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 regarding your affairs please consult us here at WMM (financial planning in Oxford).
The slower pace of life during the summertime can be a great opportunity to review your financial plan. Here at WMM, our Oxford-based financial planning team suggest 6 important areas which you may want to look over – especially if you are tempted to spend more money on a lavish holiday overseas following the months of lockdown we’ve all experienced!
#1 Check emergency savings
The economic effects of the global pandemic and lockdown in 2020 are not yet clear, but some sources claim that we could be heading for a deep depression (if we are not already in one). As such, it’s important to check the financial “safety net” of your household in case things take a turn for the worse, especially as government policies such as the Job Retention Scheme are eventually wound down. Typically, financial advisers recommend having 3-6 months of living costs in easy-access savings.
#2 Check your mortgage
If you asked for a mortgage holiday due to financial pressure from COVID-19, then it’s crucial to check your budget for the coming months. Your lender will certainly add the missing months to your future repayments, which could extend the term beyond retirement for some, or add dozens or even hundreds of pounds per month to your budget. If you are currently on a standard variable rate (SVR), moreover, this may even be a good time to consider remortgage or new fixed term deals whilst interest rates are at historic lows?
#3 Check protection
Did you have private medical insurance through your employer and, if you are now furloughed, what benefits can you access if you suddenly fell ill? Do you have a life insurance policy and is this fully up-to-date, especially if your circumstances have changed (e.g. you moved into a bigger home or had children)?
#4 Check the pension
Again, if you recently became furloughed then what is the status of your workplace pension contributions? Are both you and your employer still putting monthly amounts into the pot? It may be that you decided to reduce your monthly contributions to ease short-term strain on your monthly finances due to the pandemic and lockdown. Consider speaking with your financial planner about what’s currently happening with your pension, and the options going forwards.
#5 Evaluate debts & credit score
Do you have credit card debt or other costly personal loans hanging over you, eating into your monthly disposable income? Summertime is a good time to take stock and see how you can viably pay these off in good time. For those without major debts to worry about, consider checking your credit score and exploring ways to improve it. After all, this could help you significantly in the future (e.g. when you apply for a new mortgage).
#6 Check where your ISA is up to
In 2020-21 you are allowed to put up to £20,000 into your individual savings accounts (ISAs) each tax year. Leaving it until February and March to maximise your ISA allowance may not be the best idea, as by this point you may not have the liquid assets you need to take full advantage. As such, look at this important allowance over the summer. Are you on track to get the most out of your ISA allowance? Remember, once the tax year passes you cannot carry any unused allowance over to the following year.
Invitation
Each year offers various natural “breathing spaces” to take another look at how your financial plan is progressing. Christmas can be one such time; as can the summer.
If you are interested in starting a conversation about your financial plan, then we’d love to hear from you. Get in touch today to arrange a free, no-commitment consultation with a member of our friendly team here at WMM.
Reach us via: 01869 331469
