Thirty seems to be the magic number in adulthood. It is the now the average age of first time buyer and newlyweds. This means it can be an expensive stage in your life. If you’re just beginning your journey into adulthood, you need to start preparing for home ownership now, even if it isn’t on your immediate horizon.
Saving can be a daunting prospect, but at Milestone Financial Planning, we believe that if you have the right guidance, you can save for the next step in life to make it an exciting and enjoyable stage rather than one filled with worry.
Michael Heath, Director of Milestone Financial Planning based in Chesterfield, Derbyshire, commented: “Saving for a house or marriage can be a difficult task, but once you gain control of your income and expenditure, saving can become straightforward and almost unnoticeable each month. Starting good saving habits early will set you up financially for life.”
Follow Milestone Financial Planning’s top tips to plan financially for the next stage in your life.
1. Remember to budget your spending
Limiting expenditure can be frustrating, particularly at a time in your life when you don’t have commitments such as a mortgage or children. Budgeting doesn’t have to mean missing out however, it can be as simple as shopping around for cheaper deals on insurance and subscriptions.
Michael commented: “Planning where you put your money so you can control where you can reduce or control expenditure is important. By looking at how much you have left over, you will be able to set an achievable savings target.” The Citizens Advice offers a budget calculator to help with this.
2. Save as soon as possible
In 2016, the average price of a first home in the UK reached £161,912. If you need a mortgage to purchase your first home, then lenders will expect you to have a deposit of at least 5% of this cost. In London, however, the average deposit is £34,000.
The new Lifetime ISA is being introduced from April 2017 and is designed to help people get on the property ladder. A cash bonus worth up to £1,000 a year will be added to every £4,000 saved into a Lifetime ISA by the government and you can only touch the money to buy a home, or else face a stiff penalty on any withdrawals before you hit the age of 60.
“Although 61% of first time buyers are 25-34 year olds, it’s never too early to start saving. If you have the money ready, you’ll be in a position to move more quickly and secure a mortgage and the home of your dreams. However, once you have your home, ensure you continue to save for the next stage in your life,” advised Michael.
3. Dealing with debt
The average debt of each household in the UK, including mortgages, was estimated to be £58,153 between September 2016 and January 2017. Affordably paying money back is important and can be done, however if you need to borrow money, then do it sensibly. The Money Advice Service’s Debt Test can help with different solutions.
4. Don’t forget about your pension
A report from the Office of National Statistics suggests that retired households spend an average of £20,000 a year. With a state pension currently paying £8,000 annually, this means saving now if you want to enjoy retirement without financial worries.
Michael explained: “Although the final stage in life, planning for retirement should start as soon as your working life does, it is possible to save for both a home and retirement simultaneously if you get the right advice and choose the right products.”
If you want assistance with financial planning for the next step in life, speak to an independent financial advisor at Milestone Financial Planning on 07967671603 or email enquiries@milestonefp.co.uk
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