In my dreams I have a plan, If I got me a wealthy man, I wouldn’t have to work at all, I’d fool around and have a ball. Deep breath. Give it all you’ve got. MONEY, MONEY, MONEY... I thank you ABBA. Aah, the elusive dreams and wealthy man. Dare I say that, hmm, plan is financial planning for women. Doesn’t quite fit in with the lyrics eh?
So what is financial planning? Well according to good ‘ole Wikipedia in general terms financial planning is ‘a comprehensive evaluation of an individual’s current pay and future financial state by using current known variables to predict future income, asset values and withdrawal plans‘. Phew.
Ok, that’s that sorted. I’ll be off then. Byeeeeeee.
BREAKING IT DOWN
Right I’m back in the room. So think about what your financial goals are. What do you want to achieve? When do you want to achieve it by? What kind of lifestyle do you want? Really delve into your present and how you would like your future to be. Do you want to be swanning around the world, living on a cruise ship, or is that just me?
Start by looking at your money management spreadsheet to see where you’re currently at.
You might choose to review your mortgage as one item of your financial planning, and look to pay it off sooner rather than later. Break it down into chunks. What’s the redemption period i.e. if you pay it off early will there be additional charges? These tend to kick in during the first 5 years of your mortgage but check your terms and conditions.
What if you upped your monthly payments? Even a £50 a month increment can make a big difference to the length of your mortgage and the interest you pay.
Use a mortgage calculator in a slightly different way. Work it back using your current outstanding mortgage, your interest rate and the number of years you’d like to have it paid off by. That should show you what your payments will need to be to meet that deadline.
Note also that with regards to overpaying there’s generally a maximum (typically 10% a year) that you can over pay. Again check your T’s & C’s.
IT’S PERSONAL TO YOU
What are your circumstances? Do you have children? If so your financial planning for women mission could be to open savings accounts to cover expenditures when they’re older. Say university or mortgage deposit contributions.
Alternatively, you could open a children’s savings account that they manage themselves. Thus making it a fun way to learn about money and start to save.
Are you, like me, a continuously curious learner? Then perhaps you could open a separate account you contribute to monthly as your ‘education’ pot. When that latest course arises that you must attend you’re good to go.
When do you want to retire? How much money will you need?
Do you crave peace of mind and have insurance policies coming out of your ears to cover you for the unexpected? Income protection and critical illness cover might be something you wouldn’t want to be without. You might even have your funeral care policy in place and tickety-boo.
INVEST
You’ve got to the stage where your savings are coming along nicely. The next stage might be investing to make those savings grow. Bear in mind that investments generally have a risk factor too and can go down as well as up.
ISAs. Done for you service. Or DIY. Whatever you decide make sure you do your research. Everyone has different risk levels that they are comfortable with, be that low, medium, or high.
PENSION
You can currently obtain your state pension when you’re 66 years old. However whilst all employers should also provide a workplace pension, dependent on set criteria, if you’re self-employed another decision for financial planning is do you take out a private pension? It may be a way off but the sooner you start the better.
MAKE A WILL
No point in being super savvy with your financial planning only to not have a will and there ensues a bun fight between your nearest and dearest. If you’ve got no nearest and dearest then under the rules of intestacy, your estate goes to the Crown and not to a cause that is impactful and close to your heart.
CREATE A PLAN (AND TAKE ACTION!)
Make your plan with as many bells and whistles as you need to make sure you open it, use it and update it. For want of sounding like a learning and development executive, make sure that your defined actions are SMART. Specific. Measurable. Achievable. Realistic and Time-bound.
REVIEW REGULARLY
Be flexible too. If your plan goals are too restrictive in time frame and causing you to pull your hair out, adjust accordingly. No point in stressing yourself out and eating vast amounts of chocolate. OK, maybe there’s a plus in some of that..
As to how often you should review it, depends on your personal circumstances. At a minimum, yearly to check that you’re on track. Life happens, there might be times when you want to revisit it more frequently.
So that’s my roundup of financial planning for women. Hands up who’s coming on that there cruise ship with me?
