Give your finances a regular health check
Last updated 09:24, Wednesday, 27 August 2008
Many people approach financial planning as they do their own health – wish for the best and only visit the doctor when you have a problem.
But regular financial reviews and forward planning are as important to your financial well-being as a healthy lifestyle and regular check-ups are to your health.
Personal circumstances change. You may buy a bigger house, change jobs, have children, or just generally have more financial commitments, and a regular financial review will ensure you have considered the effect of these changes.
Even if your circumstances haven’t changed, the market certainly has and decisions made two or three years ago may no longer be appropriate.
It is easy to get on with living and only worry when you are forced to by events such as an increase in mortgage payments or an unexpected bill. But a little bit of time invested now will pay dividends long term.
If you have specific goals, investing your money in savings plans that will help achieve them. Saving little and often is a great way to get into the savings habit and the key to long-term gains is to start early and enjoy the benefits of compound interest or stock market growth over the long-term.
If you already have savings, review your accounts to check that your money is working as hard as it should. If you have moved money to an account which includes a bonus rate, make a note of when the bonus period comes to an end. There is no requirement for a company to remind you and many financial organisations rely on customers’ inertia to leave money in accounts which are no longer competitive.
It is particularly difficult to think about life’s downs such as critical illness or death, but you need to ensure your finances are secure if the worst should happen.
Debt starts early these days. Eighteen to 34-year-olds have an average of £3,200 in unsecured debt, and new graduates owe an average of approximately £11,000.
This isn’t a major problem if you have no dependants, but once the mortgage and children arrive you must consider what would happen if you became critically ill and were unable to work.
Although you may have taken out some form of mortgage cover when you bought your home, it may not be enough to provide for your family. If your partner died, consider whether you would need to give up work to look after the children. If so, you may need to take out additional life insurance on your partner, regardless of whether they work.
At the other end of the age range, the right protection plan can also be used to cover an inheritance tax bill to ensure the people you leave behind are not left with any of your commitments.
Above all, don’t wait until you have a problem. Review your finances at least once a year and plan ahead for a healthy financial future.
Call into your local Cumberland branch, call 0845 601 8396 or visit www.cumberland.co.uk to make an appointment with a financial planning consultant.
- Chris McDonald is head of marketing at the Cumberland Building Society.
- This article should not be relied upon when making investment decisions. Always obtain financial advice. Any financial advice will relate only to the products and services of the Society and Norwich Union
