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Financial planning: fail to prepare, prepare to fail
It may be boring but devoting a bit of time to sorting out your finances could reap substantial rewards.
by Michelle McGagh on Nov 28, 2012 at 14:27
Good financial planning is all about preparation, whether that’s knowing when your home insurance is coming up for renewal or making sure you have enough to live on it retirement.
Mark Brownridge of London-based Mazars Financial Planning believes in the mantra ‘fail to prepare, prepare to fail’ and ensuring it is applied to all areas of a person’s financial life.
Overhauling your finances completely can seem like a daunting task, particularly if they are messy and complicated, or you’ve never done it before. But what you have to remember is that taking the time to make small changes or savings can add up substantially.
Brownridge believes too many people remain loyal to their banks and insurers and consumers should first look at shopping around for the best deals and bank accounts that most benefit them.
‘The most common mistake people make is not shopping around and loyalty [to providers],’ he said.
‘Unfortunately loyalty is seldom rewarded these days and the best deals go to new customers so it pays to take the time to see what deals are around.’
Brownridge said car and home insurance, and energy packages, should not be renewed automatically. It may be a boring task, but take the time to compare your electricity and gas suppliers against others in the market, you may only save £5 a month, but that £60 is better off in your pocket than the pockets of the energy companies.
He also recommended using cashback websites when you purchase any item online, from insurance to a new suit. Brownridge described these websites as ‘important weapons’ as they allow you to earn money back on things that you were going to buy anyway.
Two of the most well-known sites are Quidco and Topcashback, where you can receive a few pence or a couple of pounds back on thousands of items. Before buying anything may sure you check whether you can earn a few extra pence back.
Longer term goals
Staying on top of your insurances and everyday purchases is a good start but in order to really prepare for financial freedom you need a long-term plan.
Without a long-term financial plan in place Brownridge said that it is impossible to achieve all the things you want to in your life.
‘Not planning ahead is a mistake. Do you know exactly when you will retire and how much you will need to live on in retirement? Thought not,’ he said.
‘As the old saying goes; ‘fail to prepare, prepare to fail’. We all have hopes and dreams for the future but if you don’t have a plan in place, the chances are you won’t achieve those dreams. Take the time to set out what you want financially and consider how you are going to get there.’
The final practical tip Brownridge has to help you achieve long-term planning goals is to ensure you are making the most of allowances and exemptions.
‘Every tax year, a multitude of exemptions, reliefs, benefits and allowance are available to everyone,’ he said. ‘Make sure you are aware of what and how much you are entitled to as the savings can really mount up.’
Financial Planning Week runs from 26 November to 2 December and is organised by the Institute of Financial Planning to raise awareness of the profession and help consumers make the most out of their money. You can find out more here.
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