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Do you have a financial plan yet?

Author: Evelyn Partners Financial Planning Limited

Published: 07 Jul 2022

Sponsored by Evelyn Partners logo

This article looks at what a financial plan is, why it makes sense to create one, when the right time for financial planning is and what a good plan looks like.

While most accountants are meticulous planners at work who baulk at the idea of starting a project without knowing the objective or how they’re going to achieve it, they don’t necessarily approach their own personal finances in the same way. Even those who track their spending on a spreadsheet and show real discipline when it comes to paying into pensions and ISAs, building emergency funds or chipping away at mortgages, are often doing this without an overall financial plan in place. But is this the right approach? After all, how can you get somewhere if you’re not focused on where you’re going? You might drift a little, take a wrong turning or end up somewhere you don’t want to be.

What does a financial plan look like?

A financial plan looks at your future goals and objectives and sets out the steps you need to take to achieve them. It summarises your current situation, for example, looking at how much you’re paying into a pension and the level of investment risk you’re taking. It won’t fix anything but a financial plan will highlight which areas need your attention. If you’re not on track, it’ll help you see how much more you need to save now or whether you could or should take on more investment risk.

Your financial plan can take into account everything from the age you want to retire at and the level of income you need to goals like supporting a child through university or buying a second home. It should also take into account your personal preferences, for example you may want to make sure your pension is invested in line with your values or you could want to pass on money to younger generations but retain control.

While there are common themes across most financial plans, yours will be as unique as you are.

When should you create a financial plan?

Often, it’s a significant life event that triggers financial planning. For example, becoming a partner could be the catalyst. Your life and finances are changing so it’s a great time to look at things with fresh eyes, create plans and make sure you’re set up to achieve them. Having a baby is also a moment that often focuses the mind and so too is receiving an inheritance.

It’s never too early to have a plan so even if you’re in your early days at pre-partner level, having a sense of direction is helpful. While it’s probably unrealistic that you would know exactly what you need in the future you’re likely to want an enjoyable retirement and can get into good financial habits and start making small, manageable steps towards your goals.

Of course, it’s never too late to start planning but if you’re partner who hasn’t had a financial plan and all of a sudden decide you want to retire early, you may need to take drastic steps to get there.

Can you create a financial plan without professional help?

Of course but, as you well know from your own profession, you may well find that those who seek professional advice end up with a better result. It’s a financial planner’s job to keep on top of ever-changing rules, taxes and allowances and understand the implications these have for you personally. They’ll also challenge you, helping you understand what’s really important to you and how realistic your goals are. And they’ll act as an impartial sounding board.

Priorities change and life rarely goes according to plan

And a good plan should stand up to pressure in case life doesn’t go according to plan – which it rarely does in reality.

  • Find out more about saving into a pension, planning for your retirement and taking an income

The value of an investment may go down as well as up, and you may get back less than you originally invested. 

This article does not constitute personal advice. If you are unsure as to any course of action, please talk to an adviser.

Issued by Evelyn Partners Financial Planning Limited. Authorised and regulated by the Financial Conduct Authority.