When it comes to saving money, it’s all too easy keep putting it off. It’s estimated that almost 46 per cent of people make financial New Year’s resolutions, but around 40 per cent won’t actually achieve their goals.
The hard part is finding the motivation and subsequent discipline to save – but there are plenty of compelling reasons why we should…
- Pension Reforms
In the past, people have relied on the state pension to see out their later years, but with new government reforms, this may no longer be sufficient. The government’s plans will bring the state pension age to 66 by 2020 and 67 by 2028 and okay, that means more time to save – but we’ll need it.
The reform has been designed to put more responsibility on each individual to make adequate preparations for later life, by making only basic funds available on the state. Currently, one fifth of UK citizens are not saving for retirement, and those that do aren’t saving enough. Of the people retiring in the UK today, the average pension pot is sufficient to cover around seven years. However, the average length of retirement is currently 19 years, leaving twelve years unaccounted for per retiree
- In Case of Emergency
Nobody thinks it will happen to them, but the reality is that 1,454 people in the UK are made redundant every day. Furthermore, there are currently around 887,000 people who have been unemployed for over a year.
If you were to find yourself in this unhappy scenario, having a savings pot to draw from can be a real blessing. It’s advisable to have the equivalent of at least three months’ wages tucked away just in case.
- Children
The average cost per day of raising a child from birth to the age of 21 is estimated as £29.02. That’s just shy of £225,000 per child. With the cost of education on a sharp incline, it’s never too early to start preparing for the cost of bringing up a family.
- Mortgage
The average first time buyer house price is currently £125,799, and you will typically need between a 10 and 20 per cent deposit to secure a mortgage. Added to the cost of stamp duty, legal feels, decorating and furnishing a property and all of a sudden taking that first step onto the property ladder seems closer to climbing Everest.
- Special Occasions
Finally, there are always occasions to pay for. From Christmas and birthdays, to weddings, babies and Christenings, there is always something that needs paying for. The list is never-ending. Even saving just a small amount each month to make sure funds are available when the occasions arises, can give you peace of mind.
All in all, having some savings tucked away can relieve the pressure of managing your personal finances, ensuring that funds are always available when you come to need them.
Author
This is written by Ali Raza on behalf of http://www.aldermore.co.uk/personal/savings-accounts/ Ali has been working in the Banking Industry for several years and frequently writes about finance and SME Businesses.
Ali Raza
