KIRSTY APP - What You Need To Allow For

WHAT YOU NEED TO ALLOW FOR Now you know what you have, we will look in detail at your needs. The next chart gives you basic guidelines. They are given in a commonly accepted order of priority but bear in mind that your personal situation may give you a different order of priority.

Who pays the bills if you are ill for a long time, and if you have dependants what will happen to them if you die suddenly? The state has a wide range of benefits, but they may be insufficient for you or your dependants to enjoy a good standard of living if you stop earning. The solutions to this problem are cheap and simple and involve insurance policies.

The first step, if you are in a company pension scheme, is to know what the benefits are. Then there is permanent health insurance, which gives a regular income if you are ill. Term assurance and whole life assurance (possibly more expensive) pay a lump sum if you die. Family income benefit pays your family a regular income if you die. Don't be confused by other sorts of insurance at this stage. What you are concerned with, here is protection, not savings.

Some banks arrange loans to enable you to pay for insurance protection against sickness, accident, unemployment and death.

As a rule of thumb, you should try to have a year's income available as a lump sum in case you die unexpectedly. Think also of insuring your husband or partner's life, particularly if you have young children.

Savings

You are likely to need cash from time to time to pay for big items such as the deposit on a house, a new car or a holiday.

A home

You may choose to rent, but buying a house is a good way of being forced into saving and paying off the mortgage. It is also a way of benefiting from property rises. If prices fall then other people�s property (that you might want to purchase) also falls.

When you have paid off the mortgage or loan on it you will own a valuable asset. Of course, owning a house is not without problems. You have to pay for repairs and to insure it, and you will have to sell it if you decide to move. Provision needs to be made for these costs as well.

Keep some short-term savings easily available in one or more of: a bank, a building society, national savings.

You can always get at those savings quickly. But make sure your money is earning satisfactory interest until you need it.

An increasing number of people are opting to buy, and there is a growing number of schemes for house purchase. You will be faced with having to make a decision about how to finance your purchase. That involves quite complicated sums, which depend on your income, the current rate of interest and your age. Banks and building societies are the main sources of finance.

Mortgages can be of either the repayment type or the endowment type; the latter is linked to a life assurance policy. There are a number of schemes to help the first-time buyer or the person buying an older property.

Don't just take the first house that you see. Search online, shop around, ask questions and get out your calculator. Believe it or not, the lenders actually want to lend you money! Get a quotation from a number of sources, each on the same basis - amount, number of years, interest rate, insurance benefits, etc., so that they are all comparable.


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Wealth Creation

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