Caption: Top 5 Financial Planning Tips for Accumulators
Different stages in life have different priorities. If you are in your thirties or forties you are probably an accumulator. This week, Financial Planning Week, could be a good time to think about reviewing your finances and having a complete overhaul. Start by having a good look at the things you already have in place and make sure they are right for you. What about your mortgage, as time moves on there may be better rates out there, have you considered looking at offset? Think about your pensions and savings, are they tax efficient? What about your debts, could they be managed better to bring down your interest rate?
Here are our top 5 tips for small tweaks that can make a big difference.
1 Check your bank statements. Rethink your direct debits- do you really need that mobile phone insurance when you are paying for a bank service? It may already be included in another subscription. Check each item for value and if it doesn’t stack up that cash could be diverted to a savings plan.
2 which brings me to number 2, regular savings for example, ISA’s. A good place to divert your savings from number 1. If you already have some savings consider placing them in this tax shelter which is exempt from tax on future gains and income tax. There are many types available you can even sell and buy back existing shares into an ISA with the benefit of additional Capital Gains Tax allowances.
3 Credit Card lure; companies spend a great deal on marketing to pull in consumers and they only benefit when you are paying interest. Many deals are designed to lure you in and rely on human nature and apathy to do the rest. Be wary of swapping around, even with the best intentions the most likely outcome is debt will accumulate, leaving a big headache when deals and cheap offers are less abundant.
4 Leading to point 4, now is a good time to reduce debt, not accumulate it. Mortgage rates are still low so many people will be seeing their monthly payments at a very affordable level. I know with other inflationary pressures on fuel and energy it doesn't always seem like it, but in terms of mortgage costs things are still low. We don’t know how long this situation will continue so this is a good time to reduce debt and repay capital, therefore reducing interest even further. Then, if rates do go up, your interest will be calculated on a reduced sum.
5 protect, protect, protect – I can’t say it often enough. It may seem old fashioned but it’s the first basic principle of a good financial plan. What would happen if….We all have our cars, phones and homes insured but it’s almost as though insuring ourselves is a luxury or even worse an afterthought. You will never know how important it is unless you have been in the situation of claiming on it. Hopefully you won’t need to but if you have dependents, a mortgage or business it should be top of your list of priorities.
6 – I’m giving you this one for free! Do it now!
Set up a direct debit, get started. There is no time like the present. Don’t wait for a good time, there never will be. Don’t wait for the markets, you’ll never time it right, a monthly payment will drip feed the money in and take away that decision.
A good financial planner will help you with all of the above and much more, so what are you waiting for, get those bank statements out!