Citywire printed articles sponsored by:
View the article online at http://citywire.co.uk/money/article/a637185
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 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.
More about this:
More from us
- Government plans reform of pension income rules
- New regulator wants 'simple, straightforward' financial services
- Financial planning: 10 essential lessons
- Why are we leaving financial advice so late?
- Money Masterclass: the experts share their secrets
- Financial advice: how much are you paying?
- 3 simple rules for financial success
- How to find a good financial adviser (IFA)
What others are saying
Weekly email from The Lolly
Get simple, easy ways to make more from your money. Just enter your email address below
An error occured while subscribing your email. Please try again later.
Thank you for registering for your weekly newsletter from The Lolly.
Keep an eye out for us in your inbox, and please add email@example.com to your safe senders list so we don't get junked.