Financial Planning – Why Do I Need That?
Well, not everybody does. If you’re young and single and living with mum and dad, enjoy it while it lasts.
If life depends on getting the right benefits and a low cost housing solution, the Citizens Advice Bureau will probably be more use than a fee charging financial planner.
Most people can benefit from a financial plan, even if it is just the basics. Here are few simple rules:
- Pay your bills and save early in the month, then you know how much you can spend.
- Save money before you spend it – always playing catch up on credit is no fun.
- Everyone who works should pay into a pension, regardless of how indebted you are. Bankruptcy cannot take away pension money you have saved every month.
- Insure your life and your income; if you start when you’re young it will cost no more than a round of drinks every month.
- Try to keep cash for emergencies. It helps you feel secure and can help you with cash flow when life gets expensive.
For those lucky enough to build up some savings and investments, a financial plan gives you control and composure over your life and your future. For instance:
- Get control over your debt, get a mortgage and own your own home – it’s empowering.
- Plan your retirement – work is easier if you can see the finishing line.
- Save tax on your savings – the less tax you pay, the quicker your money grows.
- Get paid back for patience – if you take the risk of investing for 10 years, the market owes you a return for that risk premium you paid.
When you’re retiring the plans are different, but vital:
- Can I afford to retire? How much can I spend?
- Can I risk investing the money, what if I need care?
- How do I leave my house to my kids?
Most financial planners give most benefit to those who have money to invest. But all those investors started somewhere so start simple and when you need it, hire a professional.