The question on many people’s minds is, how does one save in the midst of a difficult economic period?
Having a financial plan is crucial for any family or individual. A comprehensive financial plan helps you to take charge of your financial future, and putting you in a situation of financial bliss and security all through your lifetime, even in the face of other socio-economic and cultural challenges.
Your financial well-being is just as important as your physical and mental health – you need a financial plan to be financially healthy. Within a comprehensive financial plan there should be a savings portfolio: that is, individuals/families should ensure that they have a savings account. Saving is the act of putting some part of your present earnings in a protected place now, to make better use of it later. We should always remember the wise saying that ‘little drops of water make a mighty ocean’.
There are several reasons why we need to save now for the future. Savings are needed for those special and essential future needs like children’s education (especially third level education). Imagine if the only thing denying your child a third level education was lack of money, and that you had the opportunity to save for it but chose not to. It’s surely not a situation anyone would want to become reality.
Other future needs for today’s savings include planning for those special occasions like weddings or birthdays. Savings could also be used to pay off a loan, help loved ones to achieve future goals (like buying a home or a car), build a ‘nest egg’ for your retirement, or provide a tidy inheritance for your loved ones.
But the question on many people’s minds is, how does one save in the midst of a difficult economic period? Well firstly, you need to have a comprehensive financial plan which takes into consideration your present economic situation and future financial goals. Secondly, if you are in debt, you need to get out of it as soon as possible – pay off credit cards promptly, do not carry monthly balances, and if you are having difficulty controlling your spending habits, think seriously of closing your credit card accounts.
In addition, do not buy an item unless you really need it. Live within your means. Arrange to have a budget and stick to it. If your standard of living is too high relative to your income, make and execute a plan to lower it.
Furthermore, do not borrow to pay for everyday expenses, and before you buy anything that involves a large sum of money, think deeply and carefully before buying it.
Above all, always seek professional financial advice for savings schemes and products suitable to your specific financial situation. With a professional setting you on the right track, you should be secure enough to weather the roughest economic seas.
Ademiniyi Adelekun is a qualified financial adviser and principal at Alpha Royal Financial Services, based in Galway
niyi@alpharoyalgroup.com
