Don’t Worry, be Snappy: Budgeting Made Easy 🙅🍸👉

This week, we’re fawning over this super-handy budgeting model and strengthening our pension wisdom!
"We are mothers. We are caregivers. We are artists. We are activists. We are entrepreneurs, doctors, leaders of industry and technology. Our potential is unlimited. We rise." Alicia Keys at the Women's March in Washington, January 21st, 2017.
The savings gap crisis

Mind the gap, please! Nope, not the ever so annoying tube gap - the (equally annoying) savings gap. Here’s your shock stat of the day: the UK savings gap is to reach £350 billion by 2050, reflecting just how unprepared most of us are for retirement. According to this report, only 56% of the population is saving adequately - we can do so much better! In fact, we have to do better, lest we lead a miserable life of counting pennies in our old age. Nope, not happening! Let’s get you motivated with some more stats:

  • Currently, an average of 12% of earnings are being put aside for retirement (Scottish Widows 2015)
  • Britons hope for an annual income retirement of £38k. In practice, they see an average of £14k -  a huge £24k shortfall in dreams vs. reality! (Scottish Widows 2015)
  • 67% British adults haven’t got a clue how much the state pension they will receive. Get informed and check how much you’ll get here.
From Infographic charting consumer readiness for retirement, how Britons intend to use their pensions, pensions pot by profession and more.
Streamline your budget with 50/20/30
We can all think of a million things to spend money on. And, as much as we’d love to consider a pair of Gucci loafers to be a wise purchasing decision, it’s important to keep our spending in perspective, which is where the 50/20/30 budgeting guideline comes in handy. This practical rule of thumb serves as a simple guide on how you should allocate your money. Sure, there’s always going to be exceptions (ahem, said Gucci loafers?), and the breakdowns should naturally be adjusted to your lifestyle. However, the overriding guiding principles of the 50/20/30 budget are genuinely helpful. Here’s the gist:
  • 50% of your income goes to essentials: no more than 50% should be allocated to meet your basic needs, including rent/mortgage, transport, food and utility bills. Essential costs are usually more-or-less fixed, so they should be easy to budget.
  • 20% savings and financial goals: at least 20% should go towards your savings, retirement and student/credit cards loans.
  • 30% lifestyle and flexible spending: this is everything from holidays, to dining out, shopping, donating to charity and whatever else floats your boat.
It’s a sensible, practical and guilt-free strategy that works because it is both flexible and consistent. It helps you budget for your expenses while taking into account both your future and ‘non-essential’ needs - what’s not to like?  Read more on Vestpod.
Surviving a volatile world

We’re not gonna sugarcoat it - things haven’t exactly been stable on the world stage. The election of Donald Trump and the uncertainty of Brexit has created plenty of volatility in the markets. It’s only natural to feel slightly panicked and wonder how these events will play out on your investments and pension.

Don’t worry, though - we’ve got some tips on how to keep a cool head courtesy of the Pension Advisory Service:

  • Figure out the value of your pension and the strategy you have in place: it may come as a surprise, but you may not be getting regular statements from your pension provider, so it’s worth checking with them how much you have in your pension and what the performance has been over recent months or years. Make sure your portfolio is re-balanced over time (re-balancing is the process of realigning the weight of a portfolio of assets, which involves periodically buying or selling assets within a portfolio to maintain the level of desired asset allocation)
  • See the bigger picture: you’ll be building your pension over a prolonged period, so don’t panic when you see short term fluctuations. Stock markets are volatile, but the important thing is how they perform over the long term.
  • Focus on the underlying value of your assets: keep your perspective. Stocks are shares of a bigger company, and a well-run company will ride out short-term fluctuations over time. A good fund manager will focus on an asset’s underlying value and invest accordingly.
  • Spread the risk: it’s all about diversifying your portfolio.
  • Beware of scammers: in periods of market uncertainties, some people, unfortunately, try to take advantage of the panic. Don’t give in!
  • Get some professional guidance: if you feel like you’re in over your head, don’t worry! Paying for professional advice is a sound option - it’s always a good idea to get extra help, especially if you need to readjust your investment strategy.

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We are not certified financial advisers! The articles and information made available on Vestpod are provided for information and educational purposes only and do not constitute financial advice. You are advised to consult with an independent financial advisor for advice on your specific circumstances. Read our Disclaimer  here.
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