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lianne

Financial Wellbeing

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A small leak will sink a great ship

 

We have all seen versions of Maslow’s Hierarchy of Needs (I added essentials for the new Millenium)

How to juggle the important stuff like the impending MOT, bikini body/panic saving for the holiday, while also organising the things other adults seem to manage, like Wills, Mortgages and Savings

 

 

Taking a ‘snow day’ in Bushy Park, reminded me  of the reasons that work and play need to balance out.  It also reminded me just how cold open spaces can get!

The kids and dog were covering themselves in snow and making snow angels (albeit in the style of Picasso)

I couldn’t help but see it all as a cunning plan to destroy the bathroom on our return

 

 

Hot coffee on the way home, warmed the brain enough to remind me of the following Monday strategy meeting, which has a tendency to test my listening and paying attention skill levels

I mean, I have been known to nod, make eye contact, even throw in the occassional “yes, ahah” – while mentally planning that evenings dinner menu and my entire ‘why it is important to eat brocolli’ negotiations

That table can be found in a mountain side Spa in Paphos – a one time work trip.  Probably favourite Board meeting of my career

 

 Getting your foundations in place

 

 

Protect your family and lifestyle

You might have the mortgage covered, maybe even some other debts

Having a mortgage free home, does not provide for income needs.  If you or your partner dies, or suffers a dibilitating illness, how do you pay the bills, keep the car running, school uniforms, food and so on

  • Who gets the kids from school if you have to work
  • How do you pay for changes to your home on medical issues

We know you cannot necessarily cover every eventuality, but you can protect the roof over your head AND the lifestyle you have built within it

Keep your home

Getting the mortgage is just the beginning

The long-term questions you need to answer will determine how long you can keep it…

  • Keep mortgage interest as low as possible
  • Can you keep making payments if you lose your job
  • Have you got a plan in place to repay your mortgage – or are you only paying the interest
  • What options do you have in later life to pay for your care needs and stay in your home

The mortgage market is changing and one of the biggest movements is the availability of lending for Over 55’s.

Later life mortgages can help you or your parents stay athome, even if care is required.  Many retirees are reaching retirement in debt than we have previously seen.  Re-organising debts is one of key skills and the relief this brings to our clients who have been trying to service expensive debts on a retirement income is palpable

Putting money away for the future

A fundamental part of Financial Wellbeing is building security through savings

Not only is regular saving a good discipline to create, savings get you through the ‘rainy days’, help you to stop the worry of MOT’s, Boiler breakdowns, school trips to name a few

Knowing that you can pay your bills for a few months following redundancy relieves the pressure and worry that often stops people moving forward

There are no rules to saving – you just need to start

Our skill sets will guide you, make it easy and help your understanding as you build your finances going forward, whether it is Pensions, ISA’s or Trust Funds for children and grandchildren

Give up Full-time work

When I first started my career in financial services (Spice Girls had just released Wannabe for a reference point), it was called retirement

However, working with clients now, the philosophy of work / life has entered a new realm

The systems and conversations we employ guide our clients through cash flow plans, income needs and interogation of their assets (employment, pensions, savings, state benefits, house, etc) and plot what income each one can provide and for how long

The strategy might often include continuing to work, but at levels required to sustain the lifestyle they are planning for.  We regularly review, revisit and re-run the cash flow plans to take into account longer holidays, the purchase of a boat in Spain (that is a real example) and any wonderful plans that can be dreamt up so that working becomes choice and income becomes part of your life, not all of it

Inheritance and Legacies

In simple terms…… Writing a Will

Nearly 80% of adults in the UK do not do this

In the simplest of terms…. Who do you want to inherit your estate?

  • Your brothers and sisters
  • Your adult children’s ex-spouse
  • Your ex’s
  • The State
  • Bankruptcy courts
  • Ex-spouses new family
  • None of the above

You can either dictate who gets it, or you can let the State decide

 

             Easy as …..

 

 

 

 

 

 

 

 

Saving for children

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Sometimes the questions are complicated and the answers simple… Dr. Seuss

 

“what do you want to be when you grow up”?

That’s where it starts, but really, should it be Who, not, What?

 

After the first few years of planning soft play parties and buying £10 presents in every sale, because there is always a party due, we are now spending weekends meeting Youtube idols and Musically stars.

Expressing herself with a Jake hat and meeting ex-tesco worker and youtube multi-millionaire Dan TDM.  Seriously, though… plays minecraft for a living

 

Putting birthday money away was one thing, but now, looming over the horizon are education costs, moving out, getting married (too early to be planning that?)

Well, the average age of first time buyers is now around 38

So, when do I get to choose the wallpaper in every room again, have that little home studio, downsize, move to the coast.

Who do I want to be when I grow up?

 

What is availble for children’s savings, short or long-term

The grand-parents always say they want to help or give something to them.  But where and what?
What are the risks and what if I pick the wrong thing, because, let’s be honest, I am going to suffer the shortfalls too
Interest rates on savings accounts seem low, so what other options do parents have?

 

 

Places to start

Junior ISA’s

Individual savings accounts (ISAs) are now available to children, and are known as Junior ISAs. These are long-term, tax-free savings accounts. Junior ISAs are available for children up to the age of 18, and the money cannot be withdrawn until the child’s 18th birthday. Anyone can contribute to the account, although the total amount that can be invested during a single tax year is capped at £4,128 (2017/18)

Child Savings Bonds

Offered by friendly societies and allow parents, grandparents, other relatives and friends to all save up to £25 a month on behalf of each child with the benefits then being earned free of further tax. The bond must have a minimum term of 10 years, up to a maximum of 25 years. The contributions must be maintained to earn the tax benefits. However, they do offer a valuable alternative, particularly if you are not the child’s actual parent.

Pensions

These are a niche choice for investing for children, but can provide a solution in certain circumstances. Investments into a pension attract tax relief on the way in, but tax is payable on any income received.

You can contribute up to £3,600 gross every year in a pension on behalf of your child. That will cost a basic-rate taxpayer just £2,880 as the government adds tax relief, but the child will not be able to access the money until they are 55.

Life Company Regular Savings Plans

These tend to be used by relatively sophisticated investors, particularly expats and international executives. Investors can use them to build up a tax-free lump sum and then assign segments of it to their children. These segments are usually paid out tax-free as long as they fall within a child’s tax-free allowance but, in the meantime, the policyholder retains control of the investment policy.

 Designated Investment Accounts

These are a good alternative to a Junior ISA, if you wish to retain control of the investment once the child reaches 18.  These are simply held in the Parents name(s) and are Designated for the child, and until the parents (or grandparents) decide, the investment is held without the knowledge of the child.

Child Trust Funds (CTF)

Although CTFs were stopped in 2010, millions of parents still have active CTF accounts for their children. Parents, family and friends can add a total of up to £3,600 to the account each year. There is no tax to pay on any income or any gains from the fund.   The account remains in the child’s name and they will ultimately have control over how it is spent.  Some providers will allow you to switch them into a Junior ISA now

Trusts (How to keep control)

Legislation over the past few years has eroded many of the tax-planning advantages of trusts. In general, these are now used to control access to the funds rather than for tax planning.

Income and capital gains are treated as those of the children, which means that they can use all their allowances each year. It also gets round the problem that children cannot hold shares in their own name.