6 Top Financial Planning Tips

1. Make time for establishing your financial goals

Sometimes people don’t make the necessary time for financial planning; instead hoping things will fall into place. However, just as people make plans and set objectives in the workplace, applying this approach to your finances can be hugely beneficial.

Establishing your short, medium and long term goals is a useful exercise that will make what you’re hoping to achieve crystal clear. This may involve looking at what large purchases you expect to make such as purchasing property, or renovating your home as well as considering the later stages of life and when you’ll retire. It’s best to discuss your goals with those you’re closest to and make plans together so that you are well aligned.

2. Evaluate your current financial position

An honest evaluation of your assets, liabilities, incomings and outgoings will provide you with a starting point. You’ll be able to see clearly how you’re doing and may find areas you can improve on. One example is debt which can often have high interest, so you may decide that now is the right time to pay it off.

Risk protection plays a vital role in any financial plan as it helps protect you and your family from unexpected events. You should ensure you have adequate protection that, if needed, can help your loved ones in the case of an emergency.

3. Check you’re using all of your tax allowances

Utilising your tax allowances and reliefs is an effective way of reducing your tax liability and making considerable savings over a lifetime. The UK tax system is complex and its legislation often changes, so it’s best to work with an adviser who can take care of your tax planning. They can ensure you’re making the most of tax allowances, so you don’t end up paying more than you need to.

4. Create a financial plan

At this point, you’ll have a good idea of what your goals are and where you currently are. The next step is to plan for where you want to get to, which will likely involve looking at how much you need to save and invest on a regular basis to achieve your goals. A financial adviser can help to make recommendations on the ways you can invest your money across the most suitable asset classes for you. There are other elements to include in your plan: putting in place a will to protect your family, thinking about how your family will manage without your income should you fall ill or die prematurely, or creating a more efficient tax strategy.

5. Plan for retirement

Retirement is a time that many look forward to, where your hard-earned money should support you as you transition to the next stage of life. The number of options available at retirement has increased with changes to legislation, which has brought about pensions freedoms over the years. The decisions you make regarding how you take your benefits may include tax-free cash, buying an annuity, drawing an income from your savings rather than pension fund, or a combination.

Beginning your retirement planning early gives you the best chance of making sure you have adequate funds to support your lifestyle. You may have several pension pots with different employers, as well as your own savings to withdraw from.

6. Monitor and review your financial plan

There is little point in making a plan and never returning to it. You should expect to make alterations as life changes. Set a formal yearly review at the very least to check you are on track to meeting your goals. Meeting with a financial adviser for this is highly beneficial as they can provide an objective third-party view, as well as the expertise to help advise you with financial planning issues. 

If you would like help to create or review your financial plan please get in touch to arrange a free initial meeting.

The value of investments and pensions and the income they produce can fall as well as rise. You may get back less than you invested.