Financial advice is for the many, not the few
Posted in Financial Planning, Financial Advice on 13.01.20 ReadQuestion: Who needs more help with their money? A millionaire? Or someone getting by month to month?
Of course, it’s a...
Happy 2020 to you!
For many of us, January is a time for reflection and for making resolutions for the year ahead. Perhaps you have resolved to exercise more, take better care of your mental health or spend more time with loved ones?
Most of us would benefit from taking better care of our financial health, so we have put together a handy checklist of the financial planning areas you may wish to look at.
A Will appoints executors to carry out your wishes after death and this can include whether you want to be buried or cremated. If you have family heirlooms that you dearly want to go to specific people, you can set this out in your Will. Importantly, for those with minor children, you can elect guardians for your children in a Will. Without one, it’s possible your children will end up in the care system whilst family members or friends fight for custody of them.
If you have a partner but are not married or in a civil partnership, be aware that under the intestacy rules, your other half is not legally entitled to any of your assets unless this is included in a Will.
No doubt, after the Christmas period, your finances are feeling the pinch. Sadly, too many people in the UK are only one missed paycheck away from financial strife. This could be avoided by having a financial safety net in place. An emergency fund should equal at least three months’ worth of expenditure, ideally six. In other words, if you know you need £2,000 a month to cover all of your bills, you should have at least £6,000 in an emergency fund. Make sure you don’t have easy access to this account, so that you are not tempted to spend it on other things.
We insure our car and our home, but often not our life or our earnings. Consider how your loved ones might cope if you were to die earlier than expected. Would they have enough to live on? Could they pay off the mortgage in full? You may have death in service cover at work, but what if you leave your job, ill before death? Think about buying cover to protect your loved ones.
Equally, how would you cope if you were too sick or injured to work? A type of insurance policy, called an Income Protection Insurance (IPI) policy can be purchased to cover you for this. It pays out a percentage of your usual pay if you were unable to work for a prolonged period of time. Why not speak to an adviser to discuss the level of cover you might need?
Retirement is expensive and the full State Pension over provides about £8,500 a year. For most of us, this is not enough to live on. Even if it is enough to live on, it’s doubtful that you will have a comfortable life on this level of income. Take time to have a look at any work and personal pensions you have in place. Do you know how much this is likely to provide you with when you retire? Have you calculated whether or not this is enough for you? Have you thought about what your retirement might look like, for example? Do you want to travel or take up a new hobby? Don’t delay, check your pension provision today and think about increasing your contributions if you don’t think it will be enough.
It’s no surprise that personal debt levels in the UK are rising. At the moment, debt is cheap, but no one knows how long this will last for. Take steps now to start repaying debt. Start with the highest interest rates first and try to clear as much as you can each month. If you are repaying a mortgage, you can overpay your mortgage to clear this debt more quickly and significantly reduce the amount of interest you will pay over the length of the mortgage term. Always remember to check the terms of your mortgage first though, as some mortgages will charge you a hefty redemption penalty if you overpay when you are not permitted to – or overpay more than you are permitted to.
Wishing you health, wealth and happiness for the year ahead!
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