How to plan your finances, whatever your age

Written by Lori Campbell on 11th Apr 2023

The outlook for the nation’s personal finances seems to change day by day at the moment. We are living in crazy times and forecasting how the rest of the week – let alone your life – will pan out is no easy task.

Despite this unpredictability (and also because of it), having a semblance of a plan is a very good idea, even if life doesn’t always want to follow it. 

Here is an example of how to make your finances work for you through the different decades of your life.

In your 20s

  • Maximise your pension contributions. The earlier you start the better to make the most of compound interest.
  • Start saving a deposit for your first home (get a Lifetime ISA, if you’re eligible).
  • Get into the habit of saving into ‘pots’ for short-term and long-term goals. Build up some emergency cash savings – ideally three to six months’ salary.
  • If you’re planning to get married, sit down with your partner BEFOREHAND to talk about your financial goals.
  • Avoid taking on unnecessary consumer debt.

The Good Guide to Pensions

In your 30s

  • Use deposit savings to buy your first home (and keep saving for the next one).
  • Keep up pension saving. Consolidate pension pots accumulated from different jobs.
  • Start saving for your children through a Junior ISA.

In your 40s

  • Make the most of your ‘peak earning years’ by getting out of any debt and putting more into your savings.
  • Consider a Self-Invested Pension (to SIPP) to boost your pension savings. Find out more about the SIPP here.
  • Aim to max out your ISA allowances.
  • Use experience to get more adventurous (IFISAs perhaps?).

The Good Guide to the Innovative Finance ISA

In your 50s

  • Enlist the help of a planner or financial adviser, ideally one that specialises in sustainable investments such as the ones listed here.
  • Plan your retirement and how much income you will need. Make any ‘catch up’ contributions.
  • You are entitled to a 25 per cent tax-free lump sum from your pension.

In your 60s

  • Consider whether to reduce risk in your pension and other investments.
  • Think about how you will get an income from your pension.

For a detailed look at planning for your finances for life’s (most common) major stages, see our Good Guide to Financial Planning.

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