I’m Cross At Myself For Not Doing This Sooner…
My friends, today I want to share one of my biggest financial regrets and the reason I’m sharing it is because I don’t want you to wait like I did. But first of all, let’s backtrack.
When I finished school I went to sixth form college and then from there I went to art school and then university to do a BA in Fine Art. Once I finished my degree, I realised I was qualified for very little (actually, nothing!), so I joined a temping agency and had a fun year or two, taking temp jobs I didn’t care about and going to weeknight club nights and dancing my troubles away in vintage prom dresses.
Then I moved to London and worked in fashion. I earned a pretty low salary (trust me when I say, fashion DOES NOT PAY!) but it was fun and I traveled and learnt a lot. After that, I worked some freelance jobs, built up my blog and had a part time job doing social media and blogger outreach. It was around that time we left London and bought our beautiful home in Margate where we lived for 5 and a half years.
Don’t get me wrong, I’m incredibly grateful we managed to save up for a house deposit AND pay for renovations, but there was something BIG missing…. I didn’t see it then, but I see it now. And ironically, if I had thought about it then, it would have been much easier to fix. What am I talking about? MY PENSION PLAN!
Forgive me for being boring, but this is IMPORTANT!
Bare with me, I know this is the MOST boring topic in the world, but I promise you, it’s important. If you plan to retire, which I think we all do, you need to live off something. That’s your pension. Sure you might get lucky and win the lottery, but unless you want to rely on inheritance or plan to live off a partner, you need to ask yourself ‘How are you going to pay for your champagne and country club membership without a healthy pension?!?!’
Here’s the deal with pensions, if you start a pension early, you can pay less in and end up with more than someone who started it at 40 and is paying in more per month. It’s all about compound interest, my friends!
Want to know another fun fact? For every £1 you put in, the government put in 20p extra for you. So £100 turns into £120, or £10,000 turns into £12,000. PLUS the pension management company will INVEST both your money AND the money the government give you so it grows for you. Then the interest is reinvested alongside what you pay in and then it will grow even quicker. Compound interest is your friend!
A pension is basically the greatest savings account you will EVER have, the only catch is that you can’t access it until you retire, but I promise, time will fly and want to have a nice chunk of change in there for when you retire! If you are 20 and feel too young to start a pension, start it anyway and pay in a tiny amount per month, literally, £10 if you want to. If you are older and you are worried you don’t have a pension, try not to freak out, you aren’t the only one. But do yourself a favour and open one now and pay in whatever you can afford. Don’t wait for next month, do it now! I promise, starting is the hardest part, once it’s set up, you can forget about it!
Do you have a job?
If the answer is yes, then you SHOULD have a workplace pension, in which case, happy days!!! If you aren’t sure, ask your boss or HR department to check it’s all set up and you are happy with it. So you should automatically be paying into it, as should the company and then the government will top it up. You CAN have a private pension on top of this if you wish, but you might not need it. But look into it, find out what is in your pot and find out what your company are willing to match if you raise your contribution, you might find that you have a really generous pension plan at work but you need to pay in a tiny bit more each month for it to be realised. I’m not sure if that made sense, but your workplace might be really generous and be willing to pay, say, 8% of your salary amount into your pension every month as long as you match it, so if you are only paying in 3%, you could be loosing out on an extra 5% in your pension pot because you aren’t paying in as much. Sure it will mean you see 5% less in your pay packet every month, but you will see 10% more, PLUS 2% on top of that from the government, if you pay in that etc money. So it’s worth finding out what the pension plan is as if you contribute more, your boss might too and it will end up being a LOT more in your pension. I hope that made sense!
Do you have multiple pensions from old workplaces?
This is important! Usually when you leave a job, the pension becomes dormant because you are no longer paying in and nor is your employer. The money is still yours, but you need to transfer it into a live pension. I transferred mine into Aviva, but my boyfriend used Pension Bee as he had multiple old pensions and he could track them all in one place.
Are you self-employed?
I’m sorry to be the barer of bad news, but you need to set up a private pension if you are self employed. I did mine via Aviva, which I totally recommend OR you can use Pension Bee, which my boyfriend uses and he loves so much I am in the process of switching mine over. If you have multiple workplace pensions, Pension Bee might be the best option for as it lets you consolidate all your old workplace pensions and gives you a projected income for when you retire. OR you can start a pension from scratch with Pension Bee. It’s pretty cool if you have a geek streak! Use my refer-a-friend code and you will get a £50 bonus for starting your account and I’ll get one too for introducing you!
The Hardest Part Is Starting!
It’s true, the hardest part IS starting, so please do it ASAP! You can contribute as little or as much as you want, either with one-off deposits when you can afford it, or a monthly standing order (you can pause / cancel at any point if you are struggling with cash during any phase of your life). But just start! Personally, I would say Pension Bee is easiest to set up, but Aviva is too. A lot of pension providers will tell you that you need to consult a financial advisor which can be costly if you don’t have one already, which is why Pension Bee and Avivia are great as you can set it up yourself and avoid financial advisor costs. Anyway, please take my advice and start a pension. I promise, pensions are important!
What Am I Paying Into My Pension?
Ok, So I’m encouraging YOU to pay into your pension, but I think it’s only fair I share my current contributions with you all. So, this last 12 months I have been really wanting to give my pension a boost so I was paying £150 in per month (which became 20% more thanks to tax relief), however, a few months ago I decided to boost it up to £450 a month (which again works out to be 20% more thanks to tax relief). AND I did an end of financial year lump sum payment of £5,000 as I decided I could afford it. Truthfully, I had the choice between a new Chanel bag or a pension contribution and I went wild and chose the pension contribution! Sure, it’s money I won’t see for a fair few decades, but 60+ year old me will thank me for it! I totally understand this isn’t something everyone can or wants to do, but it has been a bit of a financial priority for me recently and I figured if I paid a little more in now, it would make more of an impact later.
Thank you for reading my post, I hope this is of help, I truly do want to encourage people to start their pensions, especially my self employed friends out there. You don’t have to pay in much, but even a tiny bit will help build up thanks to tax relief, investments and interest! You can do this!!!
Also this post contains a Pension Bee refer-a-friend code, but I have no links to the brand. I just think they are really good!! Also, I’m not a financial advisor, this is my friend advice to you!