The mention of financial planning can make some people’s head spin. They either think it is complicated or unnecessary. However, having a financial plan in place can help you plan a route to achieve your financial goals and build a ‘pool’ of money that can be used to cover any unforeseen expenses. A financial plan can also lead to a more efficient use of your money and increase your returns.
This article does not constitute advice. Professional advice should be taken prior to acting on any part of it.
Why you need a financial plan in 2018
You may class yourself as a ‘live in the moment’ type of person. This is great, but there could be times when you wish had planned a little more. For instance, if you own a property portfolio, you could see yourself having to pay 100% council tax on any empty properties that you own.
It is predicted that property prices in specific areas will continue to rise throughout 2018. If you are looking to buy your own property or have children or grandchildren who are hoping to purchase a property, investing your money wisely now could help you put down a bigger deposit later on.
Benefits of a financial plan
Whatever your financial goals are, having a clear and well thought out financial plan can help you achieve them. A financial plan can also help with:
Budgeting
If you frequently find that you are having to rely on your credit card to get through to pay day, setting out details of your income versus all your outgoings will help you manage your cash flow and identify areas where money could be saved.
Debt management
The UK’s credit card debt has increased again. In September, unsecured credit rose to £1.6 billion. The Government is concerned that this is becoming a national crisis.
Spending on a credit card is fine, as long as you can clear the balance each month. If you are concerned that you are spending a little too much on credit cards, a financial plan can help you devise a plan of action for paying off your debt.
Simplifying your investments
Most people build up their investment portfolio over a number of years. It is regularly done in a sporadic method. For instance, a friend or colleague may mention an investment opportunity and you decide to invest in it. A financial plan can help streamline your investments, make them easier to manage and possibly increase your returns.
Protection for your family
Using a financial plan to organise your income and outgoings will identify areas where shortcomings may exist. For example, if you bring in the bigger income, would your partner be able to cover the mortgage if something were to happen?
It is important to address such issues and put adequate protection in place.
What to include in your financial plan
When it comes to putting together a financial plan, there are certain things that you should include. These are:
- a list of all incomings and outgoings
- a list of all assets, such as homes, cars, business properties
- a calculation of your wealth, including pensions, investments
- a summary of your financial goals that have been put together using the SMART system – Specific, Measurable, Attainable, Realistic & Time based
- alternative courses of action
Financial planning for you and your family
Dental & Medical Financial Services have been helping doctors and dentists with improving their financial position for over 25 years.
Tel: 01403 780 770