Many people are too busy working and living their hectic lives to reflect as often as they should on their short and long-term financial plans. Creating and regularly reviewing a well-thought- out strategy with an expert can be invaluable in helping to determine your financial needs and developing a balanced plan to meet these goals.
Each stage of life brings with it both financial challenges and financial opportunities. Having a plan that can be adapted to reflect changes in your circumstances will stand you in good stead and help you through the peaks and troughs that inevitably occur.
The early years –18-25 – are often about making the transition from education to employment and being financially independent for the first time. It makes sound financial sense to set aside sufficient cash to take advantage of tax-efficient regular savings plans. Building up a cash reserve can help with the deposit for your first home or a car. You should also consider saving into a pension as soon as you can, it’s tax efficient and starting early gives your money more chance to grow.
The family years – 25-40 – can include marriage or partnership, building a career and raising a family. At this stage, it’s vital to have a properly-written will in place. Life assurance, critical illness cover, health insurance and income protection plans all have a part to play in protecting a family’s well-being. It makes good sense to save as much as possible now for children’s education. You should regularly review your pension and savings plans and aim to top them up as often as possible.
The middle years – 40-65 – potentially there’s more income available but there are often more demands on it. Children may need help with education costs or a deposit for their own property. Your parents may need your financial assistance in their later years. This could be a good time to revisit your will, as your family circumstances may have altered through death, divorce or inheritance and you may wish to reflect this in the way you want assets to be dealt with.
The retirement years – 65 and over – are often dominated by concerns for the future. This stage is often about taking money from a pension fund to secure a comfortable retirement, planning for future care needs and passing money on tax-efficiently to future generations.
Good financial strategy helps you attain your goals. Regularly reviewing your plan with your advisor is vital to ensure it continues to reflect you and your family’s needs.
Simply Money; summer Edition 2014
