Personal Finance Review – time to plan!
Personal Finance Review – make the time to plan!
Natalie Wright, Chartered Financial Planner, Mazars Financial Planning Ltd @NWright_CFP
30th January 2018
January is a great time to reflect and make plans for the year ahead so I’ve put together some personal finance tips to help you take stock and look to formulate your own financial plan for 2018:
If you have specific targets for your savings, it makes it easier to build this into your regular spending habits. Try setting up a direct debit to move money out of your account into a savings account (or investment account depending on your attitude to risk and timeframe for using the money) soon after you have been paid so that you start to consider it an ‘outgoing’. If you decide to save money from whatever you have left at the end of the month, evidence shows you are unlikely to save anything, or at least very little.
Personal & Family Protection
We often overlook the most important part of our financial plan – protecting ourselves. Any planning that you put in place will ultimately rely on you being here and being able to work, but what would happen to your family if you were no longer around or you were unable to work because of injury or serious illness? Research carried out by Aviva last year suggests that one in four families in the UK are classed as ‘low income’ and they have less than £100 in savings to cover any emergency needs. In addition, around 51% of women in the UK have no protection in place and therefore no financial safety net for them, or their families. There are many options to consider when looking at what protection is available but it doesn’t have to be complex or expensive, ultimately it needs to be the right thing for your personal circumstances (both in terms of the type of cover and the costs).
One of my previous MMB articles covers this off in more detail: https://mmbmagazine.co.uk/west-yorkshire/blog/protect-prosper-safety-net/
This might sound obvious, but “don’t buy things you can’t afford”. At this time of year we are surrounded by ‘sales’ but are we really getting good value for money or are we simply lured by the promise of a ‘good deal’. Credit cards can be really valuable tools; they can provide an element of protection for online payments, if you can settle the outstanding balance in full every month then there should be no interest and it is a good way to improve your credit rating – just make sure you are using them wisely!
Review Employee Benefits
Do you know the extent of the benefits offered by your employer and are you making the best use of these? All employers in the UK now need to offer a pension scheme for their staff with a minimum contribution level at least in line with the auto enrolment rules; however there are many employers offering in excess of this so if you can afford to put more into your pension on a monthly basis this is important to address, particularly with concerns around the future of the state pension.
Does your employer offer other benefits such as childcare vouchers, additional life cover, cycle to work schemes, gym discounts, financial reviews? There is an increasing focus on employee wellbeing and engagement so there may be ways to reduce what you are already spending through discounted schemes offered by your employer.
If planning for your children’s future is something that worries you (particularly with the increasing cost of University and rising property prices), starting regular savings earlier should ensure that this is less of a financial burden. If for example you receive child benefit, you could invest this money on a monthly basis (or a proportion of it). Even if you saved just half of the £20.70 weekly child benefit payment, you would be able to invest around £41 per month. If we were to assume a conservative return of 3% per annum, this would generate a pot of around £11,700 (before costs or tax) after 18 years!
One of my previous MMB articles covers this off in more detail: https://mmbmagazine.co.uk/west-yorkshire/blog/saving-childrens-future/
Disclaimer: Mazars Financial Planning Ltd are not responsible for the content in the Yolt, Plum or Moneybox websites. The value of investments is not guaranteed, they can rise as well as fall and past performance is no guide to the future.