Chartered Financial Planners Neil and Amanda Cowie explain the benefits of financial planning through every life stage, no matter what your financial circumstances are.

This vlog (Benefits of financial planning through every life stage) starts by looking at the issues affecting those who are entering adulthood and perhaps just beginning their first job.


This is a stage of life that is relatively straightforward from a financial planning perspective.  You have an income coming in each month but little in the way of financial commitments.  Your expenses may be limited to rent, either your own home or still living with your family.  You may have a car payment and if you are renting your own home, you will have monthly living expenses to cover.


The real purpose of financial planning is to ensure you make the best use of the resources you have to live the life you want.


The main action points from a financial planning perspective are:


  • Create a monthly budget – this will help you understand what your income and expenses are and whether you have a regular surplus income. You should always allow enough spending to enjoy yourself.
  • Think about the things you want to do in the future. For example, buy a home, change your car, start a relationship, have children etc.


If your budget suggests you have a regular surplus, you can consider how you allocate this in line with the longer-term goals that may be important to you.


An example of some important considerations are:


  • Set up an emergency reserve – we typically recommend a pot of around 4–6-month worth of spending. This gives you a little cushion if things go wrong.
  • You may wish to protect your income by setting up an income protection policy. This is designed to replace most of your income if you are unable to work due to accident or illness.  Statistically you are more likely to be unable to work than die before retirement.  For someone in their 20s or 30s the cost of a suitable policy is likely to be easily affordable.
  • Once the above fundamentals are in place it is then important to apply the remaining surplus to capital growth. This can be done by joining your workplace pension if you have one or starting your own personal pension.  You may also have scope to set aside some surplus to plan for short term goals like saving a deposit for your own home.  You can use an ISA or Lifetime ISA for this depending on your age and home ownership status.


Neil Cowie has modelled these suggestions in our financial planning software and hopefully you can see the benefits of making these formal plans.

Watch the Vlog here: Benefits of financial planning through every life stage

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