10 Financial Planning New Year’s Resolutions
Posted by jdavis on December 31, 2015
Around 50% of us make New Year’s Resolutions and ‘sort the finances out’ is, in fact, one of the most popular. However, it's a little vague – it’s more a wish than a firm commitment to take action.
Here are the issues which most often arise. If you are intending to sort out your finances, these may give you some food for thought.
1. Sort out the mortgage
The mortgage is the biggest monthly expense for the vast majority of people, and making sure that the rate you’re paying is competitive is basic common sense. Many people are paying a higher rate than they need to and half an hour with an independent mortgage broker (not us!) can be time very well spent. Yes, there are costs involved in moving your mortgage, but these can often be outweighed by the savings to be made.
2. Sort out our life cover
This is an absolute priority, especially if you have children. Many people don’t know the answer to questions like
‘How much life cover do I need?’
‘How much do I have?’
‘Does it include critical illness cover?’
No-one likes to think about the possibility of being seriously ill or dying, and therefore we tend to neglect our protection policies. Life cover can be surprisingly inexpensive: and even if you do have cover in place, make sure you have it checked on a regular basis. In many cases the cost of protection is continuing to fall and it may be possible to replace old policies and increase the amount of protection you have, without increasing your premiums.
3. Start saving for the children
However much you’ve just spent on Christmas presents, your children are going to cost you a lot more in the future. Whether it’s university tuition fees, a first car, your daughter’s wedding or the deposit on a house, the numbers are only going to go one way. Even if you only save a small amount, doing it on a regular basis over a long period can make a significant difference – and with the ability to save tax efficiently through an ISA, at least the taxman will be on your side.
4. Start saving for ourselves
What’s true for the children is equally true for yourself; if there’s a specific savings target you have in mind, or whether you simply need to save for the proverbial ‘rainy day,’ the earlier you start to save the easier it is to achieve your goal.
5. Sort out my pensions from previous employment
Many people have pensions left over from previous jobs, and despite various Government initiatives aimed at simplifying the system they still don’t have an accurate idea of how much is in their pension ‘pot’. Good pension planning is impossible without knowing the position you’re starting from, so it’s a sensible idea to talk to a Chartered Financial Planner and find out the position with any old pension policies. For example, can they can be brought together and simplified?
6. Sort out Income Protection insurance
Particularly if you are self employed or an executive without such cover, how will you pay the bills if you fall ill long term and cannot work or earn? IPI will pay them, right up to normal retirement, if necessary.
7. Investigate Inheritance Tax and Long Term Care
If it’s the case that your parents are elderly, then it may be worth thinking about Long Term Care planning. Similarly if their – or your – estate is likely to be subject to Inheritance Tax, then action taken now could pay significant dividends in the future. Again, a Chartered Financial Planner will be able to tell you what’s possible, and the steps that could be taken now to prevent an unpleasant surprise in the future.
8. Look at Private Medical insurance
Many people look at the option of private medical insurance. This may be an investment worth making, particularly if you run your own business and would need treatment at a time to suit you. A Chartered Financial Planner, who has access to insurance products across the board, can obtain low cost cover - which is essential for the self employed.
9. We need to sort out the partnership insurance
Many businesses are run as a partnership (whether it’s a straightforward partnership or through equal shares in a limited company). The death or serious illness of one of the partners could have catastrophic consequences for the business – and serious implications for the other partner. And yet very few businesses have addressed the simple question of partnership assurance. Your Chartered Financial Planner will be able to explain the basic rules to you and give you an idea of what protection might cost: you may well be pleasantly surprised!
10. We need to make a will
Last – but by no means least – make sure that you have an up to date will. The consequences of dying ‘intestate’ (that is, without a will) can be severe, and with a simple will being relatively inexpensive it’s sensible to make sure that this area of your financial planning is kept up to date.
So there’s plenty to think about… If you would like to discuss any of the above points – or any other aspect of your financial planning – then as always, please don’t hesitate to contact us.