Getting yourself Financially Fit
Midlife can often be filled with significant life changes, you might be thinking about a career change, or want to take some time out, maybe it’s your kids’ further education on your mind. Or maybe you just want to have money to spend on the things that make you happy in life. And it’s not too early to start thinking about (dare we say it) your retirement
At The Midlife Hub we’ve put together our top 10 quick tips for getting financially fit in your midlife.
1. Have a rainy day fund
Creating a rainy fund will help from having to rely on a credit cards or going into debt when short term, unexpected costs pop up. If your car needs a repairs or your boiler breaks down unexpectedly it can throw your entire budget out of whack if you aren’t prepared. Set up a regular standing order into a separate bank account and build your rainy day fund up over time, so it’s there when you need it.
2. Get your pension sorted
Its really important to know the value of the pension or pensions you have in place — because this is the money you’re going to live on when you retire. Check out your state, and any employment pensions you have — how much will they be worth to you annually and weekly when you retire? You may need to make some tough decisions on whether you top up your pension by saving more, or retire later than planned. Find more info on Pensions HERE
3. Write a will
If you haven’t got one already, one of the important financial moves you can make in your midlife is to ensure you put the time, effort (and money) necessary into drafting your will. Most of us own something (assets like a house, a car, valuable pieces of jewellery, or pets) If you don’t have a will in place, its the state who will decide who’ll be in charge of your children and any funds owed to them, who your assets will go to when you die.
4. Create a Power of Attorney
And whilst you’re doing the legal legwork, you might want to consider creating a Power of Attorney too. A lasting power of attorney or LPA is a legal document that lets you appoint one or more people (attorneys) who you want to help you make decisions, or who will make decisions on your behalf, if you have an accident or an illness and cannot make your own decisions.
See here for UK Government Guidance on Creating an LPA
5. Start paying off your debts
This should be the time you’re making slow and steady progress toward paying off any remaining mortgage, expensive credit card borrowing and other types of loans. Explore whether it make financial sense to make ‘over payments’ on your existing loans. Over time, this will leave you more disposable income to play with
The Citizens Advice Bureau can offers further advice and support.
Getting yourself Financially Fit
6. Maximise your company benefits
If you’re an employee, your company may well provide an employee benefits package in addition to your basic salary. These benefits can include pension contributions, transport benefits, health insurance, employee assistance programs, wellness programs, financial planning support, and local community discounts. Since your company is already paying for those benefits, make sure you’re taking advantage of them. Your employer should be communicating these benefits to you regularly, or have information on your company website
7. Clean up your credit
Maintaining a positive credit score is important as you progress through your midlife, because your credit report can play a big role when it comes to determining how much you will pay to borrow money for big expenses like a mortgage or new car. You should be reviewing your credit score at least once a year to check for errors and aim to pay off your credit card balance in full each month
8. Meet with a financial advisor
Some people like to manage their money on their own, whilst others benefit from a professional’s help. Just covering the monthly bills can feel hard at times, let alone thinking about investment and long term saving planning. A financial planner can help you audit your finances. Together you can work out what is ‘discretionary spend’ versus ‘essentials’, and from there create a budgeting and savings plan that will work for you
9. Audit your insurance policies
Taking out insurance policies, or making sure existing ones are update to date with your personal details, can be one of those things that slips to the bottom of the list. But policies that cover critical illness, or redundancy could be a financial lifeline if the worst happens
10. Set up an Emergency Fund
This is one we often think about, but rarely get round to doing. An emergency fund is your safety net in the event of a financial emergency, such loosing your job or a major illness or injury. And if you don’t have adequate insurance policies in place this could be lifeline when times get tough. Most financial advisors say that an emergency fund should be equivalent of at least 3 to 6 months of your usual monthly outgoings. (thats the cost of mortgage or rent, payment of bills, debt payments, and everyday spendings, such as food bills). As with the rainy day fund, build up your emergency fund in small amounts, regularly and over time. You may never need to dip into it, but its peace of mind to know that it’s there if you need it
Sorting out your finances can be one of those things that we never get round to, and that we often put into the ‘too hard bucket’
You don’t have to do all 10 of these steps at once. Why not take one per month, and before the year is out, you should feel you have more control over your finances, and hopefully a healthier bank balance too
Enjoyed Getting yourself Financially Fit? Why not read Need to Consolidate your Pension? HERE