Josephine Ogle from AEON Financial Services gives us her Ten Tips for Financial Success.
- Pay attention to your finances. Develop an interest in what you spend and learn to live to a budget. Once you get into the habit of doing this it’s amazing how your savings can start adding up.
- Review all items of expenditure. If you are self-employed / in a sales-based job, then ensure your sales cover your expenditure. Share your sales targets to make yourself more accountable. Review your expenditure regularly to see if anything can be chopped or changed.
- Know and use your allowances. Everyone has a personal allowance, but did you know you have other allowances too? For example, the marriage allowance, the personal savings allowance and a capital gains tax allowance. ISA’s aren’t the only tax-free investment you can have. Pensions also offset tax. Using these allowances can make a huge difference to your financial situation.
- Employ your spouse. In order to optimise your allowances, distribute your income effectively. For example, if you run a business and your spouse works within it, make this official and have them on the payroll. Take advice from an accountant first though as you can fall foul of HMRC if this is not set up correctly; have a quick google of ‘Arctic Systems’ if you don’t believe us!
- Start a pension. Once you’ve worked out a budget, you may realise you have income that isn’t ‘working for you’. The most tax efficient way to make this work is by starting pension contributions. Every contribution you make gains tax relief of a minimum of 20%, that means for every £200 you put into your pension, the governments add in an extra £50 for you. Ensure if you have a spouse you equalise your pensions; it can be detrimental one spouse having a large pension and the other holding nothing. Pensions can also be held for children too, the sooner they start saving, the better.
- Check your employment contract. If you are employed, you may possibly have various ‘insurances’ in place through work. For example, you may have death in service, sick pay or even critical illness cover. Before taking out any additional insurance it is worth checking what you already have in place.
- Check your existing financial planning products. Are they still suitable for your needs? For example, an old insurance policy you bought alongside a mortgage from several houses ago may not provide you with sufficient cover or may no longer be competitive and a new policy may be needed. Always seek advice before cancelling any insurance policies though!
- Dig out your old ‘frozen’ or occupational pensions. Do you know their value? Old pensions can often be expensive. What would happen to those pensions if you were to die? If you are in poor health reviewing all your pensions is especially important. Are your pensions suitable for the level of risk you are prepared to take? Just because a fund was suitable for you ten years ago doesn’t mean it is still suitable for you now.
- Ensure you are protected personally and professionally. Mental health and cancer account for over 50% of income protection claims and the average age of a claimant is 43. Cancer; especially breast cancer, is the biggest cause for critical illness claims with the average age of a claimant being 48. Four in five people with cancer are an average of £570 a month worse off. Can you afford that? If you have a business, ensure you are protected from a professional standpoint too.
- Make a will and power of attorney. These can often be associated with ‘getting old’ but the sooner they are done the better. Having a will creates peace of mind and they can be easily amended later down the line if your circumstances change. The most common type of power of attorney is a financial and property one and this ensures that in the event that you become physically or mentally incapacitated that your attorney can act on your behalf. Without a power of attorney in place then it is a lengthy, complicated and expensive process which is generally unwelcomed and frustrating, at what can often be a stressful and emotional time.
Statistics obtained from:
adviser.royallondon.com/globalassets/docs/protection/BRP8P10004-our-claims-statistics-2016.pdf
www.macmillan.org.uk/_images/Cancers-Hidden-Price-Tag-report-England_tcm9-270862.pdf
