News/Events

Five steps to avoiding financial regrets in the future [10th December 07]

I just love throw away lines and keep on seeing them quoted in magazines. The latest is “When I was young I thought money was the most important thing in life; now that I am old, I know that it is “by Oscar Wilde.

How many times have you thought in later life “I wish I had done that”? And the number of times my clients say “I wish I had started doing that earlier or years ago” is uncountable as it happens more than three times a week.

There are five basic areas which can help and these are:-

Get to grips with your money

Carrying out a budget will help you work out your weekly or monthly income and expenditure so that you can see how much you have left over. Perhaps a spending diary would help and list everything you buy over a week or a month – you will be amazed at where your money goes!

Setting goals

Making a plan and sticking to it can be an effective way to help you realise many of your ambitions. This can give you discipline in your spending habits and managing your investments. I find it easier to start investing if I have had something to save for e.g. making provisions to pay for university fees. Maybe to retire at 60 and have target amounts that you want your investments to be worth and in this case, you must measure their progress and keep them under regular review.

Protecting yourself

It is essential to protect what you have before thinking about growing your wealth and here you must look at life and critical illness cover, income protection and health insurance to ensure you or your family would not suffer hardship from the loss of your income. Many clients do under estimate the value of their partner’s contribution, especially full time mothers, as they may not have earned income, but, the family would be clearly disadvantaged if something was to happen to her. Many term insurance plans are set up on a joint life first death basis eg cover for your mortgage and yet for a small extra premium, you could have 2 separate plans which would double the death benefit and have other advantages. Are your policies written in Trust?

Savings

Now you can look at saving and for short term savings I do like cash ISAs because your capital is available but you earn tax-free interest. Then you can look at longer term savings plans maybe equity based as long as you are prepared to take a five year view and some investment risk, of course, pensions would be pivotal to any retirement planning.

Pass it on

After the dreaded council tax, inheritance tax (IHT) is the most disliked tax in the UK. Make sure you have an up to date Will and you take full advantage of the various exemptions available. If you are investing in pensions then ensure these are written in Trust or under nomination in order for the proceeds to be paid quickly and to the right beneficiary in the event of premature death.

The New Year is almost upon us so get in touch with your IFA and make an appointment to see them after 1^st January armed with your personal goals.

Langtons is offering a free review of all life policies and a MOT of all existing plans next month.

This article was written by Langtons - Published in the Western Morning News, This is Money, 10th December 2007