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Holly's Blog: New (tax) year, new me

11 July, 2017

As we start the next financial year, we wanted to ask some financial planners to share their tips and food for thought with you. Here's some new tax year tips from: Chris Budd, Founder, Ovation Finance, and author of The Financial Wellbeing Book; Pete Matthew, MD and Chartered Financial Planner, Jacksons Wealth; Adam Carolan, Co Founder, Next Gen Planners, and Catherine Morgan, Financial Coach and Financial Planner, The Money Panel

Chris Budd, Founder, Ovation Finance, and author of The Financial Wellbeing Book.

The connection between money and wellbeing

Financial planning is really very simple. Work out what you want from life; then spend your money on that.

Of course, working out what you want from life is not as easy as it sounds. To start, ask yourself this question – what makes you happy?

If you find this a struggle, let me give you a hand. The biggest contributor to your wellbeing is the quality of your social relationships. Having a strong sense of purpose in life is also a big help.

How we spend money should therefore be supporting our life; it should not be the focus of it. That path leads to unhappiness.

So when you are reviewing your investments, ask yourself this question. What are they for?

When you review your spending (you do review your spending, don’t you?!), ask if your outgoings are adding to or reducing your wellbeing.

When it comes to money, saving tax and maximising investment returns might seem important. But they are nothing compared to making sure your money is working towards your wellbeing.

That is financial planning.

Taking a practical step back from any existential crisis we have just unearthed, here are a couple of cracking tips which will suit the more impatient action (wo)men out there.

Pete Matthew, MD and Chartered Financial Planner, Jacksons Wealth

Pay Yourself First

Paying yourself first is the classic life-hack, in that it takes some decision-making away from you and significantly increases your chances of financial success. By setting regular savings to go out from your account the day after you get paid, and then budgeting what's left, this eliminates 'budget creep' which inevitably means that there's usually nothing left to save at the end of the month. It is also a powerful statement of intent, proving to yourself that YOU are the most important person in your financial life, because you get paid first!

Adam Carolan, Co Founder, Next Gen Planners

How much should I save?

Money is designed to make you fail. Very clever people realised many moons ago that people don’t like to deal with their money and personal finances. But let’s not get too downbeat. There are ways to beat the system, it just takes a little thought and planning and the right mindset. Some of these principles have been taught for years but they don’t get talked about enough. This fairly simple system will help you do that and it involves minimal work to set it up and minimal work to maintain.

It is all about the Three Buckets of Fixed, Savings and You:

The numbers can be bigger or smaller but the principles and percentages are fairly spot on I think. I am afraid if you have higher fixed costs then the first thing to do is to look at how you cut this or reduce the “You” part. This is a simple trade-off.

Now here is the trick. Once you have worked out your optimal allocation for each bucket you need to set it up so that you can’t screw it up. This means actually setting up a separate account and transferring money into the “YOU” account and also making sure that your direct debits for savings leave your current account as soon as your income comes in so that you can’t touch them or alter them. The whole point in this system is that it can’t be tampered with. Every 6 months or so, maybe sit down and review it but the more you touch it, the more you will screw it up.

A final challenge to consider which pushes us all to make some changes, comes from Catherine Morgan.

Catherine Morgan, Financial Coach and Financial Planner, The Money Panel

Be grown up with money

Often when we think about financial planning, we dismiss what we have already done or are able to do at no cost. So before beating yourself up for not getting started sooner, go and explore what you already have available to you at your fingertips.

Pull up your big boy/girl pants and get organised. Look at who your pension pot goes to, particularly after life changing events such as divorce. Sort out a will. Have those awkward conversations about guardianship over a large glass of wine (as if we need an excuse!). Check out those valuable employee benefits which may give you access to important protection products that will save you money.

Pick who is on your money team.

There is a big difference between financial planning, advice and coaching. Financial planning focuses on planning ahead and advice focuses on products. Financial coaching ( focuses on helping you to develop healthy money habits that will prevent you from making poor financial decisions. You need all of these experts in your life, but think about what Boring Money ‘tribe’ you are in. If you are a ‘Tired Parent’, focus on getting financially organised when money is tight and get clear on your spending habits.

Hopefully there’s something in there for everyone to consider! And here’s a final tip for this weekend – Tesco has 1/3 off chocolate-flavoured Baileys – one way to get through the blizzards this weekend!!?

Have a great weekend everyone.