Whether you are a millennial gazing out over the larger part of your (hopefully) long life or someone for whom retirement is just around the corner, it can never be too early or too late to produce a financial plan.
The truth is that, with people living longer, and with life seemingly ever-more complicated and expensive, we all need to work out whether our money will last for our lifetime. Whilst none of us knows for certain how long we have got left, we can predict with absolute certainty that our circumstances will change in ways that we had not foreseen. Any plan, therefore, must be both realistic and adaptable.
Every life contains milestones, or targets. For some, the key milestones may be to marry, buy a house and have children. For others, we could be talking about paying for your daughter’s wedding, saving for a holiday, a holiday home, a nice car or just having enough money to be able to retire and live out the rest of your life in comfort. Whatever your goals, you will have to plan to make them happen. You have to take control.
So, what are the top five tips to successful financial planning?
- Identify your targets and then assess your financial situation – start by comparing how much money you have coming in each month with your known outgoings, omitting nothing (annual insurance premiums, for example, which can so easily be forgotten).
- Analyse your outgoings to see if they can be reduced. For example, do you have any direct debits that can be cancelled – like, say, that gym membership that you never use?
- Calculate what you could afford to put by each month into some form of savings or investments. Compare this figure with what you have set as your targets, then set aside a regular sum of money each month – say, 20% of your monthly salary, adjusting the actual sum upwards if your wages increase.
- Put your money to work. Explore the different savings and investments options available to you, taking into account the level of risk involved and the level of risk that you are prepared to accept in order to earn higher returns. You can also use surplus money to pay off or reduce debts, which is another way of saving. Examples range from savings accounts, tax-free ISAs, the new Innovative Finance ISAs, pensions, bonds and stocks, and other types of investment such as property.
- Review your plan regularly – circumstances and your goals will change as you progress through life. If you have achieved one or more of your original targets, find others and move on with a clear plan.
To help you deliver on your plan, don’t be afraid to seek expert advice. Regulations and tax laws are subject to frequent change and we live in an age when exciting new opportunities are becoming available for those prepared to consider alternatives. Stay ahead of the game by talking to those in the know.
Get in touch
For more advice and to get started with your own financial plan, give me a call on 01483 205890.