Expert tips to kickstart good money habits at every life stage

by The Technical Blogs

It’s never too early – or too late – to start a new money habit, although new research suggests many of us are behind where we’d want to be in life.

More than two-fifths (43%) of 35-54-year-olds haven’t yet ticked off money planning tasks such as making a will, paying into a private pension pot, speaking to an adviser or increasing their workplace pension contributions, according to a survey for money advice firm Octopus Money. One third (33%) of those aged 55-plus say the same.

So, how can you kickstart new money habits – whatever your stage of life? Kelly Atkins, head coach at Octopus Money, shares the following suggestions…

In your 20s

Atkins suggests trying to build an emergency fund – typically enough to cover around three months worth of outgoings – in case something unexpected happens, so you can avoid having to make drastic decisions or falling into debt.

She also suggests working towards paying down any non-mortgage debts and considering ways to boost your credit score, adding: “Did you know that signing up to the electoral register can boost your score?”

Understanding your workplace pension is also key, she says: “Your future self will thank you if you make the most of this while you’re young.”

In your 30s

“If you didn’t do it in your 20s, then it’s time to consider who’s reliant on your income and what might happen if you couldn’t work,” says Atkins. “Reviewing any insurances and protection policies is really important.”

She adds: “If something bad happens, it’s important to know that you, or those that you love, will be financially OK.”

It’s also a good time to consider saving towards future goals.

“If your goals are more than five years away then investing could be a good option,” she suggests.

However, remember that the value of investments can go down as well as up, and it’s important to consider carefully whether this is right for you at this point in time.

Writing a will could also be a consideration, she says, adding: “From the point when you have assets to pass on, you should start making it clear (legally) who you would like to benefit from these, if the very worst happened.”

In your 40s

Atkins suggests setting time aside each year to make sure your insurance is up-to-date and reflects any changes in your life. She also suggests reviewing pension holdings, including what funds you’re invested in.

“Many of us are in default funds selected for us years ago and they might not be at the right level of risk for us,” she says.

“You’re still young enough to have a positive and significant impact. If you’re earning more than you used to, you could be in a position to consider increasing your workplace pension contributions more significantly.”

In your 50s

“You could be in the fortunate position of having a bit more disposable income, and so it’s important to make sure you’re making the most of any tax-efficient options to keep growing your wealth,” says Atkins.

Free pension guidance is also available for over-50s from the Government-backed Pension Wise service, or you might want to consider paying for financial advice.

In your 60s and beyond

Financial advice can be key at this life stage, says Atkins.

“You might be looking to the future and thinking about your estate planning, and how you pass on wealth in tax-efficient ways to those that you love,” she adds. “It’s worth making sure you’re making the best use of your ISAs and pensions.”

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