Financial security is scary

Reaching a certain stage in life often brings a realisation: the importance of financial security. For me, this was when we found out my wife was pregnant and not only would I be responsible for our life and relationship, but also now someone who would be entirely dependent on me.

As we begin to truly consider our future, thoughts of pensions, savings, ISAs, stocks, and bonds really started to take centre stage. It’s at this point that we realise the significance of these financial instruments in ensuring a stable future.

I felt that up until this point, I’d had a fairly good grasp of the do’s and don’ts, yet I also knew there were areas I hadn’t put much time into.

Do not save what is left after spending, but spend what is left after saving.

Warren Buffett

Yet as I was thinking about the future, I found myself contemplated the past. Many of us are not traditionally taught about the concepts of saving and financial planning early in life. Who teaches us about financial security?

Unfortunately, formal education systems often fall short in providing comprehensive financial education. Personal finance topics are not always included in the curriculum, leaving individuals to navigate the complexities of the financial world on their own. In some cases, parents or family members may impart financial knowledge, but this is not always the case.

It’s never to early to start putting into your pension

My first real consideration of a pension was when I was auto-enrolled into one when it became law. Yet the downside of working for small businesses is the contributions are often quite meagre, and rarely extend above the government mandated minimums.

Only in the last few years did I learn about the half your age rule. Where you half your age, and that becomes the basis of your employee pension contribution.

At the time I was 30, meaning I should ideally be putting 15% of my pay into a pension scheme. Daunting when the required minimum is only 5%.

Don’t rely on workplace pensions

After consolidating a few negligible pension pots into one, I took note of the investment performance. It had definitely been lacking to say the least.

Yet with many of us so preoccupied with life (cost of living, global warming, global conflicts, to name just a few..) when would we have the time to manage our own funds and investments?

After some research, I happened across Vanguard Target Retirement funds. They were managed, but also took away the hassle of making sure that my money would be risky when I could afford to be risky, and safe when I needed it to be safe. It was remarkably easy to setup.

I still contribute to my workplace pension, but only because they match a contribution if I do. I then make an extra monthly payment into Vanguard.

Leasing is not owning

I know that I’m lucky and privileged. I managed to go to University before the price hikes, I managed to buy a house before the market exploded, and I had family that helped me pay of my student loans before the interest rates skyrocketed.

All this has meant that my (pre-child) disposable income is higher than most. Yet despite this, I’ve always shrunk away from any sort of financing that doesn’t result in ownership.

Car financing is a great example of this. With the cost of everything rising, I understand why so many are leasing cars. A single monthly payment and you have a brand new car, potentially even including insurance and maintenance.

Yet if you do this, and you’re unfortunate enough to lose your job, what happens if you can’t make your car payments? Your car will be taken and you can’t travel to get a new position.

The only times I will finance anything is if there is a real benefit. For example, If I can earn more with the money in the meantime than I’d pay in interest.

Taking advantage of loyalty schemes

One aspect of personal finance that I have felt truly overwhelmed by lately is the sheer number of loyalty platforms and services. I’ve lost track of how many services I pay for that offer me a weekly Greggs treat.

Yet some can be very beneficial, and I’d highly recommend finding out if your workplace provides any sort of appropriate scheme. Buying gift cards and getting cash-back can really add up. Every few months our weekly shop is “free” because of this.

My top takeaways

1. It’s never to early to start putting into your pension
2. Don’t lease anything you can’t afford to lose
3. Unsure? Always ask on UKPersonalFinance!
4. Try not to stress, just do what you can
5. Subscribe to the MoneySavingExpert newsletter!