Financial Planning: A Step-by-Step Guide

Financial planning involves evaluating your current financial situation, with or without the assistance of a professional financial adviser, and identifying strategies to achieve both long-term and short-term goals.

What is a Financial Plan?

A financial plan is a comprehensive document outlining your financial situation, aspirations, and strategies for achieving those aspirations. A robust financial plan covers cash flow, savings, debt, investments, pensions, insurance, and other financial priorities. It evolves over time, adapting to significant life events such as marriage, starting a new job, having children, or planning for retirement.

An independent adviser can help ensure your financial plan aligns with your objectives and remains on track as your circumstances change.

How to Make a Financial Plan in 9 Steps

1. Set Financial Goals Start by defining clear financial goals. Whether you want to buy a house, retire early, or fund your children’s education, having specific objectives makes financial planning more purposeful. Ask yourself: What do I want to achieve in five, ten, or twenty years?
2. Track Your Money Understanding your cash flow is essential. Knowing what comes in and what goes out can help you allocate resources effectively toward savings or debt repayment. For example, adopting a budgeting method like the 50/30/20 rule can help balance necessities, discretionary spending, and financial goals.
3. Build an Emergency Fund Financial stability starts with an emergency fund. Begin by saving £500 to cover unexpected expenses, then aim for a reserve equal to three to six months of living costs. Good credit also provides financial protection by enabling better borrowing terms when needed.
4. Tackle High-Interest Debt Reducing high-interest debt is a crucial step. Credit cards and payday loans often carry exorbitant rates, making repayment a priority. Strategies like debt consolidation or working with a certified adviser can make debt management more efficient.
5. Plan for Retirement Whether through workplace pensions, personal pensions, or ISAs (Individual Savings Accounts), retirement planning is critical. A financial adviser near you can guide you on maximising contributions and leveraging tax advantages to secure your future.
6. Optimise Tax Planning Efficient tax planning involves understanding how to reduce your taxable income legally. Adjusting your allowances, claiming reliefs, and using tax-advantaged accounts can help you keep more of your earnings while achieving your goals.
7. Invest for Growth Investing isn’t just for the wealthy. Tools like ISAs and diversified portfolios can help build wealth over time. Speak to an independent financial adviser to create an investment strategy tailored to your risk tolerance and objectives.
8. Protect Your Finances Insurance is a cornerstone of financial security. From life insurance to income protection policies, these measures safeguard your family and assets against unforeseen events.
9. Plan Your Estate Estate planning ensures your wishes are respected, and your assets are distributed appropriately. Drafting a will and considering powers of attorney can provide peace of mind and clarity for loved ones.

When to Create a Financial Plan

Certain life events prompt the need for a financial plan, including:

• Starting a Family: Parenthood brings additional responsibilities, from childcare costs to future education planning.
• Increased Income: Promotions or windfalls can elevate your lifestyle. A financial plan ensures this growth is sustainable.
• Health Issues: Medical expenses or long-term care needs can strain finances. A well-structured plan can mitigate such challenges.
• Retirement Planning: A financial adviser can help you determine how to make your savings last and optimise withdrawal strategies.

Finding the Right Financial Adviser

You don’t have to manage your finances alone. Whether you prefer working face-to-face or exploring virtual services, finding the best financial adviser near you can make a significant difference. Independent advisers offer tailored advice without conflicts of interest, ensuring your needs come first.

Considerations when choosing an adviser:

• Fees: Look for transparent fee structures to avoid surprises.
• Credentials: A certified adviser can offer specialised expertise.
• Specialisations: Some advisers focus on pensions, protection, or investments, while others offer comprehensive financial planning services.

Why Financial Planning Matters

Financial planning empowers you to navigate challenges, such as economic uncertainty or inflation, with confidence. A well-crafted plan supports immediate needs, protects against risks, and builds a foundation for long-term goals. Whether you aim to secure your retirement, fund your children’s future, or simply achieve greater financial peace of mind, thoughtful planning—guided by the best financial advisers near you—can make all the difference.

Founded in 2017, Fintuity has fast become one of the only digital Independent Financial Advisers (IFA) in the United Kingdom.  Fintuity offers a wide range of financial advisory services including pensions, protection, investments and mortgage advice. The key difference is that as an exclusively digital service, we can offer significant savings and a service that is direct to you and on demand. All rates are correct as of 16 October 2024.