Here at Tandem Financial, our aim is to help our clients make wise decisions with their money. Whilst we hope 2021 will hold better things than 2020, it is likely that many challenges still lie ahead. It pays to have a robust, updated financial plan in place to protect your hard-earned wealth and keep things on course over the coming months and years.
In this guide, we offer a broad road map for you to review your current position, check your trajectory and ensure any “weak spots” in your plan are addressed. We can help by providing signposts along the way and holding you accountable for your progress.
The ultimate goal of a financial plan, of course, is to bring together the four areas of passion, mission, vocation and profession under one plan. This is beautifully encapsulated in the Japanese idea of “ikigai” which unites, respectively: what you love, what the world needs, what you can be paid for and what you are good at.
Here at Tandem, we represent this kind of financial planning through our ‘Tandem Compass’; a resource that we hope you use and reflect on for your own journey to financial freedom and fulfilment. In this spirit, let us now look at the main areas where you can plan your way ahead in 2021:
Cash Flow
Mastering your cash flow is a key milestone in your journey. If you are spending more than you earn, it is impossible to progress to the next step.
Important considerations include:
- Budgeting and planning
- Living within your means
- Building an emergency fund
- Clearing debt
- Applying positive financial behaviours and discipline
Financial success is not usually achieved by ‘big wins,’ but by practising good habits consistently over a long period of time. With your day-to-day finances in good shape, your goals are a step closer.
Insurance
Unforeseen events can quickly derail a financial plan. While these are not pleasant subjects to think about, we would strongly encourage you to consider:
- Life insurance
- Critical illness (CIC)
- Income protection (PHI – Permanent Health Insurance)
- Private medical insurance (PMI)
You should also consider your needs in terms of:
- Buildings and Contents insurance
- Vehicle insurance
- Other insurances, like dental insurance, pet insurance and travel insurance etc.
Some events are outside our control, but with robust plans in place, we can lessen the financial impact.
Savings & Investments
We can help you navigate the vast array of savings and investment options open to you. This could include:
- Establishing whether cash deposits or asset-backed investments best suit your needs.
- Working out the most suitable wrapper from a tax point of view.
- Carefully vetting the companies you entrust with your money.
- Helping you understand risk, why it is necessary and how much you should take.
- Creating a diverse investment strategy across a range of asset classes, geographical regions, and business sectors.
- Factoring in your goals and spending requirements so that withdrawals are carefully planned and as efficient as possible.
Retirement Planning
Retirement is a key goal for most people, but this can take different forms. Some retirees wish to stop work as soon as possible and enjoy a life of leisure. Others envision a more gradual approach, for example a three-day week and more time for family and hobbies.
Your retirement plan will depend on the lifestyle you would like to achieve. We can help you facilitate this by:
- Advising you on contribution levels.
- Maximising tax relief and avoiding penalties.
- Recommending the most suitable pension plan.
- Constructing a long-term investment strategy.
- Creating an income plan so that you take withdrawals from the most efficient source.
- Determining how to use your pension fund to create a legacy for the next generation.
Tax Planning
Saving tax is not a goal in itself but is usually a natural consequence of good financial planning.
For example:
- Funding your ISA so that future investment returns are free of tax.
- Using your annual Capital Gains exemptions to avoid large gains rolling up and becoming taxable later.
- Allocating investments between spouses to make use of both tax allowances.
- Contributing to your pension.
- Maximising benefits from your employer.
- Ensuring you claim all the reliefs to which you are entitled.
- Keeping up with new legislation which could include both risks and opportunities.
- Mitigating Inheritance tax using Wills, Trusts, Bonds, Gifts/ PETs, Exemptions.
Property
For many people, their home is their most significant asset. Property is a familiar asset class, which means it can also be an attractive investment. We can help you to make sense of the options, for example:
- The best mortgage for your situation
- Buying a second property
- Becoming a landlord
- Helping children onto the property ladder
- Understanding the tax implications
- Understanding ownership structures
- Property as an investment, including liquidity and diversification issues.
Wills & Estate Planning
Creating a legacy is an important step in your financial journey, as it allows you to leave an impact on the world. There are multiple opportunities to direct the use of your assets after you are gone, as well as ensuring that your affairs are dealt with appropriately when you can no longer make decisions. We would encourage you to consider:
- Wills, to inform your executors how your estate should be distributed
- Trusts, to ring-fence assets for beneficiaries
- Powers of Attorney, to allow someone to act on your behalf if you become incapacitated
- Regular gifting, to provide for your family and potentially reduce the size of your estate
- Charitable gifting
A carefully considered estate plan can save Inheritance Tax as well as making sure that your money continues to work beyond your lifetime.
Mindset & Ikigai:
Ikigai
A Japanese concept which means ‘a reason for being.’ The word refers to having a direction or purpose in life, that makes one’s life worthwhile and towards which an individual takes spontaneous and willing actions giving them satisfaction and a sense of meaning to life.
We take time to understand your personal aims, aspirations, and purpose in life. This means that every financial decision you take is meaningful and in service of a greater goal. As well as the financial aspects, we will also discuss with you:
- Your feelings and attitudes towards money
- Your habits and behaviours
- What financial independence means to you
- Maintaining a healthy body, mind, and spirit
- Your profession and your passions
- Your goals and interests
- Your philanthropic aims and role in the community
Invitation
Here at Tandem Financial, our planning process is represented as a compass – a process which is circular, rather than linear. Your mindset and reason for being will set you on your path but may evolve over time. This is why it is important to revisit each point on the compass on a regular basis to ensure that your journey remains on track.
Click HERE to view and download the Tandem Compass and the associated questionnaire. We hope you find it valuable to assist your own journey towards greater financial freedom and fulfilment. Please get in touch if you would like to discuss any of these areas of finance via our main office number: 01438 879262 or email [email protected]
