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Welcome to our June Newsletter,

It’s not always easy to find the time to review your personal and business finances, but in some cases this can lead to missed opportunities and reduced returns.  We have therefore focused this edition on articles that will provide some insight into how and why it is important to be proactive with your financial matters and highlight potential issues that can be avoided.

In this issue:

•  Why you should review your cash ISAs
•  5 top tips to take control of your finances
•  The potential consequences of not making a Will
•  Are you prepared for 2012?

Why you should review your cash ISAs

Low interest rates are great news for borrowers but for savers, they can have a devastating effect. With inflation currently running far in excess of most deposit interest rates, even though the value of your capital may be safe, you need to keep a close eye on the interest rates you are earning to stop, or at least limit the rate at which the buying power of your money is being eroded.

Nowhere is this more apparent than with Cash ISAs. In a recent survey for watchdog, Consumer Focus, over 80% of Cash ISA holders were found to be earning less than just 0.5% a year on their savings. In most cases, the attractive introductory rates which lured savers in had come to an end and been replaced by very low “standard” rates. In some cases this change had even gone unnoticed.

Whilst it is true that, whatever the conditions in the market, most people should hold at least some money in an easy access, readily available deposit account, simply to make sure they can cover unforeseen emergencies and short term needs, any saver with longer term plans should be alarmed by findings like this. At the very least, you should do a review of the market and see if you can find an account paying more.

In response to the findings, Consumer Focus suggested that: “…customers who have not switched their [ISA] savings may be losing one to two per cent in interest. In total this could amount to as much as £1.5 billion to £3.0 billion per year…” With those potential gains at stake, it is certainly worth shopping around.

5 top tips to take control of your finances

• Create your budget

The starting point for any Financial Plan should be to assess your total income and expenditure  There are many simple templates available online to download or you can create your own document to help you determine your income and expenditure.

It is worthwhile spending time accurately recording all expenses as this can highlight areas where you may be able to make reductions (if you wish to), and it will show you the amount of disposable income available for saving or investing towards future requirements and ultimately your financial freedom.

• Manage debt

Despite the credit crisis we have experienced not all debt is bad and borrowing money can be part of an effective financial plan, however it should be manageable.  The key is to prioritise debt, and ensure that the most expensive debt is paid off first. For example, credit cards often have higher rates of interest than loans, so paying off the credit card debt first is generally a more effective way of managing your debt.

It is good to understand your liabilities and how they fit in to your financial plan. Ensure that you are aware of the rates of interest you are paying, and how long the debt will take to repay. If you are paying more interest than you are achieving on your savings account then it might be appropriate to pay off the debt with the savings (but not with your financial cushion – see below!).

• Have a financial cushion

It is sensible to ensure you have an amount of money available that’s easy to access as a ‘rainy day’ fund that you can use in the event of an emergency. Ideally somewhere between 3 to 6 months total monthly expenditure..

• Plan for the worst

When creating a financial plan, consideration should be given to the things that may happen that could have a detrimental effect on your plan.  Illness, injury, redundancy and death can all have catastrophic effects, but by taking some time to insure for these you can minimise the financial burden.

• Review your plan

Your financial plan should be regularly reviewed to ensure it remains appropriate. Changes to your own circumstances, taxation and the investment market are just some examples of the things that can take your financial plan down a different course.  Regular review should eliminate any nasty surprises.

It is important to seek professional advice to ensure that you complete and review each of the above steps successfully. If you would like any further assistance regarding these steps, please contact us.

The potential consequences of not making a Will

People don’t like thinking about dying or the effects it can have on those left behind, but, to avoid families being heartbroken and businesses being ruined, writing a Will, with qualified help, can save untold heartache and distress.

Writing your Will can save the people you care for from disagreeing about what they think your wishes would be.  It’s natural for you to want your property and assets to pass to those you choose and making a Will ensures this will happen.

Circumstances change and family relationships become complex.  This is modern-day living.  What you expect to happen to your estate after you pass away may not be the case if the settlement is left for the law to decide.

Writing your Will can bring peace of mind and prevent unnecessary problems later.  It ensures that your possessions go exactly where you want them to, safeguarding your family and your children.
Making the decision about who gets what is tough enough, but making no decision at all can tear your family apart.

There are many misconceptions when it comes to Wills and Inheritance:-

• Did you know that without a Will your husband or wife is not necessarily entitled to inherit everything from you?
• Did you know that without a Will step children are not entitled to receive anything?
• Did you know that your holiday home abroad is not covered by your UK Will?
• Did you know that by writing a Will you can save Inheritance Tax?
• Did you know that if you have appointed a professional Executor within your Will, a massive 3% of the value of your estate could be taken in fees?

To create your first Will or review your existing one, click here to arrange a free, no obligation meeting with Will expert Eleanor Betts of Think Wills & Probate Ltd.

Are you prepared for 2012?  (and we’re not referring to the Olympics….)

Research has shown that 66% of employers believe their employee benefits package helped to attract and retain their staff (*employee benefits 2010).  Yet in the online survey we ran last December more than a quarter of those who responded, indicated that the overriding reason they did not offer employee benefits was due to cost.

However with the Government’s Pensions Reform legislation coming into effect next year, all employers will be required to enrol their employees into a qualifying pensions scheme and contribute a minimum of 3% of their salary* into that scheme.

The timing of this new law couldn’t be worse, coming as it does in the wake of the most serious economic crisis we’ve seen in decades.  However, being prepared is half the battle so we’ve created a Pensions Reform 6 Point checklist which, if followed, will help to ease the pain and get you well on the way to compliance in 2012.  Please click here to request your copy of the Pensions Reform 6-Point checklist.

* For the purposes of the Pensions Reform regulations, salary is defined as ‘Qualifying Earnings’.  For more information please download our Pensions Q&A Factsheet for Employers.