This content is for information and inspiration purposes only. It should not be taken as financial advice or investment advice. To receive tailored, regulated advice regarding your investments and financial goals, please consult an independent financial adviser here at Suttons IFA in Sale, Cheshire, or in your local area.
As the Christmas holidays approach and some opportunities for rest (hopefully) start to present themselves, December can be a good time to review your financial plan. Looking ahead to 2020, are your wealth and finances on course to achieve your goals? Are any weaknesses present in your strategy which need addressing?
Below, our Sale-based financial advisers at Suttons IFA will be sharing 12 areas of financial planning to think about over Christmas, and possibly discuss with your adviser. We hope you enjoy our version of the “12 Days of Christmas”, and invite you to get in touch if you want to arrange a free consultation regarding your own financial plan. Reach us on:
T: 0161 969 1703
E: [email protected]
#1 Emergency funds
Do you have a financial safety net in place to help cover your expenses if you suddenly lost your job, or needed to cover a large unexpected payment (e.g. a boiler breaking)? Here in Sale, our financial planners often discuss trying to create a quick-access fund with clients, worth about 3-6 months of living expenses.
#2 Credit card debts
One of the biggest drains on monthly household income are interest payments on credit cards. In the latter part of 2019, certain bank rates are now as high as 20%; that’s potentially a £200 interest payment on £1,000 unpaid credit card debt. If you can avoid such debts and clear them altogether, this can free up a lot of income for other, more important things in 2020.
For most people, their mortgage is likely to be their biggest monthly outgoing. For many couples it can equate to one of their wages. If there are ways to reduce your payments, therefore, it is certainly worth considering with your financial adviser. For some people, remortgaging or moving from a standard variable rate (SVR) to a fixed rate could make a huge difference.
Are you setting enough aside for your future retirement? Perhaps you are near retirement and there are gaps in your national insurance record which might be worth filling, to help ensure you receive the full new state pension. Or, maybe you are starting out in your career and only contribute the bare minimum into your workplace pension (i.e. 5% of your salary in 2019-20). Christmas can be a great time to take stock of your pension and consider increasing your monthly contributions.
It’s not a pleasant question, but it’s important to ask yourself whether your estate would be distributed according to your wishes if you suddenly died. By creating a legally-sound will, you can help avoid the UK’s intestacy rules and ensure your loved ones receive the wealth they need and deserve, in the right manner and timing.
#6 Power of Attorney
Building on the previous point, what would happen to your estate if you become incapacitated in later life and cannot make decisions about your wealth? By setting up lasting power of attorney, you can ensure that you delegate these decisions to people you trust, should this happen.
Individual Savings Accounts (ISAs) are a great way to build up your savings and investments within a tax-efficient “wrapper”. In 2019-20, you can put up to £20,000 per tax year into an ISA, where the capital gains and interest earned are free from tax. Christmas can be a great time of year to check whether you are on course to maximise this benefit before next April.
#8 Employee benefits
Have you performed particularly well in your job this year? If so, perhaps you could take time during December to consider your workplace benefits, and build a negotiating strategy to ask for rewards in 2020. Are you in a position to ask for a raise, for instance, or to request more employer pension contributions?
#9 Review your legacy
If you are nearing or in retirement, are you confident that your estate will eventually pass on to your family in a tax-efficient manner? Remember, in 2019-20 each individual is likely to face a 40% on the value of their estate over £325,000. Yet there are smart strategies which you can discuss with your financial planner, to legitimately mitigate this.
#10 Higher rate taxes
Are you a higher rate taxpayer and wondering if you could reduce your tax liability in 2020? There might be some clever ways to save more towards your future, whilst reducing your higher rate tax exposure now. If you are on £55,000 in 2019-20, for instance, then perhaps you could discuss putting £5,000 straight into your workplace pension with your financial adviser?
If you suddenly could no longer work in the event of debilitating illness or injury, would your family cope financially? Christmas can be a good time to think about approaching the topic of protection with your financial adviser in 2020, such as term insurance or income protection.
#12 Big spending in 2020
Are you planning on making any big purchases in the new year – perhaps a significant home improvement, a new car or a nice holiday? Perhaps you are thinking of getting married, or starting a family. Doing some sensible cashflow modelling for 2020 can help ensure that you will have the funds you need to cover these large expenses.
If you would like to know more about financial planning or wish to discuss your own financial goals and strategy with us, then we’d be delighted to hear from you.
Please get in touch using the details below, to arrange a free, no-commitment financial consultation with a member of our team:
T: 0161 969 1703
E: [email protected]