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Time to put financial planning first

Time to put financial planning first

Category: Money

Updated: 25/11/2014
First Published: 25/11/2014

This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

We're in the midst of the fifth annual Financial Planning Week, a consumer awareness campaign aimed at helping you improve your financial fitness and achieve your long-term goals. So, isn't it time you put financial planning first?

The importance of financial planning

Let's start by taking a look at why financial planning is so important. Quite simply, it can make all the difference to your financial future – for many, having a proper plan (and sticking to it) is the only way to be confident about achieving financial stability in later life, and it can give you the peace of mind you need to know you're on the right track.

Financial planning isn't only about the here and now; it's about where you're going. Making slight changes to your spending habits, setting up clear savings goals, even writing a will and planning how your family would cope should you lose your income – these are all areas that come under the financial planning umbrella, and if you address them now, you can be far more confident in the future.

It's all about being organised, and it could be a great way to reduce money worries and stress levels. Really, the importance of financial planning can never be underestimated, and it's this understanding that the campaign hopes to foster.

Financial Planning Week – what it means

Financial Planning Week is running from 23-29 November, which means there's still plenty of time for you to get involved. Organised by the Institute of Financial Planning, the aim is to highlight the importance of financial planning and help people improve the way they organise their finances.

There's a lot going on, too. Free financial planning surgeries are being held across the UK, giving you the chance to meet with a professional financial planner to discuss your situation and get an idea of the steps you could take to reach your goals. There are plenty of online resources, too, such as a cashflow modelling tool and plenty of free guides, and there's also an Ask a Planner facility if you want answers to a specific question. Head to the Financial Planning Week website for more information.

Steve Gazzard, CEO of the Institute of Financial Planning, comments:

"There has never been a more important time to look at your financial future and start planning, but many people don't know where to start.

"This year, consumers have been bombarded with information on products like pensions or ISAs, with news of mis-selling scandals, offered guidance, and threatened by an advice gap. Financial Planning Week is about putting people back in control of their finances and their lives, giving them a process, tips and tools, and also providing personal and practical support through free face-to-face surgeries and online access to the expertise of experienced planning professionals."

Steps to improve your financial fitness

It's a great campaign, and one that will hopefully encourage more people to take a proactive approach to their finances so they can get organised for the future. We want to help out with that, so here are a few steps you could take to get you on the road to financial fitness.

· Write down your goals, be they short-term, medium-term or way into the future. By having a clear understanding of the goals you want to reach, you'll be better placed to start thinking about how you can achieve them.

· Evaluate your current financial situation. This should include everything from your regular outgoings to your assets and financial liabilities, because again, having a clear understanding of things is key. It'll give an idea of your net worth and could help you realise how close you are to achieving your goals, and will help feed your plan for the future.

· Start planning your route. You know your current situation and your goals for the future, but how are you going to get there? Now's the time to start planning your route. This could include anything from the budget you should stick to and the savings you need to build to the will you'll need to write to ensure your family's future stability, and you'll probably want to speak to a professional so you can be confident you're on the right lines.

· Consider ways to increase your disposable income. This may only be a short-term goal, but extra disposable income can lead to reduced stress about your financial situation, and that's got to be a good thing. Go through your outgoings and look for ways you can make cutbacks, be it through switching gas and electricity supplier, sticking to a tighter budget or making your own lunches, and you may even find you have enough left over to stash away. Which brings us onto…

· Get saving. Being able to save regularly is one of the cornerstones of financial planning, as it not only means you'll have a buffer should you encounter any financial shocks, but means you'll have a valuable nest egg for the future. Cash ISAs will be a great place to start, but don't overlook workplace pensions or other forms of investment, as these will be key to achieving longer-term goals.

· Be prepared. What would happen if you were out of work because of illness, or if you died leaving your family with no income whatsoever? These scenarios are never nice to think about, but if you want to be a financial planning master, you should always be prepared. Consider things like life insurance and income protection, and always keep your will up to date to ensure your assets will go where they should – to your family.

· Review your plan on a regular basis. Once you've implemented your plan, you can't just sit back and hope for the best – your circumstances or goals could change, so make sure to review your plan on a regular basis to ensure you're still heading in the right direction.

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