Around 50% of us make New Year's Resolutions and 'sort the finances out' must be one of the most popular: but that's a little vague - it's more a wish than a firm commitment to take action. Looking at the January appointments we've had with new and existing clients, here are the topics that we've discussed most often. If you're determined to sort out your finances, these may give you some food for thought.
1. Sort out the mortgage
The mortgage is the biggest monthly expense for the vast majority of people, and making sure that the rate you're paying is competitive is basic common sense. Many people are paying a higher rate than they need to and half an hour with an IFA or independent mortgage broker can be time very well spent. Yes, there are costs involved in moving your mortgage, but these can often be outweighed by the savings to be made.
2. Sort out our life cover
This is an absolute priority, especially if you have children. Many people don't know the answer to questions like 'how much life cover do I need?' 'How much do I have?' 'Does it include critical illness cover?' No-one likes to think about the possibility of being seriously ill or dying, and therefore we tend to neglect our protection policies. Life cover can be surprisingly inexpensive: and even if you do have cover in place, make sure you have it checked on a regular basis. In many cases the cost of protection is continuing to fall and it may be possible to replace old policies and increase the amount of protection you have, without increasing your premiums.
3. Start saving for the children
However much you've just spent on Christmas presents, your children are going to cost you a lot more in the future. Whether it's university tuition fees, a first car, your daughter's wedding or the deposit on a house, the numbers are only going to go one way. Even if you only save a small amount, doing it on a regular basis over a long period can make a significant difference - and with the ability to save tax efficiently through an ISA, at least the taxman will be on your side.
4. Start saving for ourselves
What's true for the children is equally true for yourself; if there's a specific savings target you have in mind, or whether you simply need to save for the proverbial 'rainy day,' the earlier you start to save the easier it is to achieve your goal.
5. Sort out my pensions from previous employment
Many people have pensions left over from previous jobs, and despite various Government initiatives aimed at simplifying the system they still don't have an accurate idea of how much is in their pension 'pot.' Good pension planning is impossible without knowing the position you're starting from, so it's a sensible idea to talk to an IFA and find out the position with any old pension policies. For example, can they can be brought together and simplified?
6. It's time I understood the company pension scheme
Just as importantly, far too many people don't understand their existing company pension scheme. Is it final salary? Money purchase? Eightieths? Sixtieths? Can I make additional contributions? Buy extra years? Again, half an hour with a knowledgeable independent financial adviser will be time well spent. He'll be able to summarise the main benefits of the scheme for you, tell you the sort of pension you're likely to receive and advise you of the best course of action if you want to improve your pension benefits.
7. Investigate Inheritance Tax and Long Term Care
If it's the case that your parents are elderly, then it may be worth thinking about Long Term Care planning. Similarly if their - or your - estate is likely to be subject to Inheritance Tax, then action taken now could pay significant dividends in the future. Again, an IFA will be able to tell you what's possible, and the steps that could be taken now to prevent an unpleasant surprise in the future.
8. Look at Private Medical insurance
With tales of woe from the NHS continuing - and more economies seemingly still to be made - many people are starting to look at the option of private medical insurance. This may be an investment worth making, particularly if you run your own business and would need treatment at a time to suit you.
9. We need to sort out the partnership insurance
Many businesses are run as a partnership (whether it's a straightforward partnership or through equal shares in a limited company). The death or serious illness of one of the partners could have catastrophic consequences for the business - and serious implications for the other partner. And yet very few businesses have addressed the simple question of partnership assurance. Your IFA will be able to explain the basic rules to you and give you an idea of what protection might cost: you may well be pleasantly surprised!
10. We need to make a will
Last - but by no means least - make sure that you have an up to date will. The consequences of dying 'intestate' (that is, without a will) can be severe, and with a simple will being relatively inexpensive it's sensible to make sure that this area of your financial planning is kept up to date.
So there's plenty to think about… If you would like to discuss any of the above points - or any other aspect of your financial planning - then as always, please don't hesitate to contact us.