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26th November 2012

Today is the start of National Financial Planning Week and we have put together a set of useful top tips according to which stage of life you’re at, giving you lots of information and tools that you can use straightaway and for free.

First, decide which life stage applies to you, then click through to read our top tips to help you get on top of your finances:

· Young free and single

· Settling down and making commitments

· Starting a family or have a young family

· Empty nest and thinking about retirement

Lastly, we have listed the ten benefits of using a financial adviser

Young Free and Single (or a concerned parent of someone who is!)

Whether you’re a student fresh from further education or you are about to embark on your career, now is the perfect time to get into the habit of planning your finances. Good habits created now will set you up for a lifetime and will go a long way to helping you afford the lifestyle you want to achieve.

Top tips

1. Work out your budget

Work out how much money you have and how much of it you spend each month. Write a list of all your bills and outgoings, including money you spend on socialising, clothes, hobbies, eating out, taxis, etc. It can be a sobering exercise once you realise how much you’re actually spending each month, particularly on discretionary items, but gives you the foundation on which to build your financial future.

2. Start small….

Start putting a small amount aside each month. It doesn’t matter if you can’t afford a lot as even a little can mount up over time. It is as important to get into the habit of regular saving as it is the amount you actually save.

3. Set yourself a goal (or two…)

Do you want to go on holiday or buy a car? If so, keep this in mind and use it as an incentive to work to.

4. Make a plan and stick to it

With your goal(s) in mind, you can create your own plan to reach them. The Citizens Advice Bureau have a useful online budgeting tool which enables you to work out how much money you need to save and allocate yourself the timeframe in which to do it.

5. Use credit wisely

Credit cards can be a great way of paying for purchases and borrowing money, however they can easily lead to problems if you don’t fully understand what you’re getting into.

We found this useful credit card guide from Defaqto which lists all the various types of credit cards and includes 10 top tips for managing your credit card(s).

If you’d like some assistance with your financial planning please give us a call on 01926 651122. You may find it helpful to read this useful article, ten benefits of using a financial adviser.

 

Settling Down and Making Commitments

At this stage in your life you’re settling down and starting to make some personal and financial commitments. You may be getting a place of your own and perhaps moving in with friends or a partner. You may even be getting engaged or married. Whatever your circumstances, this is an important stage in your life and your finances need to reflect this.

Top Tips

1. Work out a budget

Set aside 30 minutes and work out how much you’re spending – include all your bills, accommodation costs and what you spend on every day living and socialising. You must be realistic here so be honest with yourself!

2. Make a spending plan

Write down your goals (short, medium and long-term) and include the costs and timescales. Again, be realistic.

3. Develop a habit – the savings habit!

Build regular saving into your budget and work out your saving options. Ideally you should aim to get at least 3 months income saved for emergency use first, particularly if you are a homeowner. The easiest way is to put a percentage of your earnings aside every pay day; you won’t miss what you haven’t seen, and even if you start with just 1% of your net pay this will build up over time. The important thing is to start somewhere.

4. Deal with debt

It’s unlikely that you can avoid debt altogether so just try to avoid bad debt, for example borrowing money at very high rates of interest, excessive credit card debt, and so on. If you have current debts use this debt test calculator to work out where you stand.

5. Don’t forget the long term

You may think you’re too young to consider a pension and pressures on your budget may make it tempting to postpone contributing to a pension, but think again. It’s really important to begin saving for your retirement and if you start early, even a small regular sum will have the chance to grow significantly.

Check out your pension options with your employer first and maximise these if possible. If your employer doesn’t currently offer a pension, by 2016 they will be required to do so by law, but it is well worth considering setting up a personal pension in the interim.

6. Plan for the unexpected

Illness, accident and redundancy can have a huge impact on your life and your finances. Check with your employer as to what provisions you would be entitled to in any of these circumstances and then work out the impact this would have on your budget and every day living. You may need to consider insurance to provide you with, for example, a regular sum if you are incapacitated for a long period. Common options include income protection and critical illness cover which would provide you with much needed funds in the event you become ill and were unable to work.

Now is also the time to consider making a Will to ensure your wishes are carried out should you die prematurely. If you die intestate, in other words without making a Will, the State will decide how your assets are allocated which could be entirely different to your intention.

Did you know…. 58% of UK adults don’t have a Will.

Source: Datamonitor, Financial Services Consumer Insight Survey, June 2011

If you’d like some assistance with your financial planning please give us a call on 01926 651122. You may find it helpful to read this useful article, 10 benefits of using a financial adviser.

Young Family or Starting a Family

Having a family is life changing and will have a huge impact on your finances. There are so many issues to consider and getting proper financial plans in place is essential. The Parents Guide to Money is a good starting point and is full of useful information. Below are some more useful tips to help you on your way.

Top Tips

1. Work out a budget

Be clear about how much of your income is spent on bills, accommodation costs, everyday living and non-essentials. This basic step forms the foundation for developing your overall financial plan.

Try this useful online budgeting tool which will also give you a percentage breakdown of your spending per category eg household bills, living costs, travel and leisure.

2. Claim all your benefits

Make sure you claim all the benefits that you’re entitled to. You can check by going to the Direct Gov Benefit Advisor to determine what benefits you’re entitled to.

3. Protect what’s important to you

Illness, accident and redundancy can have a huge impact on your life and that of your family. Check with your employer what provisions you would be entitled to in any of these circumstances and then work out what impact this would have on your budget and every day living. Consider what insurance you may need and how much. For instance, income protection will provide you with a regular sum to help with household bills if you were to be incapacitated for a long period.

Also, if you have life insurance in place, consider setting the plan in trust. This has a number of advantages which, in the event of your death, would ensure the payout was subject to less tax, the proceeds would avoid the probate process and would be issued much more quickly, and it ensures proper management of the funds for the benefit of your beneficiaries.

Lastly, it is important to check your death benefit nomination form on your death in service and pension policies to ensure this still reflects your wishes.

Did you know…

• 56% of people don’t have life insurance
• 87% don’t have critical illness cover
• 90% don’t have income protection

Source: Datamonitor, Financial Services Consumer Insight Survey, June 2011

4. Make a spending plan

Write down your goals (short, medium and long-term) and include the costs and timescales. Having a family will cause your spending habits to change over time so it’s worth having a look at this useful baby costs calculator.

For more useful articles click through to the Having a Baby section on the Money Advice Service website for a wealth of related information and tips.

5. Make a Will

It’s essential that you make a Will, or update your existing Will, to ensure your wishes are carried out should you die prematurely. If you die intestate, in other words without making a Will, the State will decide how your assets are allocated which could be entirely different to your intention. Did you know that unmarried couples have no automatic rights to the other’s property on death? Even if you are married, without a Will in place your surviving spouse may get less than you had intended.

Did you know…. 58% of UK adults don’t have a Will.

Source: Datamonitor, Financial Services Consumer Insight Survey, June 2011

If you’d like some assistance with your financial planning please give us a call on 01926 651122. You may find it helpful to read this useful article, 10 benefits of using a financial adviser.

Empty Nest and Thinking About Retirement

Once your children are grown up and/or have left home, you may be thinking about your retirement and what to do when you finish working. If so, now is a great time to review what you want out of life and how you can achieve it. Making sure your finances meet your goals is crucial, and having your financial plans properly in place will give you peace of mind that you’re really in control of your money.

Top Tips

1. Work out your goals and your budget

Work out what you need, not only for the present but for your retirement too. If you know how much you will need to live the life you want, then you can work out a plan to get there. Click through to this free online retirement income calculator to get an idea of how much income you may get during your retirement.

Did you know….. Men tend to retire in the winter and women tend to retire in the summer.

Source: Saga June 2012

2. Review your existing assets and work out your net worth

Draw up a schedule of all your assets including their current values and work out what your assets are worth in total, less your liabilities. Identify the shortfall between this and the amount you need to achieve your goals and then work on accumulating that additional money through saving.

3. Boost your retirement income

You may still have time to boost your pension in which case you have three main options:

. Top up your pension savings, whether by adding to an existing scheme or starting an additional one. Maximising your pension contributions in the years before retirement brings an immediate boost in the form of tax relief, particularly if you are a higher-rate tax payer.

· Delay the date on which you’ll start taking your pension income. This gives you more time to contribute to your pension and more time for your fund to grow (although you may need to think about how it’s invested to reduce your exposure to a fall in investment values). Annuity rates also increase as you grow older, so if you delay retirement you stand to get a better pension income, subject to overall annuity rates not falling.

· Maximise your state pension. If you reached State Pension age on or after 6 April 2010, then you would need to have completed at least 30 qualifying years of National Insurance contributions (NICs) to recieve the full basic State Pension. If you had fewer qualifying years, then your pension entitlement will be proportionately lower. But you may be able to fill in some gaps in your NICs history by making voluntary contributions. Normally you must make the top-up payment within six years of missing the original payment, although there are some exceptions when you can buy years further back.

If you’re not sure whether you’re on track to have made the National Insurance contributions needed to get the full basic State Pension, you can request a State Pension forecast which may help you decide.

4. Update your Will

It’s important to keep your Will up to date to ensure that your wishes are carried out. If you don’t already have a Will, it’s not too late and should be straightforward to put in place unless your financial affairs are particularly tricky. If you die intestate in other words without making a Will, the State will decide how your assets are allocated which could be entirely different to your intention. Unmarried couples have no automatic rights to the other’s property on death and even if you are married, without a Will in place, your surviving spouse may get much less than you had intended.

Did you know…. 58% of UK adults don’t have a Will.

Source: Datamonitor, Financial Services Consumer Insight Survey, June 2011

If you’d like some assistance with your financial planning please give us a call on 01926 651122. You may find it helpful to read this useful article, 10 benefits of using a financial adviser.

Ten Benefits of Using a Financial Adviser

Everyone can benefit from Financial Advice. Not only can it help you protect and build your assets, it can help secure you and your family’s long term future.

No 1: Protecting your family

Financial Advisers will assess your current position and guide you through the best options to protect yourself and your family – regardless of your age and circumstances. Whatever your needs, an adviser can help ensure a personal crisis does not turn into a financial crisis.

No 2: Help in planning your saving – and spending!

To secure your long-term future, you need to build some assets to get you through the rainy days and to pay for holidays and luxuries. Step one is to plan your spending so that you begin to save – and step two is to plan your saving so that you can build your wealth as efficiently as possible.

No 3: Helping you plan for retirement

Once you have sorted out your short-term saving needs, you can then start thinking about the long-term – and most people these days realise they cannot rely on the State for more than the absolute basics. However, planning for retirement is a complex business and there are many different options available. A financial adviser will not only help sift through the many rules and product options but also help construct a portfolio to maximise your long term prospects.

No 4: Securing your house

The mortgage market was complicated enough already with its discounts and variables, AERs and caps, indemnities and early redemption fees. Then the credit crunch hit and things have got even worse. However, buying a house is still one of the most expensive decisions we make, and the vast majority of us need a mortgage. A financial adviser could save you thousands, not only can they seek out the best rates, they can help you assess sensible levels of borrowing, make the most of your deposit and possibly access lenders who would otherwise not be available to you.

No 5: Helping you meet your investment goals

As you progress through life, you begin to build your assets and your income begins to increase. You then start considering how you can enhance your position rather than simply consolidate it. This could mean anything from looking to retire early through to paying school fees for private education or investing in overseas property. A financial adviser can help assess what is realistically possible – and put the best plan in place to help you achieve it.

No 6: Finding you the right combination of assets

Investment is as much about protecting the potential downsides as it is about targeting maximum growth. High returns are often associated with high risk. A financial adviser will make a detailed assessment of your attitude to risk before making any recommendations. They will also ensure you don’t put all your eggs in one basket by helping you diversify your investments.

No 7: You get an objective assessment

Every new product or investment opportunity is accompanied by hype, proclaiming it is the best ever – but that does not mean it is right for you. Investors the world over have been caught out by market bubbles or high charges because they don’t take a step back. A financial adviser knows how products work and can outline the downsides for you as well as the benefits. Between you, you can then make a more informed decision about what hype you can believe – and what products you really need to avoid.

No 8: Saving you money

Once your risk and investment assessments are complete, the next step is to look at tax and even the most basic overview of your position could help. It may simply mean using ISAs or a pension plan to benefit from Government incentives or it could mean choosing growth assets over income to use capital gains allowances rather than pay income tax. Alternatively, for more complicated arrangements, it might mean moving assets to your spouse or children to make full use of their personal allowances. A financial adviser will always have your tax position in mind when making recommendations and can help point you in the right direction even in complicated situations.

No 9: Keeping you on track

Even when you have every product you need taken care of and your investments are set up and running to plan, someone needs to keep an eye on them to ensure your overall financial plan remains on track. You can ask a financial adviser to do this monitoring work for you, they will also ensure that your asset allocation does not get distorted as markets move and help you consolidate gains as the dates of your ultimate goals approach.

No 10: You have peace of mind

Money is a complicated subject and there are many things you need to think about to both protect it and make the most of it. Markets are volatile and the media is prone to exaggeration of both the risks and the rewards. Employing a good financial adviser can take the emphasis away from you and move it into the hands of an expert. Whether you need general, practical advice or a specialist with dedicated expertise, the money you invest in taking advice ought to be paid back many times over in the long term.