If it feels like your finances are in need of some TLC, give yourself a money MOT and follow these tips for improving your financial wellbeing.
The last year changed all of our lives. It also affected a majority of us financially – many negatively but some positively. With some aspects of life gradually returning to normal, now is the perfect time to take stock and make some changes to improve your financial future.
Life in lockdown understandably placed a lot of focus on our physical and mental health. But as the crisis played out it became clear that the financial impact for some of us was just as significant and could have a longer-term effect on our wider wellbeing.
A recent survey by the Financial Conduct Authority found around 20m adults (38%) saw their financial situation worsen because of Covid-19. Looking to the future, 38% of adults surveyed anticipated struggling to make ends meet. On the flip side, one in seven actually saw an overall improvement in their financial situation.
In either set of circumstances it’s a good idea to reassess your finances and do what you can to boost your own sense of financial wellbeing, including doing what you can to help protect and boost your pension plan and other investments. Some simple steps now could help avoid money worries later.
We’ve come up with some easy ways to give yourself a money MOT and some specific steps to help protect your pension investments through any future turbulence.
If you’ve already set yourself a budget – now’s the time to check and update it. If you haven’t, now’s the time to set one up.
There are loads of new tools online that can help you get on top of your incomes and outgoings. Shop around for new apps that can give you an overview of everything you earn, owe or spend in a single place. To get started you could try this free budgeting tool which will analyse your household spending and help put you in control of your money.
A review of your spending will often highlight any unnecessary outgoings which you could reduce or cancel altogether. Or try shopping around for better prices on utilities and services by using comparison sites.
Money saved today could be invested in your future and just diverting a little can give some peace of mind. The Money Advice Service has loads of cost-cutting tips that could free up some extra cash to save – covering everything from utilities and holidays to cars and home improvements.
The last thing anyone wants is to add to their money worries by falling victim to the scammers seeking to steal personal information and money. For clear and practical help on protecting yourself online read the Government’s top tips for cyber awareness.
Talking more openly about money can help people make better financial decisions, build better relationships, help their children form good lifetime money habits and feel less stressed. The Money and Pensions Service has guides to help you start conversations about money with friends and family.
We understand that the ups and downs in the markets in the last year have been worrying for those with pension plans and other investments, especially anyone approaching retirement or already taking some of their pension money.
When it comes to long-term investments it’s important not to panic and take any sudden decisions without thinking things through. But you can easily review where things stand with your pension plan by logging on to your account or speaking to your provider or employer. And our pension calculator can help you see whether you’re on track for the retirement that you want.
You may have things you need to save for in the short term – maybe the last year has convinced you of the need for a rainy day fund. But if you can afford to save more into your pension plan too it could make a big difference to the choices you have in future in terms of when you retire and what your lifestyle in retirement might look like.
One of the best ways to help cushion yourself against the worst of market ups and downs is to make sure you have a good mix of investments. You may already be benefiting from diversification. For example, if you’re in the ‘default’ investment option of a workplace pension plan, this will generally include a broad mix of investments. But it’s worth checking. You also want to be comfortable that your investments are right for your age and the amount of risk you want to take. This risk questionnaire can help you with this.
We’ve got lots of guidance online for you if you want to understand your workplace pension plan better, if you’re thinking of taking money from your pension plan or want to learn about pension transfers. Or you can try the Pensions Advisory Service for more.
But before taking any major decisions it’s a good idea to consider getting financial advice. An adviser can provide you with a tailored plan that meets your individual needs. If you don’t have one you can find one local to you at Unbiased. Bear in mind that there’s likely to be a cost for getting advice.
Of course, it’s more than just money worries that many people are dealing with at the moment. Thankfully, there’s plenty of support out there if you’re finding things difficult. Try the Government’s website for guidance on looking after your mental health during the Covid-19 outbreak, or these NHS tips on helping mental wellbeing.
The information in this article is based on our understanding in June 2021 and should not be regarded as financial advice. Please remember that the value of investments can go down as well as up and may be worth less than what was paid in. Standard Life accepts no responsibility for information in external websites. These are provided for general information.