Get your finances fit in Financial Planning Week
Monday, November 24, 2014
Your very own financial boot camp has arrived - Financial Planning Week is here to put your pennies through their paces. With free financial planning advice on offer through the Institute of Financial Planning, it's time to kick start a healthier financial future.
Financial Planning Week is all about raising awareness of the benefits of financial planning.This week, there are free financial planning clinics on offer, plus the chance to get expert advice online through the Institute of Financial Planning's (IFP) Ask a Planner facility, and lots of helpful tips and tools to download. Find out more about what's on offer here.
So, if your retirement savings are underweight, your mortgage interest rate is a bit flabby or you need to work on some protection for your family, there's never been a better time to get your finances into shape.
Why is financial planning a good idea?
In a nutshell, financial planning helps you take control of your finances and put strategies in place to achieve your goals and dreams.
Even if you're not saving for a specific goal, it's generally accepted that having enough savings to cover three months' living expenses as an 'emergency' fund is a good idea.
It's also been shown that saving money makes you feel more positive and gives you peace of mind - so it really is worth putting a plan in place that will help you to do this.
Isn't it simply a case of just saving as much as you can?
That is essentially what it boils down to - but it's also about your goals, timeframes and the best way to save.
To take a specific example, let's say in the future you would like to help your children with university costs. Although it's a relatively simple plan, the finances that underpin it are fairly complex. You'll need to consider factors such as:
- What are their expenses likely to be?
- Do you want to cover all their expenses or contribute a set amount?
- What are your timescales?
- How much can you afford to save towards this without jeopardising other goals (for example, a comfortable retirement)?
- What is the best way to save to meet this goal?
A financial plan will take all these factors into consideration and work out what you need to do to achieve your goal. It's something to help you base all your financial decisions on.
Can I do it myself?
Drawing up a plan is as simple or complex as your financial situation and future aspirations. These are the main steps to putting one in place:
- Work out your goals and their timescales and rank them in order of priority… however much you'd like to own a property on a Caribbean island, a decent retirement income will likely rank above it!
- Estimate the cost of achieving your goals. There are plenty of tools on the IFP website to help you do this.
- Work out what you've already saved towards your goals and how much disposable income you have.
- Take each goal in order of priority, work out whether you've already saved enough to cover it and how much, if any, of your disposable income needs to go towards it.
- Put the plan in place and then monitor its progress.
- Run through this exercise with each goal until you run out of disposable income or, if you're very lucky, goals.
More detail is covered in 'A brief guide to DIY financial planning' available on the IFP website but, if this is too daunting or your needs are complex, you could get professional advice from a financial planner.
Find out more about what Financial Planners do, and how they differ from Financial Advisers >
Please Note: This blog is intended to provide information, not financial planning advice, to help you make an informed decision about financial planning. We do not offer financial planning advice. You should contact a Financial Planner for this. You may have to pay a fee for their advice.