For many people, financial security can be a real worry.
The cost of living is rising and wages aren’t keeping up, putting extra pressure on households.
So, it’s no surprise that seven in ten workers say they have felt stress or financial strain in the last five years.
But it doesn’t have to be that way.
We understand how stressful money worries can be so, as part of Stress Awareness Month, we want to share some simple steps that can help you feel better about your financial future.
If you’re worrying about reducing debt, how you’re going to fund your retirement or pay for your children’s further education, for example, then taking action to address the issue head on is the most important thing you can do, and you don’t have to do it alone.
Once you’ve got your finances on an even keel, you can then consider putting your spare cash to work, investing it to help grow your savings.
Dealing with debt
Having debts doesn’t stop you saving or investing, but make sure debt repayments aren’t taking too big a slice out of your salary. If more than 15% of your earnings go to pay off credit cards or personal loans, your first step is to consider bringing that down. This is because often the interest rate on these loans can exceed any potential earnings on investments.
But, if you feel you are losing control of your debts, then there is specialist debt advice available to you from Citizens Advice. It’s free and it’s friendly, so don’t delay.
Cutting back costs
There are plenty of comparison sites online that can help you save on your monthly outgoings.
Shop around to get the best deal on financial products like credit cards and your household bills – Ofgem found more than half of households can save £300 a year by switching energy supplier.
For a rainy day
Investing can mean tying your cash up for many years – you can’t access any money saved into a Self-Invested Personal Pension until you are 55, for example – so it’s important to have access to some ready money, just in case. A useful rule of thumb is to have three months’ outgoings saved up.
With a safety net in place and your spending under control, you can consider investing, but there are some important factors to consider first.
Take charge of charges
All investments have fees, but some are far more expensive than others.
Fees that are just a few per cent higher every year can take a substantial slice out of your savings over time.
Making sure you are getting the best value can save thousands of pounds over the lifetime of an investment, so shop around.
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The attitude to invest
If you want to grow your money – and money that is invested can earn far higher returns than if it is just left in the bank – you should invest it for at least five years, so don’t use any cash you might need during that time.
It’s also important to understand that investing is risky, and your investment could go up or down in value.
If that is going to cause you stress, then maybe investing’s not for you, though there are ways to minimise the risk of any losses.
Deciding to diversify
The phrase ‘don’t put all your eggs in one basket’ applies to investing too. evestor can invest your cash in funds with stakes in over 2,500 companies in 75 countries, so if one of them has a bad year, this would help balance the impact.
At evestor, we want everyone to be able to make their money work harder and have access to high-quality financial advice.
To get advice from one of our expert financial advisers and start building a financial plan, register with us now.