Wishing for a prosperous new year is part of the tradition of this time of year. But wishing is not enough. A prosperous new year has to be worked for, and the time to start is now. A little financial planning now will let you reap the benefits all year long.
Before you get started on your financial plan
The first step to financial planning is to set your goals and decide what you are planning for. Retirement, paying off the mortgage, planning for the holiday of a lifetime or even setting up our own business. We all have our own financial targets.
If you have outstanding debt, you’ll need to deal with it. If you have money gathering dust (but very little interest) in a savings account you need to see how you can make it work harder for you.
Its always a good idea to check up on how your pension is working for you, whether retirement is in sight or still many years away.
When you really understand where you are now, you can start working on a financial plan that will get you where you want to be. You can only monitor your progress if you know what you’re working towards.
Getting started with your financial plan
When you have decided what you want to achieve and by when, you can work backwards from that target as the basis for your financial plan.
- Look at your income
We don’t know what’s around the corner. You may get a pay rise, switch jobs or find that you are taking a pay cut. But if you are not enjoying the income you need to make your plan work, you might consider an additional revenue stream such as freelancing or making money online. Turning a hobby into a part time business could be enjoyable as well as rewarding. You may also need to consider investments.
- Look at your costs
Your financial plan should help you see where the money goes, from groceries to annual costs such as insurance premiums, car payments and the mortgage. Work out how much goes on necessities and how much is spent on luxury items. Exotic holidays and an expensive car might not be absolutely essential, pleasant though they are. If there are costs you can trim, you should.
- Look at the balance
A balance sheet will show what you’re left with after your spending is deducted from your income. It will let you see if you’ll meet your long-term goals. If you can’t, you’ll need to cut back on your spending, re-evaluate your financial objectives – or increase your income.
- Look at your Investments
Investing could make your money work harder, and build a nest egg for children or retirement. Savings – where your money is kept as cash are not doing well right now, and turning them into investments, where you buy something such as stocks or shares in an investment trust can make them work harder. Stocks, bonds, funds and property are all viable investment options that you could consider.
Get some help
If your planning shows that you need to up your income, boost your pension or make other changes to your finances, we can help. A personal review from one of our experts could help you discover new ways to make the most of your money now and in the future. For the answers you need to make it a prosperous new year, call us now on 0345 643 0770, or email us now at [email protected]
The value of investments can fall as well as rise. You may get back less than you invested.