Covid-19 has highlighted our collective, deep-seated insecurities – fears personal and financial and confronted with our own mortality it is no wonder that we are worried about the future. This applies to all of us, whether we have our 'affairs in order' or whether we might struggle with a major unexpected bill.
In spite of the current uncertainty, now is absolutely the time to examine the big picture and fill in any gaps. By taking charge of your financial path you can ease some of that worry about the future and gain momentum.
1. Cashflow – money in, out and when.
Factor in any savings and investments, taxes, debts such as cards or mortgage. All that basic info will give you a great insight into your present situation. If you know where you are right now you know whether you are headed towards or away from your goals.
Nobody likes to admit it but it is crucial if you want to get ahead. Whether you love a good spreadsheet or prefer a pen and paper – just do it! Regular reviews of your monthly in and out flows and the type of expenditure (need versus want) do come into their own when assessing your objectives.
3. Emergency Fund
Now you know where it all goes you can ensure that you set aside an amount for three or ideally six months worth of expenses. Not everyone has the ability to do this however with careful planning you can save a little every month and it will soon add up. If you do your budgeting right (see #2) you will have your own crisis fund. The only caveat being: put it into a separate savings account or ISA and do not touch it – that's the secret!
Top up your pension or consider switching funds. If you can afford it now is an excellent time to increase your contributions. Even a minor increase in contribution, say 2% will make a difference in the long run. If appropriate your Independent Financial Adviser may recommend switching funds to maximise recovery if you have less than 10 years to retirement.
If you have more than 10 years you can take advantage of the market volatility as in the long run you will reap the benefits. Tax reliefs on contributions mean you effectively receive 'free money' to help compensate for any investment losses.
Please contact us to discuss your options.
5. Estate Planning
Often the elephant in the room, don't leave it until it's too late! Review your Will – is it up to date and reflects your current wishes? Are any Trusts in place still advantageous and tax-efficient? Lasting Power of Attorney registered and valid? It takes a few moments to check your documents and will make a world of difference. If you have no plan in place or don't even have a Will (yikes!) contact us immediately.
Insurance is something we all need but don't like to think about...for very little money you could and absolutely should get a cover appropriate for your needs. Life cover is a bare minimum that would make a massive difference to your loved ones. Add a critical illness and you as well as your family will be taken care of. And if monthly income instead of a lump sum is preferable then family income benefit fits the bill. Finally, income protection in the event of a job loss is the ultimate in peace of mind.