June 20th, 2024

Do you “act your age” when it comes to your money?

A new study from Octopus Money has revealed that while the average age of a UK adult is 41, the average “money age” is as low as 32.

The research looked at knowledge and behaviours relating to financial topics like pensions, saving, investing, debt, and protection, Money Marketing reports. It showed that although financial education is more widely available than ever thanks to the digital age, many Brits are still not “acting their age” when it comes to money.

Keep reading to learn what it means to act your age financially, plus how to work out your money age and compare it to the stage of life you are currently in.

Being “financially young” could mean you’re underprepared for important later-life milestones

Despite aging, you might still have just as much zest for life, or even more of it, than when you were in your 20s or 30s.

Yet when it comes to money, acting younger than you really are could have adverse effects.

Interestingly, the Octopus Money study found:

  • Men have an older money age than women. Male participants were revealed to have a financial age of 35, compared to female participants whose money age was 32. This could be attributed to a lack of financial education for women and girls that may have had an impact on women’s financial literacy.
  • 23% of respondents didn’t know when they could start drawing from their workplace pension. As of the 2024/25 tax year, you can draw from your pension at age 55. This is set to rise to 57 in April 2028.
  • 62% of women and 45% of men say they feel unprepared for retirement. This could mean that many people need to retire later than they’d planned, or may enter this chapter feeling financially insecure.
  • 33% of over-55s haven’t ticked off crucial financial planning tasks. This includes creating a will, paying into a pension, seeking financial advice, and upping their workplace pension contributions as they approach retirement.

All of these factors could contribute to less financial prosperity for you and your family.

For instance, if you entered your 40s or 50s without a will in place, passing away unexpectedly could lead to significant financial distress for your family.

Or, if you are unaware of how to make the most of your pension, you could enter retirement without enough saved up to last the rest of your life.

This is especially true during the cost of living crisis, which the Pensions and Lifetime Savings Association (PLSA) says has pushed the annual cost of a comfortable retirement to £59,000 for a two-person household.

With all this to consider, let’s now take a look at three helpful tips for keeping your financial age in line with your actual age.

3 helpful tips for matching your financial age to your real age

1. Assess your financial foundation

The study revealed that many people don’t build a strong financial foundation as they get older. This includes not taking proper estate planning steps like drafting a will, and placing their pension savings on the back burner.

As such, it may help to assess your financial foundation first.

Having a greater understanding of savings, investments, legal documents, debt, and protection may all help you to match your money age to your real one. If you notice any gaps, now is the time to “act your age” and fill them in.

2. Look carefully at the next 10 years

Living in the moment is important, but it’s also essential to look carefully at the next 10 years and ensure you’re financially on track to achieve your goals.

It could help to ask yourself questions such as:

  • What are my most important goals for the next 10 years?
  • Is my life going to change significantly in this time, such as if I retire or become a grandparent?
  • How can I financially prepare for any imminent shifts in my life?

Taking the time to examine your plans for the coming years might help you identify any shortcomings in your existing financial plan. In turn, this gives you the opportunity to align your money age with your actual age.

3. Talk to a financial planner

A financial planner can help you to assess your current situation and suggest ways to improve your financial behaviours over the short, medium, and long terms.

The input of an impartial professional may allow you to gain a fresh perspective on your financial situation, enabling you to match your wealth decisions to the stage of life you are in.

Bespoke financial planning could help you manage your money more effectively

For help managing your wealth over the various stages of your life, email enquiries@prosserknowles.co.uk or request a callback from one of our advisers.

Please note

This article is no substitute for financial advice and should not be treated as such. To determine the best course of action for your individual circumstances, please contact us.

The Financial Conduct Authority does not regulate estate planning or will writing.

A pension is a long-term investment not normally accessible until 55 (57 from April 2028). The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available. Past performance is not a reliable indicator of future performance.

The tax implications of pension withdrawals will be based on your individual circumstances. Thresholds, percentage rates, and tax legislation may change in subsequent Finance Acts.

Note that life insurance plans typically have no cash in value at any time and cover will cease at the end of the term. If premiums stop, then cover will lapse.

Cover is subject to terms and conditions and may have exclusions. Definitions of illnesses vary from product provider and will be explained within the policy documentation.

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