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Financial planning starts with common sense

Financial Planning Week is here, but just how do you know if you need a financial plan or not?


by Michelle McGagh on Nov 26, 2012 at 12:41

Financial planning starts with common sense

Financial Planning Week is upon us, but according to one independent financial adviser (IFA), most people don’t need to call in the professionals to sort out their finances – they just need to exercise some common sense.

Steve Martin, director at Altrincham-based Smart Financial Planning, said everyone should endeavour to put their finances on a firm footing but not everyone would benefit from full financial planning.

He said the most common reason not to undertake financial planning was that people cannot afford it.

‘There are some people who say they cannot afford it but are earning enough and just spending their money. But there are some people who are not earning enough,’ said Martin.

‘I do not see how you can pay for financial planning if you are earning £25,000 to £30,000 a year and have two kids, a car and a mortgage to pay for – you should not be paying for professional financial planning.’

Martin said that consumers had to decide whether they would get enough value from the financial plan in order to pay for it, but said 90% of people would not.

He recommended taking sensible steps at home to sort out your finances before progressing on to financial planning.

‘You need to spend less, pay down debt and set a bit of money aside – if you cannot do that yet then you don’t need financial planning,’ said Martin.

‘You need to run your household budget profitably and then start saving. Financial planning starts at home.’

Exception to the rule

The only exception to this rule is protection and insurance, said Martin. He said everyone must put protection in place regardless of how much they are earning. There are a number of different types of protection policy available, including life cover, income protection, family protection benefit and critical illness.

‘It’s not hard to work out that if something happens to you then there will be a shortfall in income for your family,’ said Martin. ‘You can get insurance online, through a broker or at the bank, whichever way you need to sort out some protection – you need to take responsibility.’

When you need financial planning

Martin said financial advice should be sought when the decisions you make will affect you further down the line, such as retirement planning.

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1 comment so far. Why not have your say?

Graham Barlow

Nov 27, 2012 at 11:02

Comparing my own life with youngsters to-day, the biggest difference is the age when parents start their families. I have friends who have just got married at 40s something and rushed like lunatics to become pregnant. I say to them by the time we were forty something we had 4 teenagers, and they were all independant by my early fifties.. Then you are at your top level and can plan your retirement with ease as you are earning your highest income ever plus you have paid off the mortgage etc.. It is plain common sense to start your family as early as you can . You can never afford it but you make up the difference in energy, and get up and go which you dont have in your late 40s.. Dont put it off, start now.

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