Gently Introducing Savings Into Your Budget In Three Ways

According to the latest Labour review, workers must begin doubling their pension savings or else they may suffer later on in life.

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According to the Independent Review of Retirement income, the target savings amount should reach about 15 per cent of a worker’s salary.

It’s quite high, you have to agree with us.

But it’s not entirely impossible.

You don’t have to cut about 15 per cent of your monthly funds and budget immediately.

Here are three ways to introduce gently savings and cuts into your budget.

Start Slow

It doesn’t have to be 15 per cent all at once.

Some individuals begin with about 5 per cent of savings. Some even start with saving just about £5 monthly regardless of proportions.

Once you’ve adjusted yourself to the budget, allow yourself to move towards £10, then £15 and so on.

Begin slowly. The savings you’re making might seem little.

But when you look back after a few months, you’ll realise how they’re stacking up nicely.

Make The Necessary Budget Cuts

Once you’ve adapted to saving more than £50 or about 7 per cent of your monthly salary, it’s time to cut some more corners in your budget.

Don’t be blunt to your budget. Introduce the small amounts once again. Give yourself time to adjust.

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Once you’ve grown used to the cut-off, move closer to your goal amount.

Now you’re saving more than £500 or even about 10 per cent of your monthly income.

Appreciate And Move Further

Now, be proud of yourself and look at how much you’ve saved with your perseverance and monetary discipline.

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Inspire yourself to introduce cuts further where necessary. Make it a habit.

Move your money into your pensions contribution or investment account where it can grow.

This is how you can secure you and your family’s future!

Osborne May Come Back To Haunt Pensions- Kennedy

Independent Financial Adviser and Pensions Specialist Michael Kennedy wrote in The Irish News that it is likely possible Chancellor George Osborne might return to introduce the flat-rate pensions tax in the near future.

He derived the idea from the Chancellor’s statement following his Budget 2016 speech.

According to Kennedy

“There is to be a ‘Lifetime Isa’ from April 2017 which gives a 25 per cent government bonus. You can open a Lifetime Isa up until you reach the age of 40, and then, for every £4 you save up until the age of 50, the government will add £1. With the Lifetime Isa you could, therefore, save up to £4,000 a year, to which the government will add £1,000, and it can be used either to help buy a first home or to save for retirement.

“Perhaps surprisingly, George stuck to the previous weekend’s promise that he would leave pension tax relief alone,” he said.

“However, considering that the government currently spends £34.2bn every year in tax relief on pensions, it’s certain that such a large, peachy fruit must have the Chancellor’s mouth watering.”

Kennedy believes that the pensions numbers only add up to show how much the Chancellor is missing. He said the promise of leaving pensions tax alone only leaves a ‘to be continued…’ in the heads of financial analysts.

However, he pointed out the Chancellor’s positive perspectives with the Budget 2016. In Belfast, Widows and widowers whose husbands and wives were civil servants can receive the continued payment of pension to any civil service. They wouldn’t lose the pension as they would initially.

Employees Troubled By Mandatory Pensions Contribution

Smaller UK companies are taking centre stage with their continuous growth. Upon meeting their legal deadline for workplace compensation, employees feel the pressure of mandatory pensions contribution for the first time.

And all of that is happening this year.

According to cloud-based payroll and pensions app Paycircle, about 27 per cent of UK employees not paying into their pension feel that the extra pension contributions would strain their current finances.

Auto-enrolment will become mandatory in the next few months. However, employees can opt out of the workplace pension. However, they will not have guaranteed benefits upon their retirement.

According to Paycircle founder Catherine Pinkney, the government had focused long enough on enabling business owners to have their own workplace pension. While it sounds easy and even beneficial on paper, employees may find auto-enrolment difficult to swallow .

“Another worry is that, while people need to save for their futures, should they do so if it puts significant strain on their finances today? Auto-enrolment is a fantastic idea in principle, but what its effects will be in practice we are yet to find out,’ she adds.”

Pensions Victory Still Early As Pensions Can Still Be Targetted

As critics of Chancellor George Osborne’s radical pension tax changes rejoice with its withdrawal, other observers said pensions can still be a target.

According to Aegon Pensions Director Steven Cameron:

“The Treasury comment that now is not the right time for radical change, does beg the question of how soon after the Brexit referendum might the right time arrive,” he said.

“A commitment to no further changes within this government’s term would be very welcome, but this may not be the last Budget where we’ve been holding our breath in anticipation of major changes to pensions tax relief.”

The chancellor did not include in the Budget announcement the radical reforms he may introduce to spell the end of tax relief on pension contributions for higher and top-rate earners.

According to PriceWaterCoopers’ Pensions Advisory Team Raj Mody: “While the genie is now out of the bottle on radical pensions tax reform, the chancellor has the opportunity to continue exploring the detail of possible options behind closed doors.”

“It is just a matter of time until we hear more on this front. In fact, it’s possible that the industry will still be asked for further input soon after the Budget, even if no short-term changes are planned.”