The start of a New Year is a great time to take stock and make plans for the future. Financial plans often feature high up the list, as people consider how they might make better use of their available resources.
Here we take a look at some of the main areas for consideration.
It is not uncommon for financial circumstances to change on an annual basis, yet having the discipline to review your finances and make necessary adjustments isn’t a step that’s always taken. It may be that your financial liabilities have increased over the past 12 months, or that inflation has hit your budget. Conversely, you may have new income streams, a higher rate of pay or have received an inheritance.
A review of your financial circumstances may prove a positive exercise and it could be that there is more you could be doing to make your money work harder for you.
Review your goals
The past couple of years haven’t panned out as any of us would have planned. This may have prompted many people to review their goals or take a different view on certain aspects of their life. Any significant changes to your life or the goals you have should be carried through into your financial plans so you can be sure you are on the right track.
Make a commitment
Many people put off making financial plans for fear of the unknown, or thinking they are too young/too old/don’t have enough money. However, there is a financial plan and a financial planner suitable for all circumstances.
Make a financial plan
Having an idea of what you’d like to achieve and having a concrete plan in place are two different things.
Once the first step has been taken towards seeking advice and committing to a plan, it is likely that you will feel much better – in control of your circumstances and safe in the knowledge that you are taking steps towards a more secure future.
One way of making it easier to stick to a financial plan is to have a monthly arrangement set up. This might be a regular contribution into a pension or ISA; meaning you know this is being taken care of without having to manually take an action each month. If your income is variable, it may be that you’d prefer to divert an amount each month into a separate (but still accessible) account so you can make lump sum payments at various intervals throughout the year.
Plan for every eventuality
Uncertainty can be damaging to mental stability over the long term and looking for ways to create a more solid foundation can be reassuring. Reviewing the protection arrangements you have in place for yourself and your family is a good step to achieving this. Income protection, life and serious illness cover can provide peace of mind in the event of death or life-threatening illness, limiting the impact to your finances.
If you already have protection in place, it might be worth reviewing to see if this is still appropriate for your current circumstances.
Time your plans effectively
The start of the new year also signals the countdown to the end of the current tax year. From the beginning of January, there are just over three months to go until the start of a new tax year on 6th April. If you are wanting to take advantage of personal allowances, such as contributions to pensions or ISAs, January is a good time to start taking action. If you have a lump sum available, you can make arrangements for this being paid over into the relevant accounts. Alternatively, you may want to look at the funds you expect to have available up until the start of April and plan a series of payments over the three months, to manage cashflow.
The dawning of the New Year is the ideal opportunity to set goals – write them down and hold yourself accountable to them. For help on making a financial plan that’s right for your circumstances, please get in touch.