold. Model plans on what-if scenarios that could impact your ability to meet goals.

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5. Do it.
Turn planning into action. Just as gym membership doesn’t make you fit, a financial plan doesn’t make you rich unless you commit to it.

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6. Review. 
Circumstances rarely remain the same forever and reviews are an essential part of maintaining the right, steady course. Changes in law, taxation or investment conditions may affect your financial plans, so it’s important to review them at least annually.

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