Integral to all financial planning is having a plan written down on paper (or a handy computer sheet). For some, writing down a financial plan may be seen as a chore, or simply too difficult because the future is unknown. It’s true that life can be unpredictable and real life can complicate even the best made plans, but without even a basic plan there is a danger you could end up just financially drifting, simply hoping for the best.
Ultimately your financial plan should be about making the most of your life. We all know we are going to die one day, so why not aim to ensure that you have lived your life to its potential, and have done all the things you set out to do? A strong financial base will give you the freedom to make choices for you and your family.
Here are some ideas to hopefully inspire you to begin some financial planning:
Making a start, whatever your age
Research undertaken this summer shows 34% of UK adults are not saving for the future. This is a worryingly large proportion of UK adults who admitted to having no savings at all, which could be disastrous for themselves and their families should they lose their income in the future. Ask yourself how long would your lifestyle last if you lost your income? Would you have enough put by to cope with an emergency?
The state can’t afford to provide for you
People tend to believe, wrongly, that the state will provide for them. As our population continues to age, the ratio of working people to retired will only get worse. This means that there will be fewer people available to pay for retirement benefits and so less money in the pot to pay for these benefits. You may also need to question the likely amount of state help. Would you be able to live on this amount when you get to retirement? What would you have to give up?
Debt is robbing from your future
If you have debt, then it is both impacting your financial health now and is stopping you from saving for your future. Many people use debt to fund their existing lifestyle, which only serves to make profits for those lending money.
How much money do I need to retire?
Obviously this depends on your expectations in retirement. You need to think about your likely expenditure requirements on a month by month basis. You then should factor in additional capital needs, e.g. home repairs, change the car and other unforeseen emergencies. Then you need to consider where this income will come from. Will it be from accumulated savings and investments, Pension policies, Buy to let portfolio or from other assets?
What all this means is that the traditional plan for retirement no longer applies. We are more active, and live for longer; therefore we need more money and probably want more flexibility.
Financial planning is about breaking your financial life into manageable chunks so you can make progress in all of these. Your plan will allow you to prioritise your needs, so that the most important are dealt with first. It starts with a piece of paper and a discussion with your family about what you want in life and how you can achieve it.
Want some help? Look for a financial planning firm, where they work closely with clients to develop and maintain their financial plans. At Berry & Oak we have one clear aim – to help our clients do all of the things they want in life without the fear of running out of money.
Source: The Savings survey by Teachers Assurance was carried out by independent research specialist Opinion Matters and questioned more than 2,000 UK adults. Full data found here:
https://www.teachersassurance.co.uk/documents/2014/08/savings-survey-2014.pdf
