How to save in the short, medium and long term

Have you considered your savings goals in the short, medium and long term? Maybe you have not had time to think about this yet, or maybe you simply do not know where to start putting this in order.

Talking to a professional Adviser will put you on the right track, but here are a few pointers to start you off:

Short term

We recommend an ‘emergency fund’ of around three months income. This savings pot should be easily accessible to help with those small, unexpected expenses, such as:

• Replace or repairs on your boiler
• Unexpected work required to pass an MOT
• Large electrical item such as a fridge freezer needs replacing

Having an emergency fund may help you avoid the need to use a credit card to pay for these unexpected expenses. This avoids the temptation of delaying paying off your credit card and the possibility of accruing debt at high rates of lending and allows you a ‘financial comfort blanket’.

Medium term

Beyond having an emergency fund, saving also gives you the chance to afford more exciting purchases. After all, what is the point in working so hard to save if you can’t spend it on something that makes it all worthwhile? What will you want to save for?

• The deposit to buy your first home?
• A boat?
• A classic car?
• A once in a lifetime holiday?

By ensuring that you plan for this, your dream is more likely to become a reality. As well as savings accounts, there are other financial products that can help you achieve these goals.

Long term

Are you confident you’ll have enough savings to live the retirement you want? You may have a workplace or personal pension in place, but have you really thought about what it will be worth when you reach your selected retirement age?

Take Peter for example. Peter saves £100 per month through his workplace pension. He is a basic rate tax payer and therefore receives tax relief of 20% on his payments, so that £125 per month is invested into his plan. He intends to continue to pay this level of contribution for 40 years, until he retires.

If we assume a growth rate of 2.4% (slightly above inflation), we can project that Peter will receive an income of £213.33 per month for life from his retirement at age 65.

Pension is one way to save for retirement. There are other options which you can discuss with an Independent Financial Adviser. Talk to your Adviser about your short, medium and long term savings goals.

This article is for information purposes only and is not personal advice. It is based on our current understanding of legislation and HMRC guidance which could be subject to amendment. It is correct as at October 2016. You should always seek financial advice. The value of your investment can fall as well as rise and is not guaranteed. You may not get back the full amount invested. Calls may be recorded for use in quality management, training and support.