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It’s financial planning week – so take steps to economic security by setting a budget and making a habit of saving

LARGE numbers of people in the capital face an uncertain future, particularly when it comes to their retirement. That’s according to the fourth annual financial planning survey, commissioned for UK financial planning week by the Institute of Financial Planning (IFP) in association with National Savings and Investments (NS&I).

The survey, which was conducted by YouGov, discovered that retirement plans for many Londoners now hang in the balance as they struggle to pay down debt.

These findings present a worrying picture. Many people are facing an uncertain future yet they are not taking appropriate steps to improve their financial situation. There seems to be awareness, but people need to take action now to get to grips with their finances. Financial planning week provides the ideal opportunity to do just that, but how?

The first step is to work out what you actually need your money to do for you – your goals. According to our survey, 43 per cent of Londoners have not yet identified their financial goals. Try to break yours down into the short term, such as next year’s holiday, medium term, perhaps having children, and long term, such as planning your income in retirement. Make sure you find out the likely cost of these goals as well as when you want to achieve them. Then you can start to plan your savings and investments accordingly to stand the best chance of getting what you want from life.

The next step is to take a look at what you’ve got – your assets. Work out what you own and what money you owe, as well as what income you earn and what you spend. Despite the fact that 25 per cent of Londoners haven’t worked out their budget, make sure you do – and that you stick to it. Whether you use an online tool, a spreadsheet, or a notebook, get to grips with budgeting and setting out your plans. There is some excellent financial planning software available free on to get you started. It also has lots of practical tips and tools and provides help should you wish to contact professional financial planners. Once you know where you stand with your budget, you can use any surplus to pay off debt or save towards your goals. Try to spend less than you earn, but if you’re struggling to do that, try to work on ways to cut your costs or find other ways to increase your income. Wherever possible you should avoid borrowing to pay bills or to pay for things like shopping or holidays.

In our survey, Londoners report that they have been cutting back on spending over the last six months to try to save money: 45 per cent report having eaten out less and 46 per cent have spent less on clothes and shoes. People are also going out less (43 per cent) and many (42 per cent) are shopping online for bargains. Over a fifth (21 per cent) of people reported using less petrol while 22 per cent report cycling or walking to save money on transport costs.

Borrow only what you really need and work out the true cost of your debt: interest charges can push up the total cost of your purchases enormously. Work out a plan to pay off any debt you do have as quickly as possible. Despite unattractive interest rates on deposit accounts, make sure you make saving a habit. Save some cash every month into your emergency fund – the IFP recommends this should ideally equate to three months net income. Once you’ve got that, start saving money every month to help achieve your short, medium and long-term goals.

Think carefully about protecting yourself and your assets financially against unforeseen events such as illness, accident, or death. Worryingly, our survey found that 82 per cent of Londoners don’t have any contingency plans in place at all if they were to face any major changes to their financial situation, with 53 per cent not even having a will in place.

My final tip is to review, review, review. Things change, so remember to review your financial plans regularly to make sure you stay on track to achieving your important goals in life.

Nick Cann is chief executive of the Institute of Financial Planning. Find out more at