Ask Away Blog: Important Things to Save For In Life

Important Things to Save For In Life

Friday, August 6, 2021

 

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We’re raised to know that financial stability and security is important. We know that we should live by a budget, avoiding overspending and sticking to our disposable income in order to avoid debt. But staying out of debt isn’t necessarily the long term goal for all of us. You may find that there are things you will need to save for to enjoy. In this situation, saving money becomes just as important as staying out of debt. By saving, you can make larger purchases or investments that will benefit you for the better. But what might you want to consider saving for? Here are a few suggestions that could seriously benefit you!

A House

Sure, renting works well for some of us. If you haven’t settled down yet and aren’t sure where you want to lay your roots, or if you’re a free spirit and don’t ever really want to settle in one place, renting can be a fine long term solution. However, if you know where you want to be and if you want more stability in your life, buying a house is a much better solution. Think about it. When you rent a property from someone, you’re paying off their mortgage on their behalf. Instead of paying for a home that can ultimately be taken away from you, you could be paying the same amount to gain an asset of your own that you will have to keep, sell or leave to loved ones when you pass away. When you own your own home, you can also rest assured that you can stay there as long as you want. When you rent, your landlord can always terminate your contract when it comes to an end rather than renewing it. They can choose a new tenant, sell the property or simply decide they want to move in themselves. Plus, when you rent, you make rent payments for life. When you buy, you will eventually pay off the full cost of the house and be able to live rent free for the future after. So, if buying a house sounds good to you, it’s time to start saving a mortgage deposit.

How Much Will You Need for a Mortgage Deposit?

First, you need to determine how much you will need to save to put down a deposit on the kind of property you want. This means determining what properties you can afford. There are plenty of mortgage calculators out there, where you can input your income and essential outgoings and it will determine how much you can afford to pay in monthly mortgage instalments, determining what value property you could be approved on. Once you know the overall value of a property you can afford, you can then determine how much of a deposit you need to save. Generally deposits will be roughly 10-15% of the property’s value. However, there are a range of 0% mortgages available that you may be eligible for.

Saving

Of course, saving a large amount of money can be difficult. So, what can you do to save your mortgage deposit sooner rather than later? The answer is savvy spending and savvy saving.

Open a LISA - a LISA, or lifetime ISA, is a high interest savings account. By saving your money in one of these, you will get a much higher interest rate than other savings accounts, helping you to save more and spend less of your own money on your deposit. The reason interest rates on LISAs are so high is that it takes a while to save your deposit, so the bank will have a hold of your money for internal investments for a longer period of time, benefiting them. Of course, this means that most LISAs have terms and conditions that incur fines or fees for withdrawing for any reason other than actually buying a property. If you are 100% sure that you want to buy, however, this shouldn’t be a problem.

Cut Spending - next, you may want to cut your spending on non-essential items. Dedicate as much of your disposable income to your deposit savings as possible. This will help you to get the money together faster. Of course, don’t deprive yourself of any disposable income entirely. You still need to live a good quality life where you’re doing things you enjoy, even if you are saving for your deposit.

Earn more - of course, the more you earn, the more you will have available to put into your savings account. So, consider ways to earn more money as you go along. See if there’s any overtime available at work. Consider a second, part time job. Try selling your old belongings online, or, if you’re good at creating things, consider selling your own creations online.

Retirement

We all grow older. This is one of the few things that is inevitable in life. Of course, as we grow older, we can also grow more vulnerable and dependent on others to get by and lead a good quality of life. You will reach a point where you won’t be able to or want to work anymore and will need to have prepared a way of supporting yourself during your older years. So, you may want to start preparing now. Here are a couple of things you may want to save for to make old age better for yourself.

A Pension

Sure, there may be state pensions available. But these tend to be low volumes of money that will allow you to just about get by, rather than being able to lead a comfortable quality of life. If you want to truly enjoy your retirement years, you need to save your own pension. This will provide you with money that you can use on things you enjoy, such as holidays, gardening, home improvement, lunches, dinners, cinema and more. Saving a pension should start as early as possible, so if you haven’t started yet, it’s time to start investing. Speak to a financial advisor about your options. There are a number of contribution schemes that will allow you to put money into a retirement pot and that can be released when you hit retirement age.

A Care Home

As you grow older, you may find that you want to live in a care home. Sure, independent living is great as long as you are able to live independently. But as we grow older, many of us grow weaker and have difficulty in completing day to day tasks. We may not be able to cook proper meals for ourselves. We might not be able to clean our homes well. We may need medical support and assistance, such as the administration of medicine. We may even just find that we are lonely and crave the company of others. This is where a quality care home like La Posada can help. Care homes create communities of older individuals, providing them with accessible living spaces, as well as assistance with medication, cooking, cleaning and more. They can make your older years much more comfortable. Of course, they come at a cost. You may find that you need to start saving well in advance to cover the costs of a good care home and guarantee yourself a comfortable retirement within one.

General Savings

Of course, it’s always good to have general savings that are saved without any particular purpose in mind. Think about it. There are often situations in all of our lives where we find ourselves in need of money with little warning. Perhaps your car breaks down. Maybe a kitchen appliance needs replacing. You might have a medical emergency that requires immediate funds. You may need to pay for a pet’s veterinary treatment. These are all situations where having general savings can save the day. So, create a savings account with a high interest rate and do what you can to put as much money into the savings account as possible. There are plenty out there, so use comparison sites to determine which will give you the best return on your money. Alternatively, you can consult a financial advisor who will be able to help you further! Over time, it will mount up, providing you with a safety net should something negative occur in your life. Having funds available for a rainy day really is important and can also give you a sense of security in your day to day life, knowing you never need worry about sudden costs which would otherwise send you into debt.

As you can see, there are many things that you might want to consider saving for sooner rather than later. These, of course, are just a few examples. There are many more out there that may be better suited to you, but hopefully at least one of the suggestions above will help you to be able to afford whatever it may be that you want!


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