That never go out of fashion
Every year, an array of new financial products come to the market, aimed to help you reduce tax, earn more from your investments or to retire with more money under the mattress. On the other hand though, there are the good-old fashioned basics of financial planning, that don’t come and go with each tax year or product phase.
Top 10 financial planning tips for life
These are largely habit forming, and if you can get to grips with making these a part of your financial routine, then the rest should follow suit.
Set realistic financial goals
With financial planning, start by understanding where you are right now. Taking an honest look at your current financial position whilst also considering your future aspirations, means you can plot a path from A to B.
Setting financial goals to reduce debt, increase investments, save more, plan for large purchases or retire at a certain age means that you always have a reference to return to. Just make sure that your goals are S.M.A.R.T – Specific, Measurable, Attainable, Relevant and Timely.
Follow a budget
The word “budget” can, for many, conjure up thoughts of complex accounting procedures as well as cutting back, although this doesn’t have to be the case.
Following a budget simply means to compare your income and your expenses to calculate what is left at the end of the day. It is important when following a budget to understand the difference between necessities and luxuries as this will help to prioritise spending.
Respect and build credit
Credit cards are virtually essential these days, however in the wrong hands they can cause financial misery. On the plus side, having credit helps you to build up a credit score, prevents having to always carry cash and they can also earn valuable loyalty reward points, that come in handy for travelling or other expenditure.
Respecting credit is the key though. Pay off your credit card each month and ensure that larger credit transactions are planned, such as a car purchase, or home improvements – this way you can shop around for a low interest rate on a loan, and then budget properly for the monthly repayment.
Keep control of your own money
Sounds an obvious one but if you worked hard to earn the money, at least keep control of how it is being spent; this particularly applies for couples. It isn’t to say that sharing bank accounts or finances is not advisable; it is of course part and parcel of many long-term relationships, however, take a conscious part in the family finances to avoid future risk of not knowing where your money has gone.
Don’t bet on the next big thing
When budgeting, it is essential to work on the reality of the situation, now.
Until the money is in your account, or the next contract signed, it isn’t wise to spend whilst wishing on a star. Stock prices may not double in the timeframe expected, the new job may not materialise, or the house may not sell. Make sure you don’t jump the gun, financially, and leave yourself regretful.
Protect yourself – get insurance
Nobody likes to see insurance premiums hitting the bank each month. However, even more so, nobody likes nasty surprises that leave him or her financially high and dry.
Insurance for the car, home, personal belongings, pets and mobile phone are more or less a given. Don’t forget though life insurance, health insurance, income protection insurance and critical illness insurance as other options to consider. It is just as important to protect your income stream and the ability to pay off long-term debt, in the event of ill health or death.
Don’t ignore retirement – save & invest
Retirement may seem like a long way off, but the sooner plans are started the better chance of building a sufficient nest egg for the golden years when you finish work.
It isn’t necessary to go all-out, retirement plans can start small and build up, for example, opening a savings account or ISA and making regular contributions can be a good start. The important this is not to ignore retirement thinking that you have all the time in the world.
Own your bricks and mortar
Owning your own home is more often than not a way to securing a high value asset and saves lining the pockets of a landlord by renting.
Ensure that your mortgage is competitive and you keep up with repayments.
Having a will is the way
More people in the UK don’t have a will than those who do, which is an alarming reality, as a will defines where everything you own of value goes in the event of your death, including property, valuables and even your dependent children.
It is not uncommon now for the family unit to be more complex. Divorces are common and many people marry again, bringing together sets of children and rearranging property ownership to suit the new set-up. Ensuring you have a say in the inheritance of your personal assets should be a priority.
Think before acting on big financial decisions
Some things are not reversible when it comes to financial decisions.
Once the line has been signed on the loan, for example, you have a legal obligation to make those repayments. When making a key financial purchase such as buying a house or signing a new lease, it is easy to get carried away and let emotions make the decisions. Make sure you have carefully considered all your options and assessed your budget to make sure it’s affordable.
Prepare a financial plan with Darren
If you would like us to undertake a review of your financial strategy and help you to build and protect your wealth using tried and tested methods, call Darren to get the ball rolling.
Tel: 01403 780 770