Savings are so important and are a huge part of any solid financial plan. Having savings gives you more security for the future which eases financial worries. There are countless things you can save for depending on your goals, but the following are 5 key reasons why you need a savings plan.
Nobody knows what the future is going to hold which makes having an emergency fund so important. Unexpected things happen in life that you will end up needing money for. This could be a medical emergency that you don’t have cover for or a financial crisis where you need to dip into your savings. We do recommend having protection policies in place for unforeseen circumstances, such as income protection, but it’s also very important to have an emergency fund for other financial emergencies. There are scenarios that will happen in your life that you can’t even think of at the moment, which is why it’s so important to be prepared for the unexpected.
To get a return on your money
Savings and investments are often used together to get a return on your money. With banks having negative interest rates and credit unions having savings caps, these options may not be the best savings solutions for most people. This is why investing some of your savings to get a return on your money is a much better alternative. You can decide what level of risk you want to invest at by completing a risk profile. You’ve probably heard the old saying “is your money working hard for you or are you working hard for your money?”. Well, having a savings and investments plan is the best way to get your money working harder for you.
Saving for a house
Saving for a house is one of the most daunting yet exciting experiences of your life. If you are looking to get a mortgage, just know that you need a minimum of 10% of the house price as a deposit. If you want a house worth €300,000, then you will need at least €30,000 for a deposit as well as other fees such as solicitor fees, stamp duty, etc. This money isn’t just going to magically appear. You need a savings plan to get there. The same goes for saving for a car, the holiday of a lifetime, or anything else. The key is to be organised.
Saving for your children’s education
If you are a parent, it’s important that you know how much is needed in the future to pay for your children’s education, whether that be primary, secondary or third level. The cost of education in Ireland is on the rise and has been for a while. You have to factor in so much more than just fees. You need to consider whether your child is going to be living in student accommodation or at home, or if they are going to college near home or in a different city. Check out our education savings calculator to get an idea of what you need.
Saving for retirement
You will continue to hear it time and time again but pensions are extremely important and are often overlooked or put off until later in life. Pensions are the most tax-efficient way of saving money. When you save into your pension pot you get tax relief and your retirement fund can grow tax-free. The goal of saving into a pension is to replace your income in retirement. A good pension pot is up to 66% of your working salary. Check out our pensions calculator to see how much you may need to save for your retirement. We also have various articles and videos on different types of pension schemes on our website and social media platforms.
To explore your saving and investment options, please give us a call on 025-30588 or book a complimentary consultation here. We are always happy to help and we will be with you every step of your financial planning journey.
Tracy Sumstad is a highly qualified and experienced Senior Financial Consultant with over 20 years of expertise in the Finance Sector. Tracy is well-equipped to provide comprehensive advice on financial planning and corporate solutions. Her focus lies in helping clients identify their unique values and goals, empowering them to make informed financial decisions that protect and enhance their wealth and success.