This content is for information and inspiration purposes only. It should not be taken as financial or investment advice. To receive personalised, regulated financial advice please consult us here at Elmfield Financial Planning in Padiham, Burnley, Lancashire.
The COVID-19 outbreak is top of everyone’s minds at the moment. One key concern is how the pandemic and lockdown affect our wealth and finance. Here at Elmfield, our financial advisers in Lancashire have prepared a short checklist to help ensure your financial plan is fully up-to-date in light of the current situation.
We hope this content aids your thinking. If you’d like to speak to an independent financial adviser you can reach us via:
T: 01282 772938
#1 Review your budget
In some ways, household expenses might have gone down for many people since March 2020. Petrol and public transport costs are no longer being used for commuting, for instance. With that said, however, many households in Lancashire have experienced financial strain as one or both breadwinners have lost work/hours. Naturally, therefore, now might be a good time to review your budget for the months ahead. Keep to the golden rule: spend less than you earn!
#2 Check your buffer
If you suddenly faced a large, unexpected expense (e.g. a boiler breaking) then would you have the financial resources to deal with this? At Elmfield, our financial advisers in Padiham, Burnley and across Lancashire usually suggest that households aim to build 3-6 months of living costs in an easy-access savings account, for exactly these kinds of scenarios.
#3 Clear debts (where possible)
One of the biggest drains on a household’s monthly income is credit card debt. In 2020, it is estimated that around half of UK 16-64 year-olds are in debt, with nearly 5m people owing at least £10,000 in personal debts. Here, it can be immensely helpful to speak to a financial adviser about your options. It might not be wise to pay off all of your debts at the expense of your emergency buffer. Yet it could make sense to repay some of the smaller debts and move some/all of the rest to a low-interest personal loan, to ease some of the pressure and make it easier to actually repay the debt(s).
#4 Craft/update your Will
In the UK, if you die without a will then your “estate” (e.g. property and possessions) will be distributed according to intestacy rules. This means that your assets might not be handed to the right loved ones, or in the manner you would have liked. Consider finding a professional to help you craft a legally-airtight will, just in case.
#5 Consider LPA
If, in the future, you become unable/unwilling to make decisions about what should happen with your estate, then could another trusted person or professional be assigned to make decisions for you? This is called Legal Power of Attorney (LPA) and it can be a hugely valuable tool within estate planning.
#6 Review income streams & protection
If you lost your job then what plans do you have to help ensure income for your household? For some, there might be some short-term comfort in May 2020 that the UK government would replace up to 80% of your income (up to £2,500 per month) should you become furloughed. Yet this scheme is unlikely to remain in place forever, and the Chancellor has already made noises that it could start winding down in July 2020.
People in Lancashire might, therefore, want to consider other options with a financial adviser. Could you develop other income streams during the lockdown period to supplement your income? Might taking out an income protection plan help protect your family’s financial security if you could suddenly no longer work, due to injury or ill-health?
#7 Plan borrowing
In UK society it is difficult to get through life without dealing with at least some form of debt, whether that’s a student loan, a car finance deal or a mortgage. This period of lockdown could be a good time to review some of these “non-credit card debts” and come up with sensible ways to reduce unnecessary monthly costs, perhaps when lockdown restrictions start to ease (hopefully) in the coming months.
#8 Check your pension
Many people are focused on the “here and now” of their finances, given the gravity of what’s going on around the globe. That’s understandable. Yet it’s important to not lose sight of the longer-term view. You still face questions over how you will fund your future retirement if you are still at working age. At Elmfield, our Lancashire-based financial advisers would urge extra caution if you are considering a suspension in your pension contributions, which many are tempted to do right now to help ease the immediate financial pressure. Speak to your adviser first, as lowering or stopping your contributions is likely to reduce the size of your pension pot in the future.
Conclusion & invitation
If you are interested in starting a conversation about your financial plan, then we’d love to hear from you. Please contact us to arrange a free, no-commitment consultation with a member of our team here at Elmfield Financial Planning in Padiham, Burnley, Lancashire. Reach us via:
T: 01282 772938