After the fun of the festive season comes the inevitable lull of January, along with the realisation that you may have overindulged during the Christmas break – and the fear of what your finances could look like as a result. If that sounds familiar, it's time to take a cold, hard look at things, and ask yourself one key question – will you spend or save this year?
Hopefully, the answer is save, at least for some of your disposable income. Research from Friends Life has found that a growing number of people are going down this route, with 44% of those surveyed planning to stick to a monthly budget this year – and perhaps surprisingly, it's the younger generation that's leading the way.
The survey found that 32% of those aged 18-24 plan to curb their spending in 2015, a sharp contrast to the overall average of 18%, while 35% want to increase their savings. Key motivators are buying a car (17%) and a house (20%), so with such big ambitions, it's no wonder that younger people are more likely to prioritise saving and getting in control of their finances.
It's great to hear that so many people, particularly those among the younger generation, will be prioritising saving in the year ahead. Regularly putting money aside in a savings account can not only give you a financial buffer for valuable peace of mind, but it's the only way to ensure you can comfortably reach your goals.
Saving up enough to buy cars and houses may seem like a daunting prospect, but even saving small amounts on a regular basis can quickly add up, particularly with compound interest added into the mix. And, if you've got short-term goals, they can be even more achievable – the research found that 29% of respondents put taking a holiday as their top priority this year, and 18% said they wanted to pay off credit card debt.
In even better news, people are generally more positive about their ability to achieve their financial goals in 2015, with 38% confident that they'll achieve both their long and short-term priorities, and 47% saying that they'll be in a comfortable financial position. Chances are, you'll want to think even further ahead, too – retirement may seem a long way off if you're young, but if you're prioritising saving for other things, you'll want to get into the habit of saving for your financial future, too.
Andy Curran, of Friends Life, commented: "As our thoughts turn to 2015, it is really interesting to understand what people's financial priorities are. The positive news is that many feel confident about their financial situation and are already taking steps to ensure they plan ahead and save for both the short and long-term. This is particularly evident among those aged under-25 who are just entering the workplace and appear to have a healthy approach to saving.
"This is a crucial shift in savings behaviour, as our recent Retirement Savings Map found many people currently face a £96.67 per week financial shortfall in retirement. This demonstrates why it is so important for people to take control of their finances sooner rather than later."
So, will you spend or save this year? Saving should definitely be at the top of the agenda! Make sure you consider your long-term goals as well as your short-term priorities, and have a clear plan in place of how you'll reach them. Putting aside disposable income into a traditional savings account or a cash ISA will be ideal, but don't overlook your workplace pension either – with auto-enrolment in full swing, it's hoped that fewer people will face a financial shortfall in the future.
Auto-enrolment and you
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