‘ Just one financial thing….’

In today’s fast-paced world, managing personal finances can feel overwhelming. With so much advice out there, it’s easy to get lost in complex strategies and forget that sometimes, small changes can make a big difference.With my love of food and good health, and inspired by #JustOneThing from the late Michael Mosley and the practical wisdom of Tim Spectator, I’ve put together a series of 30 simple, actionable steps that anyone can take to improve their financial health.Whether you’re just starting on your financial journey or looking to fine-tune your existing habits, these tips are designed to help you build a more secure and prosperous future — #JustOneFinancialThing at a time.                                   

1. Starting with an easy one – make sure you have an emergency fund. Ideally this should be 6 months’ salary, but we are going to start small, and let’s just get an account opened if you haven’t already. As we work through the series we will begin to work out how much you can afford to add it, but just getting that account opened will be a great first step. If you are time restricted, just do this with your existing bank. A separate account, earmarked for emergencies, will ring fence the money and avoid you dipping in to it at the end of the month. Ideally, if you can spare the time, open an account with another financial institution. That way it will be ‘out of sight, out of mind’ and will help you avoid spending that money.
2. Number two in the series of #JustOneFinancialThing is to be organised. Whilst we are entering a paperless world, you will still have emails, documents, contracts and policy information.Set up a virtual filing system to make it easy to find everything. This could be using a tool like Microsoft One Note, or just folders within your email system. The most important things is to stick with it, move documents so they are stored where you can find them, and remove old information you don’t need anymore. This is going to come in very useful as we move through the series as you are going to need this information to hand.
3. Now you are organised, you will have access to the information you need for number three of the series of #JustOneFinancialThing, where you can get a grip on your finances and be ready for whatever life might throw at you. Work out who you owe and what interest you are paying. There are 2 schools of thought on repayment on debt: – Pay off the highest interest rate first – this will save you the most money in the long run. This is likely to be short term, unsecured debt, like pay day loans or credit cards, with any mortgage the cheapest form of debt.
   – Pay off the small debt first – this will reduce your outgoing the quickest and will allow you to re-direct that repayment to the next debt.Whichever you choose, stick with it. We all accept that a mortgage (or rent) is a long term debt and I would not expect this process to make you debt free in the short term, but what it will do is put control of those debts in your hands, and you will have a plan.
4. Number four in the series of #JustOneFinancialThing is less about you and more about protecting your loved ones. This is especially important if you have debts and / or a family. There is no golden formula for how much life assurance you should have, but it should be at least enough to pay off the mortgage. If you have children, you should also be thinking about how your partner will manage with just one income, whilst raising a family.Life assurance is not just for young people either. We should all be thinking about what would happen to our loved ones if we are no longer here to support them. To find out more about life assurance we have a video box set which is free to access, just follow this link:https://lnkd.in/er_k4SF7
5. If you are following this series already, you have set up an emergency fund. Number five of #JustOneFinancialThing is to start adding money into this account using Round Up. If you haven’t come across it before there are lots of banks and Apps you can use to round up spending on your debit card. Like Phil Bray💡The Financial Services Marketing Guy💡if you spend a lot of time in coffee shops, every time you spend £3.75 on your latte, the App will pop 25p into a savings account, it rounds any spending up to the next £. You’ll be surprised at how this can build up. When I first heard of this, a client was telling me that he had taken his family to a theme park on his round ups. You could do this, or you could transfer it on a regular basis into your emergency fund.
6. #JustOneFinancialThing part 6 – we have to talk about ‘Get rich quick’ schemes. I don’t necessarily mean the pyramid style schemes that were around 20 years ago (although these should definitely still be avoided) but more the day to day ‘clickbait’ offers. One which I am sure you are all aware of and is widely talked about is changing banks to get cash back. On the face of it, it looks good. It’s simple to do, in fact the banking system does it for you, and you make ‘free cash’. BUT, the consequences of this need to be considered. If you have a mortgage, or may need one in the future, the lender will look at your credit rating. One of the components of this is duration with your bank – a demonstration of credit worthiness. Regular changes, in their opinion, does not reflect well and therefore could have an impact on your ability to borrow. The same rules apply to 0%, or very low, credit card interest rates. Switching credit cards can be a good way to pay off debt, but it should be considered as a one off exercise. Worryingly I have also come across people borrowing on a 0% deal and investing the money. Again on the face of it, that looks great, but what if the investment goes wrong (past performance is not a guide to the future after all). Then you have a debt and less money to pay it off. And in the meantime it has also potentially impacted your credit score. So the overall thought is, if it is too good to be true, it probably is, and think about the longer term consequences of short term decisions. A couple of years ago I wrote a blog about why you don’t want to win the lottery too!
7. #JustOneFinancialThing part 7 – Whatever your age, one of the components of your eventual #retirement will be the #StatePension. Now there may be an argument that my children (12 and 14) may not get one, but for the majority of people reading this, it will form the foundation of their retirement income. And this is why it is unbelievable the number of people we speak to who have no idea what their State Pension might be. They know they have worked a lot and paid a substantial amount of National Insurance, but particularly for women who have had time off to raise a family, or anyone who has worked part time, they don’t realise that they could still have accumulated credits during that time. Checking it is easy and is something I would suggest everyone reading this should do. Our video box sets can tell you more, just follow this link to register (it’s free!) https://lnkd.in/ewsvDpXd
8. In Part 2 of #JustOneFinancialThing you were getting yourself organised. Armed with that information you can now start to make use of it for Part 8 of the series. And we are going to start with an easy one – check your regular subscriptions. All banking apps allow you to see what direct debits and standing orders you pay. But when was the last time you checked them. Perhaps you have got a Netflix subscription you no longer use, a online (or paper) magazine that you never read or a gym membership you set up in January with the best of intentions. Or perhaps like me you set up an Amazon Subscribe & Save (which can be very useful) and now have a collection of shampoo bars, because it lasts longer than you thought! Be honest with yourself, are you making use of it and is it good value for money? If the answer in no, cancel it.
9. Part 9 of #JustOneFinancialThing is going to get you thinking a little more long term. By now you have already checked your State Pension, but this is unlikely to be enough to live on when you stop work, and indeed it might not be in payment when you want to stop work, particularly for those 40 or below. So you are going to need to work out how much is going to be enough in retirement. I often get asked by clients, ‘How much will I need?’ and my honest response is that I cannot answer that. It will be very much dependent on your lifestyle and goals. The Retirement Living Standards research (link in the comments) has created 3 tiers of retirement based on various types of expenditure; Minimum, Moderate and Comfortable. You can use these as a starting point for working out how much income you will need. You will use this later on in this series.
10. In Part 10 of the #JustOneFinancialThing series you are going to be thinking about your nearest and dearest again, and this time, who and how they will benefit when you are no longer here (Anyone recently bereaved may wish to skip this post as I would hate to upset anyone). You will know by now that this series was inspired by the late Michael Mosley, who died suddenly whilst on holiday. He always came across as a well organised man who put family first. So I am sure he left his affairs in order. Follow in his footsteps, as none of us know what the future holds. Take the time to write a Will. We know from experience with our clients that knowing what the wishes of the recently deceased were can be comforting at a time of distress. And whilst none of us expect it, disputes can happen when that person is no longer here, particularly if things aren’t clear. Our video boxsets may help, and the advice of a great solicitor is really important. We work with many locally but feel free to tag one in the post if you want to share how they have helped you https://lnkd.in/e6kzFZ_H
11. Many of our clients have had a series of jobs over their careers and, perhaps like you, they have a stack of papers about various pensions they have. In reality they have no idea how much they are worth and if they are older pensions whether they have guarantees, limitations or protections built in. So step 11 in #JustOneFinancialThing is to find out what you have got now. You cannot build a plan for the future without understanding where you are currently are. There is a FREE service to help you – link in the comments, or if you don’t know where to start, seek out an Independent Financial Adviser (try VouchedFor). If you are starting out in your career and been enrolled in a workplace pension, do take an interest in how much is being contributed and where it is being invested.
12. Being #Scam aware is an important part of feeling financially secure. If you are busy running a business, bringing up a family, caring for loved ones or dealing with whatever life throws at you, you are more vulnerable to scammers. The clever emails asking you to confirm your bank details are less frequent now, as the scammers using more advanced technology and more sophisticated ways to catch people off guard. So Tip #12 in our series of #JustOneFinancialThing is to have a good grasp of how you might get caught out by a scam. We have a video boxset which you can watch to help you spot scams and what to do if you have any doubt about any offer being made. It won’t take long to register and watch, and it will help you to protect yourself. Please feel free to share this link with anyone you think might find it useful https://lnkd.in/eeXzkVdN.
13. Tip 13 in our #JustOneFinancialThing is based on the experience of a client. He had been offered a great deal to buy a car, if it was taken on finance. With no repayment clauses it made sense to take out the finance with a view to paying it off quickly (perhaps even immediately from cash reserves – that’s a tip for another day!) but was turned down. This was someone of a more advanced age, with no mortgage, credit card and debts. He rang me to discuss the alternative options, and the first steps was to check his credit score. This is something that most of us do not do. It transpired that as he had never had any debt, he had no credit score, meaning that the lender had no track record to decide on credit worthiness. This is perhaps a rare instance, but we should all be aware of our credit rating and check it regularly. It could also highlight potential scams, where your address had been used by a third party. So take 5 minutes to register with one of the free services and check your records are correct.
14. #JustOneFinancialThing No 14 is something that we all know we should do, but many of us struggle to find the time for – check your renewals. It might be car insurance, building and contents insurance or your mobile phone contract. This applies to your personal contracts but also to your business contracts. It is a competitive market and there are people out there vying for your business. This means that we have to be on high alert (if it looks too good to be true it probably is) but on the other hand when a policy is due for renewal do not be afraid to try and negotiate. There are some great comparison websites out there, but again remember that not everyone is on those and some of the great deals can be found by going direct. And if you don’t have time, make use of a broker. They are there to help you find the best deal – not just based on price but on finding the right policy for you – and I am sure that some of my connections might comment on this post so that you can contact them.                          
15. Tip #11 in the series #JustOneFinancialThing was to gather all the information on your old pensions. Once you know this, you will then be able to consider not only how much you might get in retirement but also how much extra you can put into pensions. If you have looked at the lifestyle you want from #9 in the series, then you can work out what shortfall you will have. For those in the fortunate position to be able to make extra contributions, you may wish to consider backdating your contributions to ensure that you have maximised allowances. This is particularly relevant now, when the incoming Government may well look at the allowances and tax relief on #pensioncontributions. Our blog post tells you more.
16. Any kind of #FinancialPlanning should take into consideration your age, and that is No. 16 in our #JustOneFinancialThing series. Understanding where you are in your financial journey will guide your decision making. The steps you take now will depend on whether you are at the start of your career and looking to buy your first house, starting a family and thinking about protecting them in the future, or at the peak of your career and thinking about when you could stop work. These 5 main stages of financial life, each with different priorities, are covered in more detail on our website but can be summarised as follows:                                             1. Early career (in your 20’s) – workplace pensions, saving for a deposit, budgeting
    2. Building foundations (in your 30’s) – finding the right mortgage, protecting those close to you
    3. Lifestyle balancing – (in your 40’s) spend now or save for later, setting up a business, taking more risk
    4. Future Proofing – (in your 50’s) How much will be enough, when will I be able to stop work, maximising allowances at the peak of earnings path
    5. Enjoying the plans you set up (60+) – helping out younger family members, ensuring your money lasts. You can find out more on our website https://fhmanning.vps03.dev.inetservices.co.uk/financial-advice/
17. We often get asked about tax; how to understand whether the right amount is being paid, how to reduce it or how to protect assets from it in the future. Each of these could be a #JustOneFinancialThing tip in its own right, but the starting point is to ensure you are paying the correct amount of tax now. Initially, we all have a #tax free allowance of £12,570 (in this tax year at least). This is adjusted for a variety of different reasons (benefits in kind, state pensions, loss of personal allowance due to high earnings). This code is then passed on to your employer or pension provider to ensure any tax they deduct uses this code. If you are self employed this is used in your self assessment so forms the basis for all tax deductions in that tax year. If it not correct, or not applied correctly, then you could be faced with an unexpected tax bill from HMRC. If you are unsure whether your code is correct get in touch with an #accountant (please tag one you know and trust in the comments for everyone else) who will be be able to help.
18. Hopefully, if you are employed, you are all fortunate enough to get an annual pay review. In recent times many have received inflation linked pay increases. Of course, when prices are rising like they have, the increases hopefully cushion the blow of rising fuel food and general household expenses. I acknowledge that this #JustOneFinancialThing tip is not always possible, but if you can, save half of your salary increase each month and spend half. If you do this every year you will gradually build up a a regular savings amount and will find you have build up a sizeable emergency fund / nest egg for the future. If you can add this to an ISA or pension you will also benefit from the tax relief (although lose the accessibility)
19. We have already talked in our #JustOneFinancialThing series about being organised. Knowing where to find information saves time and helps you to plan, but we have to also be prepared for something unexpected. We are all very private when it comes to our finances, but it is sensible to let someone else know where you store important information. We have a few clients who keep a ‘death journal’, one place where details of all those little details are kept safely, just in case. We are also regularly told not to share passwords etc, but if that means that no one knows how to log in to your emails or internet banking then this can cause a lot of distress at a time when those close to us are already dealing with a lot. Of course, we should all keep information as safe and secure as possible, but if we just let one person that we trust know what to do, should something happen, then this is invaluable.
20. #JustOneFinancialThing No 20 is to understand what the future might look like. I appreciate this is not easy as there are many eventualities and variables. We use financial forecasting to try and understand what the future could look like, with a disclaimer things change and it could be wrong, but it is better than no plan at all. As an example, many people pay into their workplace pensions but do not actually understand what this means when they stop work. Not many of us have the luxury of a final salary pension, where it was much clearer how much you would get as an income if you stayed with the same employer your whole working life. Our retirement is more tied to investment returns and we also change jobs more frequently, so the projections we do get don’t give the full picture. You may decide that a simple spread sheet could be sufficient, with details of your current pensions, monthly contributions and other savings being compounded at a set rate of return to work out how much it could be worth at your anticipated retirement age. This can be compared to the retirement living standards from Top No 9 to see if there is shortfall. You may however decide that a more sophisticated analysis is needed ,with full financial forecasting. Whichever route you choose will help guide you future decision making. Originally I had planned 20 #JustOneFinancialThing posts to help people to start on their journey to being in control of their finances. It seems that once you get started, you begin to uncover lots more things you can share, so I am now extending this to 25!

There was a recent post by Saul Fairholm Chartered Accountants about the move by more people to being self employed, a transition we are also seeing, particular amongst the over 50’s.

21. With that comes #JustOneFinancialThing tip #21, which applies to employed and self  employed individuals and companies alike – plan for tax. We have already talked about making sure you can understand your tax code and if you are an employed basic rate tax payer that is probably all you need to do. But if you are a higher earner, self employed, have 2 jobs or other possible tax complications, then you need to be aware of the tax deadlines, paying tax on account and how much you need to set aside.

As a shameless plug, we launched a new service almost a year ago, specifically to support business owners and the self employed, but of course you can do some research yourself as well.

22. #JustOneFinancialThing tip number 22, with the recent budget being one of the most talked about in my 28 years as an Independent Financial Adviser, there is a strong possibility that the allowances and tax planning opportunities we all have may change. I do not advocate making #FinancialPlanning decision based on a whim, ‘leaked’ information or hearsay, but we all need to be aware of using these allowances whenever possible. So #22 of #JustOneFinancialThing is, if you can, use your ISA allowance (Lifetime ISA if you are not yet on  the housing ladder) , make pension contributions, transfer your personal allowance to a higher rate tax payer etc. This should not be a knee jerk reaction to the Budget, but a well thought out part of your plan for the future.

23.  After 22 days of advising you to ‘strike while the iron is hot’ and take action, todays #JustOneFinancialThing is quite the opposite. Next time you have fallen down the Amazon/TikTok shop etc rabbit hole, don’t hit the ‘Buy Now’ button. Pause, reflect, add to the basket and go back the next day to see if you still really NEED it.

My daughter is a big culprit of this, she’s only 12 but the Shop basket is always getting items added to it. So when I say to her ‘I’ll sort it later’ I am actually giving her the chance to reflect and I very often find that she removes them because she doesn’t really want them after all.

As adults, we have to be in control of this moment to reflect ourselves. One way to do this if you are out and about is to only use cash. Handing over cash actually allows us to see the money we are spending. It is more ‘real’ than tapping your phone against a card reader. Give it a try and let me know how you get on.

24. Apologies if #24 in the #JustOneFinancialThing gets a bit ‘geeky’ but I am fascinated by Behavioural Finance, and I have waited this long, but have to include it in this post. Your challenge today is to set yourself a goal; could be a savings target, could be a personal achievement, whatever it is, firstly you have to write it down. Now you have to challenge it – why have you set that goal/ why that number. Once you are sure that is the right target for you, and it is smart; Specific, realistic, achievable, relevant and time bound.As an example, you want to: Save (Specific), £10,000 (Realistic), from my salary of £30,000 (you still live with parent so it is Achievable). For as house deposit.  Relevant as a non home owner within 2 years (Time Bound).Now go and tell your mate / Mum (they are very good at holding people to account!). By telling someone you will (unconsciously) feel like you are letting them down if you don’t achieve it. You can share any challenges you face along the way and they can offer you support. You are far more likely to achieve your goal if you verbalise it.

(Now for the geeky bit) As you get closer to your goal you will work harder at it – it’s known as the goal gradient effect. Humans are more motivated by how far they have left to go, rather than how far they have come. #DuoLingo the foreign language app uses it very effectively, as will a lot of App based games. Setting ‘Learn French’ is not a ‘SMART’ goal – and neither is ‘Save £500,000’ before I retire. DuoLingo break it down into bite sized chunks i.e. learn how to talk about your family. I know from experience that the closer I get to completing my DuoLingo subject, I do more of it – goal gradient effect in action. You need to break down your long term goals into bit sized chunks and use the Goal Gradient effect to your advantage.

We talk about objectives and goals with all our clients and they can be recorded and tracked using our client portal. We challenge if they are ‘SMART’ and our regular reviews ensure that our clients remain on target. They can even see their progress. All I would say is, sometimes things come along that mean those goals aren’t achievable anymore – don’t be disheartened, life can take you on a different path and that is alright.

25. My final tip in the #JustOneFinancialThing series is to go out and make it happen!  I have this as a sign on board in the office, I say it to my colleagues and my children. It’s the saying I use to get things done (alongside ‘If opportunity doesn’t knock, build a door’ Kurt Cobain)

I have hopefully given you some tips to help you on your financial journey. If you would like to hear more, then please do sign up for our monthly newsletter, or give me a call. I would love to help you achieve your goals.

Claire Markham.