Financial planning

A personal journey tailored to your unique financial situation and aspirations

Financial planning isn’t a one-size-fits-all process. It is a personal journey tailored to your unique financial situation and aspirations. Without considering your complete financial status and goals, the effectiveness of specific planning elements can be compromised. Here are some main areas to consider when developing a robust financial plan.

Setting your financial goals
Consider your life plans for the next five, ten, and 20 years. Are you on track to achieve these? Depending on your life stage, your goals might differ. Short-term focuses include buying a house, paying university fees or making significant purchases. Medium-term goals can involve tax-efficient investments, retirement planning and more significant spending events. Long-term objectives might include tax-efficient retirement income, estate planning reviews, and identifying Inheritance Tax issues.

Keeping track of your cash flow
Understanding your cash flow is crucial. It provides a clear view of your current assets and future requirements. Incorporating cash flow analysis into your financial planning gives an accurate position of your short-medium and long-term goals. This monitoring keeps you on track with financial returns, inflation, planned changes and any unexpected occurrences. It also allows for the creation of ‘what-if’ scenarios, empowering you to make informed decisions about your finances.

Preparing for unexpected situations
Life can throw curveballs – illness, unexpected death of a partner, financial emergencies or job loss. Preparing for these potential situations can provide security during challenging times. Ensuring that your household has financial resilience in case of such events is essential.

Creating a debt repayment plan
Debt comes in various forms, with mortgages being the most common. A plan to pay off debt is vital for long-term security, whether being mortgage-free or focusing on early retirement and reduced expenditure. As interest rates rise, reducing any debt over a quicker term than previously planned could be financially sensible.

Evaluating and managing risk
Risk can take many forms. It could be family risk should illness strike, job changes, or investment risks. Do your investments align with your risk appetite? Are you aware of how market volatility can affect your investments? With many factors increasing risk, such as the COVID-19 pandemic, global lockdowns, supply-chain disruption, the war in Ukraine, high inflation rates, and rapid interest rate rises, ongoing risk assessment and management are vital to keep your long-term financial plan on track.

Making informed investment decisions
Your investment strategy is critical to any financial plan. A bespoke investment strategy considers your personal outlook and goals, balancing the risks you’re willing to take with the return needed to meet your objectives. It also considers your tax position and maximises your tax allowances. Diversification is key – ensuring you’re not overly reliant on one type of investment, reducing the overall risk of losing money.

Effective tax planning
Your financial plan should consider your current tax position, tax-efficient investments, and savings. It should also plan around your estate to ensure your legacy is passed on as you wish. With many tax bands frozen until 2028, including the inheritance tax threshold band, financial planning must effectively cover trusts, planned gifting, and investments that hold assets outside the estate.

THIS ARTICLE DOES NOT CONSTITUTE TAX OR LEGAL ADVICE AND SHOULD NOT BE RELIED UPON AS SUCH. TAX TREATMENT DEPENDS ON THE INDIVIDUAL CIRCUMSTANCES OF EACH CLIENT AND MAY BE SUBJECT TO CHANGE IN THE FUTURE. FOR GUIDANCE, SEEK PROFESSIONAL ADVICE.

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