Planning

What will things cost in the future?

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There's no way of knowing, so it's important to start saving early

There's no way of knowing exactly how much things will cost in years to come. History tells us that some costs may rise faster than the rate of inflation and, therefore, become comparatively more expensive, while others may get cheaper.

Although the increase in house prices seemed unstoppable for many years, over the recession they dropped significantly. In December 2012, the Land Registry placed the average price of a house in England and Wales at £162,080. The price of cars has also been rising at a much more restrained level in recent years.

Planning ahead

What all this tells us is that, without a crystal ball, it's difficult to know how much money you're going to need to pay for the things you want – but it's likely to be a significant sum. So what should you do to meet such expenses?

ISAs are a good starting point for your financial strategy because any income or capital gains you receive from them are tax exempt. There are two types available: Cash ISAs and Stocks and Shares ISAs. This tax year, the overall ISA subscription limit is £11,520, of which up to £5,760 can be subscribed to a Cash ISA with one provider. The remainder of the £11,520 can be invested in a Stocks and Shares ISA with either the same or another provider. Alternatively the full annual ISA allowance of £11,520 can be invested in a tax efficient Stocks and Shares ISA.

There is a range of other savings and investment vehicles that you could use to build up your financial resources. Regular savings accounts, for example, are often considered to give a better rate of interest than some other accounts. There are many other options that also offer better rates, with many offering bonuses if accounts are managed online.

Another way of potentially building your money over the medium to long term is by placing it in an investment fund that offers potential capital growth. This may give you the opportunity to increase your funds at a faster rate than you could with a savings account. With investment funds you're not guaranteed to get your original investment back at the end of the investment period. Whichever route you take, saving is an important part of life these days.

Everyone's circumstances are different and what applies to one person may not be right for the next. The suggestions above are based on a general assumption of each life stage and it is not intended to provide advice or recommendation on your individual financial needs.

The value of investments (and any income received from them) can fall as well as rise and you may not get back what you invested. For some investments this can also happen as a result of exchange rate fluctuations as shares and funds may have an exposure to overseas markets. You should aim to invest for at least five years. Please be aware that the value of tax benefits will depend on your individual circumstances, and tax rules may change in the future.

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Everyone's circumstances are different and what applies to one person may not be right for someone else. The suggestions above are based on a general assumption of each planning event and they are not intended to provide advice or recommendation on your individual financial needs.

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