The importance of back-up financial plans

We have take lift off - Apollo 11 Racket representing financial plans

Pensions

Julie Hutchison

20th July 2013 at 1:28pm

Cast your mind’s eye back to those nail biting moments 44 years ago to Sunday 20th July, 1969.

 

The Apollo 11 lunar module, Eagle, had landed in the Sea of Tranquility.

6 hours later, Neil Armstrong became the first man to walk on moon.

Just under a day later, he and Buzz Aldrin planned to blast away from the lunar surface , reunite with the command module Columbia and head for home.

I say planned, but hoped might be more appropriate. When landing the craft, Armstrong had to navigate over an unexpected boulder field, leaving the Eagle with only 20 seconds worth of fuel remaining, enough for only one attempt to escape the moon’s gravitational pull.

Fortunately, all went well and Armstrong, Aldrin and their lesser known teammate Collins returned safely to earth and a heroes’ welcome.

It seems incredible to me, though, that for them the margin between success and disaster was so very slim.  That there was no Plan B for those astronauts if the fuel ran out.

And yet, when it comes to financial planning, in many ways our own lives are very similar.

We might have our retirement planning sorted, but do we have back-up financial plans in the event of unexpected redundancy or sudden critical illness?  Or on a happier note, what is our financial Plan B if our son gets accepted into Cambridge or our daughter announces she’s getting married. When it comes to squirreling something away for a rainy day, little and often is the recipe for success.  Many of you may not even have been born when the first man stepped onto the moon, but for those of us who were, if you had put away just £50 a month into an ordinary savings account from the day Neil Armstrong made his giant leap for mankind, that small step would be worth a staggering £95,800 today. (based on an average interest rate of 5% p.a.)

But it needn’t take anything like as long as that to build up a nest egg. For example, if you had been saving the maximum amount into a stocks and shares ISA over the last 15 years, it would be worth an incredible £121,000 today.

The key is to save what you can afford and save regularly, using whatever tax breaks, like ISAs, that are available.

Start your financial backup plan today and you could have a decent amount put by in just 5 years or so. Imagine how much you’ll have saved by the time Buzz Aldrin reckons the first man or woman will set foot on Mars in 2040?

In the meantime, you can read 10 interesting facts about the moon mission here.

Share your thoughts

Join the conversation and follow us on twitter @StandardLifeUK and Facebook to share your experiences on the subject above.