7 Ways to Avoid Financial Regret in Old Age – Part 1
I have an uncle who says, when you are young, work for your money, so that when you are older your money will work for you. Well I like that!
When we are in our wonder years, that is, the years of retirement, it should be a time of enrichment, not suffering.
Not sitting in a cold accommodation with teeth or dentures chattering because we cannot dare afford to put the heating on, especially for those of us who live in colder climates.
Or you don’t want to be depending on your kids. (My father says, when you depend on your kids, then the day your kids don’t give you money, the day you don’t eat!).
There are many who reach their wonder years and find they are feeling low, depressed even or regretful about some of the choices they made earlier on in life, especially when it comes to money.
So how can we avoid regret? If you are still young and or working, start planning now. It is NEVER too early to plan and make wise decisions. And also no matter how old you are now, better late than never.
##1 Are you on a pension scheme?
It is amazing that many will work for 40 or 50 years and will never consider investing in a pension scheme.
If you are living in the UK, you cannot depend on your NI contributions now to give you the pension life you desire when you retire. The government has told us over and over again that our NI contributions will not amount to much. Currently (2015), the government has warned that state pension works out at £115.95 per week for a single person. If you were retired now, would that be sufficient for you?
What are you doing to avoid poverty in old age? To avoid being dependent on your kids in your golden age?
Get into a pension scheme. Does your company offer one? Can you sign up to one privately? Start making contributions to your pension. The years will count up quickly. Don’t get caught out scrapping the pan later in life.
How much should go into the pension fund? Someone said a rule of thumb is about 10% of your current income. Talk it over with a financial adviser or someone who you trust that is financially savvy, but do something today!
##2 Are you saving?
Are you saving? You must learn to pay yourself. The government gets your money through taxes. The bill companies are making a profit on what they charge your for utilities? But you are the one waking up at 5 am to pay all these people. Of course, not grudgingly. But you get my point.
Why are you not paying yourself for your efforts? That is what savings are about. At the end of the month you should not find your money is either zero balance or even in the negative figures and not even a dime has been put into a savings account?
Sometimes we need to make adjustments to our spending. Make sacrifices now.
I remember some years ago I wanted to buy a bag. I was ooo-ing and aaa-ing about it (and the guy I was dating at the time was putting his own two pence into it, even though he was not buying me the said bag, lol). An old lady said to me, Listen my dear, don’t get carried away buying everything you like. When I was young, I was always buying shoes and clothes, but today I regret it. Even though I was grounded and quite sensible for my very young age at the time, her words touched me, and I have never forgotten them.
If that bag costs say £30 and I had been saving £30 a month over 10 years, that means in my account, I am £3,600 pounds richer. The bag by now is probably long thrown away even by the recipients from the Oxfam charity shop, but I would have that money in my account!
Another rule of thumb I have heard, is to save 10% of your current income. Again look into this very carefully. You must be saving no matter how ‘little’ your income is.
Use Freeview instead of subscribing to Sky if you have to. Buy during the sales instead of impulsively. Use your free loyalty points and coupons. Why not? Must you have that designer suit instead of a well cut suit that has no label? Must you have that exotic holiday now?
Check out the various saving plans. If you can afford to lock up some money for some years, go ahead and do so. Interest rates may be low at the moment and you may be tempted to invest in riskier plans.
Remember little drops of water make a mighty ocean. As Tesco supermarket in the UK says, every penny counts!
##3 Clear your debts and don’t get into the trap again!
Debt is a strangler. I have never seen someone in debt that is happy! Reassess your debt now. Start paying off the debts and cut up the credit cards. If you paying the minimum amount on your credit card, you could spend years or even decades paying off the amount.
That is not wise financial management. You took out £2000 and for the next 5 years you are paying the minimum amount on a high interest. Is that 2000 worth it? For me, certainly not.
One rule of thumb I have heard is to clear your debts before savings especially if you have high interests on the debts. Do your sums. Get the Casio calculator out and work the sums. You can do a combination of the two, pay the debts and still save, with the emphasis being more on clearing the debts till you are at a comfortable position where you can save more than pay into the debt.
Work it out and see what works best. Again you got to promise me, you will do something about those debts so you don’t end up crying later.
Next time, we will take a look at four more points to give you that financial freedom. Please share, pin or tweet this post. Thank you.
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