Does the way we manage Personal Finance still work in this forever-changed market?

06 Aug 2020

Volatility, volatility, volatility is all we hear lately. Markets and global economies are roller coaster rides, cost of living and inflation is on the rise and salaries just can’t keep up. This seems to be the new reality for our finances.

With all these factors impacting our money, we can only ask ourselves if the traditional way of dealing with personal finance is still viable.

• Most people can’t afford the 10% saving rule anymore – they just don’t have the disposable income.
• Salaries are shrinking – most salaries can’t keep up with rising inflation and cost of living. Every year professionals get less out of their salaries.
• Professionals are riddled with debt – from student loans to credit cards and mortgages.
• Professionals are putting off saving for retirement.
• People are living longer, and existing retirement planning is just not adequate anymore.

So how do we adapt to this new way of life and make our personal finances work.

Go digital – There are many online apps that help you save/invest and have lower fees than traditional funds.
Saving should be a habit and not an objective – Any saving is better than none. 
Change your mindset. If saving £5000 is your goal don’t let that get in your way. Go from the angle of any amount every month builds towards the bigger total. Don’t let guilt or commitment to a 10% fixed amount prevent you from saving at all. As long as you create the habit of saving as much as you can every month, you are building up to your goal.
Move to other savings vehicles that offer better returns – most savings accounts don’t offer enough interest to beat inflation. Find alternative savings vehicles that potentially offer better returns
You come first – appreciate and reward yourself. No one is going to look after you when you retire. Contributing even a small amount every month is an investment in yourself. Waiting till you have more money to start saving may never come. Pay your retirement and savings first and then budget the rest between debt, necessities and luxuries.
Think twice before spending – follow the rule of: if you want it, ask yourself if you can do without it? If the answer is yes, then it’s a luxury spend. Buy it only if you have budgeted for a luxury spend.
Budget, budget, budget – now more than ever before, we need to budget for everything we spend.
Your deVere Acuma adviser will help you shift your mindset to a new way of thinking about finance and digital finance. [email protected]

Please note, the above is for education purposes only and does not constitute advice. You should always contact your deVere Acuma adviser for a personal consultation.

* No liability can be accepted for any actions taken or refrained from being taken, as a result of reading the above