'Annual income twenty pounds, annual expenditure nineteen pounds, nineteen shillings and six pence result happiness, annual income twenty pounds and six pence, result misery’ – Mr Micawber in David Copperfield, Charles Dickens
If you do not have a clear idea of what money you have coming in and what you are spending it on, the chances are you will spend all of your disposable income – or worse.
There are a number of free tools available online to help you record what you spend on a weekly, monthly and annual basis, such as Money Advice Service. These will help you work out where the money goes and review whether you approve of your own priorities. You may decide you’re spending money on things you don’t really need, or that you need to seek better deals on things like utility bills and insurances. The savings you make can then be used either to pay off debt or increase your savings.
After working out how much you are spending now, consider how this might change when you retire. For most people this will mean no more mortgage or pension payments, or having to fund school or university fees. They may also no longer have the costs associated with working, such as travel. But retirement may also involve some increased expenditure, such as funding holidays or hobbies. Ideally your retirement plans would cover both your basic standard of living costs and an aspirational income requirement – i.e. what would allow you to be able to do the things you really want to do in retirement.
We have developed a cashflow planning model that helps us “stress test” your retirement plans for changing inflation, tax rates and investment returns.
Get in touch and we can help to put you in touch with the Planner who is right for you. There are many ways you can contact us. Call or email for general enquiries, for something more specific use our enquiry form.