7 simple steps you can take right now to improve your financial engagement

How engaged with your finances are you? A survey suggests that millions of Brits aren’t actively managing their finances and it could mean they’re missing out on opportunities or overlooking risks. 

According to a Legal & General survey, almost half of adults are “financially disengaged” – that’s the equivalent of 24.5 million people. If you’re among the financially disengaged group, here are seven small tasks that could help you get to grips with your finances. 

1. Review your spending

Going through your spending can seem like a tedious task, but it’s a simple step that could identify where you’re spending more than you think.

From direct debits for services that you don’t use to the cost of a regular coffee adding up, sifting through bank statements could help your money go further. You don’t need to cut out all luxuries when you’re reviewing your budget. It’s about potentially finding areas that you’ve overlooked or would be happy to cut out. 

2. See what interest rate your savings are earning 

Do you know how much interest your savings are earning? Heading to your online bank account to check takes just a couple of minutes.

Over the last year, interest rates have increased. Shopping around could mean you secure a far better rate that will boost your savings, especially if you’re in a position to lock your savings away for a period.

The difference in interest rates might not seem like much, but it adds up. A better interest rate could help you minimise the effect high inflation is having on the real terms value of your savings. 

3. Check the interest rate you’re paying on debt

It’s not just the interest you earn on savings that is important, but the interest you pay on debt too.

If you have debt, such as credit cards or loans, review what interest rate you’re paying. Transferring the balance to another lender could reduce outgoings or allow you to pay off the debt quicker. 

Don’t forget about your mortgage. While you may have a current mortgage deal in place, knowing the interest rate you’re paying now and when the deal ends could save you money in the future.

4. Look up your pension contributions

When was the last time you looked at your pay slip closely? Most workers will be automatically enrolled into a workplace pension, so it’s easy to see how much you and your employer are contributing. 

A pension is a tax-efficient way to invest for your retirement. If you can, increasing your pension contributions could mean you have more income in your later years. 

5. Forecast the value of your pension at retirement 

Your regular pension contributions are crucial, and so is how they’ll add up in retirement. You can log into your online account for your pension provider or check your annual statement to get a forecast of the value of your pension when you retire.

The forecast isn’t a guarantee and is based on some assumptions, including investment returns and retirement date. However, it can be a useful indicator of whether you’re on track to achieve the retirement income you need. 

If you need help understanding what income your pension could provide, and whether it’s enough, please get in touch. 

6. Review your financial protection 

Sometimes things don’t go to plan. Having a financial safety net could provide a vital cash boost when you need it most. Spending some time reviewing your essential outgoings and how long your savings or other assets would last if your income stopped can be valuable.

If you have already taken out financial protection, such as income protection or critical illness cover, review if it will still provide you with the necessary cover.

If you don’t have financial protection, assess if it could improve your financial resilience and provide peace of mind. 

7. Set out what you want to achieve 

Getting to grips with your finances isn’t just about reviewing your spending and checking interest rates. Understanding what you want to use your money for is just as important – it should inform the financial decisions you make.

Whether you’re dreaming about going to an exotic destination, retiring early, or buying property, a clear goal can help you move in the right direction. So, spend some time thinking about what gives you purpose and could improve your wellbeing. From there, you can create financial goals and a long-term plan. 

Could you benefit from working with a financial planner?

A financial plan can set out what steps you need to take to achieve your goals. Working with a financial planner means you could have more confidence about your future and have someone to turn to if you have any questions about your finances. Contact us to arrange a meeting to talk about your needs. 

Please note:

This blog is for general information only and does not constitute advice. The information is aimed at retail clients only.

Note that financial protection plans typically have no cash in value at any time and cover will cease at the end of the term. If premiums stop, then cover will lapse. Cover is subject to terms and conditions and may have exclusions.

The value of your investment can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance. Your pension income could also be affected by the interest rates at the time you take your benefits. Levels, bases of and reliefs from taxation may be subject to change and their value depends on the individual circumstances of the investor.

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