There are different planning needs for
the short, medium or long term. In this section we are going
to look at some examples for long term needs.
Example: planning
for retirement
When you think about long term needs,
the time you will spend in retirement is maybe the most significant
one. After a long
life of working it should be a time for you to enjoy and rest.
In order to make this possible you have to plan ahead for this
period in your life. It is important that you are planning
for it well in advance.
There are different ways to plan and
save for your retirement. One way is to invest into a pension
plan. This means that you will pay a
fixed amount of money every month off your salary into this
plan
and when you retire you will get paid a monthly pension.
Buying a house can be an investment for
your retirement. If you buy a house you should choose a mortgage
repayment plan
that finishes before you go into retirement. This way you will
not have to worry about paying for accommodation when you are
in retirement and will have extra financial security this
brings.
When you plan ahead for your retirement,
you should try to plan how much money you will need.
You should
consider how much income you will have from pensions and
savings and how much regular expenditure you will have,
including
accommodation costs, food, clothes, etc. On top of that
remember to keep some money for extra expenses, such as birthdays,
holidays and so on. To estimate your budget, you can
use
our budgeter in
the Useful Tools section.
For more information
relevant to planning for retirement
you may want to take a look at In
retirement in
Life Changes section.
Example: saving for funding children
through further education
When your children are young it is quite
easy to plan for short term needs. But what will you need in
the long term? Once your
children leave school they might want to go on with their education.
You might have to pay for tuition fees, food and accommodation
for your children. These costs will add up and it is
easier if you plan for these expenses a long time ahead.
You can start a savings account or invest
money for this purpose many years in advance. If you start
a savings account for your
children when they are still young you can save quite a big
amount over the years. If you save £25 per month,
that will be £300 a year – and if you do that
over 16 years you will save £4800 plus interest! This
is a good example how little amounts in the short term can
make a huge difference in the long term.
For
more information relevant to planning
for retirement
you may want to take a look at our
'Growing
older' section and
at
'In
retirement' in our 'Life
changes' section.
