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Spring Clean Your Financial Plans

Spring Clean Your Financial Plans

By Nick Ritchie, Director, Wealth Planning at RBC Wealth Management

1. Know your budget

A sound financial plan starts with knowing what comes in and what goes out of your bank account each month. It sounds simple, but without this foundation it’s difficult to set realistic financial goals. Thankfully there a number of online tools and open banking mobile apps that let you connect your accounts in one place and keep track of your spending. Your savings might have been bolstered in lockdown or you might be spending more than you think.

2. Develop a personal and financial timeline

Think about your personal priorities, both immediate and longer term. Maybe you hope to get promoted, plan to set up a new business, start a family or buy a second home. Many of our personal priorities have financial implications and being clear on what’s important to you personally will help you align your financial plans to these priorities.

3. Allocate savings to short, medium and long term goals

With a plan in place, allocate savings to short, medium and longer term goals. These timeframes can then help you determine how much risk you should take with your savings. You might not want to take risks with savings you expect to need in the short term, whereas funds set aside for the long term like a pension should usually be invested to achieve better long term returns.

4. Protect what matters most

Covid-19 has sadly taught us nothing is certain. Protect loved ones by ensuring your wills are up to date and you have adequate life insurance in place to pay down debts and provide for your family.

5. Make the most of available tax allowances

There are a number of vehicles available to UK savers that can reduce or remove the impact of tax on the hard earned return on savings. From ISAs to pensions, determining which are most appropriate for you will depend on a number of factors. A financial adviser can help you make the most of allowances available to you if you’re unsure.

6. Understand the implications of potential tax increases

The March Budget clearly positioned that there will be tax rises to come, reinforcing the need for investors to get their house in order and to make use of the current gifting allowances and CGT rates, especially when considering legacy and next generation planning. Having an unexpected window of opportunity shouldn’t be a cause to celebrate, rather it should prompt clients to seize this opportunity. The budget statement in the Autumn and some darker clouds loom on the horizon.

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