Financial planning

Feeling lost? Let’s make a map

It seems these days whenever we switch on the TV, turn up the radio or scroll through our phones it is hard to escape the doom and gloom. With the cost-of-living crisis and threats of a recession, it feels as though there is a lot to worry about. While a lot of these wider economic issues leave us fretting about big problems that can seem out of our control, not knowing what is around the corner can leave you feeling a little bit lost. I find it helps to sit back, take a look at where you are and, with guidance and ongoing advice, we can help make sure you are heading in the right direction.

8 November 2022

Where am I?

It might sound obvious, but something as simple as sitting down and creating a spreadsheet of what you have and where it is can really help to demist the brain fog and bring clarity to your own finances.

I know I, like many others, can be guilty of losing touch with my finances. Whether it is moving jobs, moving pensions, different bank accounts for current accounts, savings accounts, mortgage accounts, fixed rate deposits, individual savings accounts (ISAs), Junior ISAs, etc., it can all be tricky to keep track of.

One facility that could help is HMRC’s pension tracing service www.gov.uk/find-pension-contact-details. You will need the name of your employer/previous employer or pension scheme provider and HMRC can help you to locate a ‘lost’ pension scheme.

However, through a financial planner and, with your authority, we can take the stress out this process by approaching any provider on your behalf to collate key information to help you understand what assets you hold and how best to use them.

 

Where am I going?

Once you know exactly where you’re starting from it is much easier to plan where you are going. So have a think about what it is you want to achieve and when.

Whether it is saving for a holiday, your first home, your children’s education or retirement, your financial planner can help you focus on the key destinations, prioritise your objectives and offer a friendly face to direct you.

 

How do I get there?

There is a plethora of tax-efficient investment options, including tax-relievable pension contributions, ISAs, Venture Capital Trust investments, etc. Sometimes explained in incomprehensible jargon it can feel like reading signposts in a foreign language. However, a financial planner can help you to translate this information and plan your route.

I also find that cash flow planning can help to build visibility and mitigate any potential traffic you may find en route. There is an abundance of technology through banking and budgeting apps that can help to organise your outgoings by categorising your transactions into useful bitesize reports so you can see how much you are spending and where. This can identify areas to reduce spending or build additional savings.

For those in pre-retirement, your pension scheme provider will issue an annual illustration, based on a number of broad assumptions, to show the potential of your pension scheme value at retirement based on your contributions. This is a valuable tool to consider what level of retirement income this could support and whether this will be enough to meet your expectations.

However, talking to an expert financial planner can help you bring this together and, along with an assessment of your views on risk, build a suitable and bespoke route to your destination.

Whether it is targeting £1,000 for a holiday next year or £1 million pension savings over 30 years, you will need to know how much to save corresponding with the level of investment growth needed to achieve your required goal. Your financial planner can work with you to build a cash flow forecast to give you the tools to get you where you need to be.

 

What if I go the wrong way?

Sometimes life does not always go to plan and you may need to take a detour. Thinking about the fallbacks such as emergency cash funds and insurance can help to bring peace of mind in knowing that even if you have to change your route, there are safety barriers in place to help keep you on track.

As with cash flow planning, it is important to consider stress-testing – have you got access to enough cash in the event of an emergency? Through gaining a full understanding of your spending and budgeting, this can help you to envisage what level of emergency funding to set aside if, for example, you were unable to work.

While many employees may benefit from workplace income protection insurance, it is worth reviewing what (if any) deferred period may apply before the plan would pay out and looking to ensure you have sufficient emergency cash to support you and your household through this period.

Working with a financial planner can help to provide security and commitment to your direction of travel through suitable insurance to cover yourself and your loved ones to minimise the risk of running off course.

No two journeys are the same and whether you are wanting to get from A to B in the quickest time possible or prefer to take the scenic route, with the assistance of a financial planner we can help to get you where you need to be – just think of us as your trusty sat nav.

 

This article has been written by Roise Marlow, Senior Paraplanner

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