Saving for my family’s future – why managing my money matters
While the concept of saving money has always been important, it has arguably never been more crucial than it is today.
The nature of saving has also changed considerably during the last decade, as the combination of innovation and economic volatility has rendered traditional savings vehicles far less effective.
In this article, we will look at why money management is so important in the modern age, and ask how you can save effectively for your family’s future.
Why has saving become so important?
In simple terms, the goal of saving is to optimise wealth and build towards a more secure financial future. The macroeconomic climate determines precisely how hard people have to work to save effectively, however, either empowering their efforts or making it exceptionally difficult to secure a return.
The latter scenario has been evident recently, as stagnant real wage growth and a disproportionate rate of inflation (which has peaked at 2.9% recently) have combined to restrict disposable income levels in the UK.
Not only has the cost of living risen at an incredible rate, however, but minimal high street savings rates have also declined and prevented savers from maximising their returns. This correlates directly with the base interest rate set by the Bank of England (BoE), which has remained at just 0.25% throughout 2017 and was only recently increased to 0.5% (this was the first increase of its type in more than a decade).
As a result, savers have been forced to reduce the amount that they commit to savings, while the money that has been invested will not work as hard.
How to save and manage your wealth effectively in the modern age
As you can see, the oppressive nature of the economic climate means that savers must adopt a creative and proactive approach if they are successfully build wealth. The first part of this process should be to optimise your disposable income levels, either by adding or diversifying an existing revenue stream (through activities like freelancing or investing) or budgeting to reduce the cost of living.
These activities can also be combined, of course, as you adopt an entrepreneurial mind-set and focus on optimising your profitability as an individual.
One you have built a larger pot of savings, it is important that you seek out expert assistance to manage this fund. After all, there is world of difference between creating a monthly expenditure budget and future financial planning, as the latter requires innate knowledge of the economy and the future trends that will shape its course. Service providers like Tilney showcase the importance of expert financial planning, while they also help you to ensure that your estate is maintained and distributed efficiently once you have passed.