1. Consider your needs and obligations at each lifestage


When you begin to consider building your financial plan, the first area you should take into account is your individual needs and requirements and how these are likely to change throughout your lifetime. Of course, not all of these will have a monetary value, but it is likely that most will and so considering them will give you an indication of your financial needs throughout life.

Some of the immediate questions you can consider include:

  • How long do I have left on my mortgage?
  • What are my monthly living expenses and how will these change over time?
  • What other expenses will I have throughout my life?
  • How long will my children and/or grandchildren be dependent on me financially?
  • Do I want to set aside some money for later-life care?

Of course, there will be additional questions to consider; however, by the end of these considerations you will have a comprehensive outline of your financial needs and obligations for the short, medium and long term.

Once you have considered these areas, you can begin to factor in aspirations which are orientated around your desired lifestyle at each lifestage. These could include retirement length and location, or other costs such as holidays and vehicles.

It is important to realise that for your plan to work you must consider the basics prior to lifestyle aspirations – otherwise you could find yourself unprepared, with a financial shortfall in later life.


2.  Create specific and realistic goals for the short, medium and long-term


After identifying your needs and financial obligations, you should begin to identify some financial goals. As you will have noticed above, your focus will change throughout life and, as such, your goals should be orientated around the short, medium and long-term.

You should also ensure that these are SMART goals (see below), as these will be easier to benchmark against.

  • Specific
  • Measurable
  • Achievable
  • Realistic
  • Timely (or Timebound)

Examples of possible goals include:

  1. Short – To put £5000 in your personal pension per annum, for the next 5 years.
  2. Medium – To retire with a net income of £36,000 in today’s terms.
  3. Long – To be able to donate £10,000 to charity as part of your will.

Planning these in advance will provide structure to your financial plan and will allow you to focus on specific financial planning solutions to meet your goals over time.


3.  Adjudge whether your protection arrangements are sufficient


Unfortunately, life can include situations which cause financial worry for you and your dependents. Whether that is the loss of your job, incapacitation, illness, or even death, it is important to be protected against unforeseen circumstances.

You should begin by considering the following fundamental questions:

  • How long would you be able to manage without a job before your finances were seriously damaged?
  • Would you be able to afford long term care if you became seriously ill, or incapacitated?
  • Could your dependents cope financially if you were to become incapacitated for an extended period of time? What if you were to die prematurely?

Thankfully, there are a number of protection/ personal insurance policies that can help safeguard you against the unthinkable. These insurance policies include:

  • Life assurance
  • Income protection
  • Critical illness cover
  • Private medical insurance

Having the correct protection in place will provide you with peace of mind and is a fundamental component of any financial plan.

For further information the protection policies available, view our previous blog article.


4.  Research the tax allowances and reliefs available to you


Often, you can mitigate some of your tax liability by researching the tax allowances and reliefs available to you and diversifying your assets to benefit from them.

It is important to be careful, however, as many people attempt tax planning on their own and end up making mistakes that can cost them vast sums of money.  Often, the help of a professional, expert financial planner, and the resources available to them, can prove invaluable – they are able to distribute your assets to utilise the tax allowances and reliefs available to you, mitigating your overall tax liability where possible, all whilst adhering to your financial plan.

For further information on tax planning and the allowances and reliefs available to you, please follow the link to our Tax Planning webpage. A free download of our Tax Planning Guide is also available.


5.  Think about which life events will require you to review your plan


It will not come as a surprise that your priorities and requirements will change throughout your lifetime and what is important at present can seem insignificant in later life. Therefore, it is important you create a plan that is adaptable to potential changes.

But, have you thought about this? Are you aware of when your financial plan will need to be reviewed and adjusted to reflect changes in your circumstances?

If you haven’t already considered these events, then it is important that you do so before you complete your financial plan. The life events which may cause you to review your plan include:

  • Marriage or Divorce
  • Children and/or Grandchildren
  • Inheritance
  • Retirement
  • Death of your spouse
  • Later life care

For additional information on other circumstances where you should review your plan, read our article.


Consider professional help


Whilst some of these considerations are basic and can be self-managed, it is important to take into account the value of an impartial, expert professional financial planner.

Using their expertise, and the extensive resources available to them, a professional will be able to help you develop a financial plan based on your financial circumstances and objectives for the future. Often, the cost of making a mistake is greater than that of seeking advice and a financial planner can offer you peace of mind and the assurance that everything is in order for the future.

To get the most out of seeing an expert financial planner, consider and document your current circumstances, needs, aspirations and goals, as it will form the basis of an informed discussion and should save you time and money.

Lucas Fettes Financial Planning are Chartered, independent financial planners.  We’ve been building meaningful relationships with private, corporate, and not-for-profit clients since 1980.


Important information

The content of this page is solely for informational purposes and nothing in it is intended to constitute advice or a recommendation. You should not make any investment decisions based on its content. The impact of taxation (and any tax relief) depends on individual circumstances. This has been prepared based on our current understanding of UK Law, Taxation and HMRC practice, all of which could be subject to change in future. The value of investments can fall as well as rise and it may not always be possible to receive back the sum initially invested. Past performance is not necessarily a guide to future investment returns.

This article constitutes a financial promotion.

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