When it comes to sticking to a resolution, the key lies in making your goals specific and measurable, according to psychological research. This principle is particularly relevant when setting financial goals. With this in mind, we’ve identified five practical and achievable financial resolutions to help you stay on track. These tips are designed to help you safeguard your financial wellbeing and ensure you’re prepared for whatever the future may hold.
1. Adapting to Change: Reassess Your Financial Plan
Life is ever-changing, and in times of economic uncertainty, it’s crucial to ensure your financial plan remains aligned with your current circumstances. Significant life events, such as receiving an inheritance, selling a business, or separating from a long-term partner, can have a considerable impact on your financial strategy.
It’s important to review your financial plan regularly, and now is an ideal time to take stock of your situation. We recommend consulting with a Wealth Planner to ensure your financial strategy continues to support your goals, regardless of how your circumstances may evolve.
2. Maximising Your Savings: Utilise Your ISA Allowance
Individual Savings Accounts (ISAs) offer a tax-efficient way to save and invest, shielding your income and capital gains from tax. It’s always wise to make full use of your ISA allowance as part of a broader savings strategy, regardless of the time of year.
Incorporating your ISA into a comprehensive savings plan is a fundamental aspect of sound financial management. A Wealth Planner can help you structure your finances to take advantage of available allowances and advise on how much to hold in cash versus other investments.
3. Pension Planning: Make the Most of Your Contributions
In 2023, the Chancellor increased the annual pension contribution allowance from £40,000 to £60,000 (subject to earnings-related caps), along with other adjustments to pension regulations.
To ensure you’re making the most of your pension opportunities, it’s crucial to stay informed about upcoming changes in the budget that could affect pension planning. The budget may introduce further adjustments to pension allowances or tax treatment, making it essential to review your contributions and strategies in light of any new developments. Professional advice is crucial to optimise your contributions and secure your retirement plans.
4. Strategic Gifting: Transfer Wealth Tax-Efficiently
For those looking to pass on wealth, an annual inheritance tax (IHT)-exempt gifting allowance of £3,000 is available. If you didn’t use this allowance in the previous year, it can be carried forward, allowing you to gift up to £6,000 tax-free.
Gifting should be considered as part of a comprehensive financial plan, complementing other wealth transfer methods such as funding education costs or contributing to Junior ISAs. It’s also important to stay informed about the coming budget, as it may introduce changes to inheritance tax that could impact your gifting strategies. Consulting a Wealth Planner can help you navigate these potential changes effectively.
5. Family Matters: Engage in Estate Planning Discussions
While inheritance tax planning is crucial, it’s only one element of broader intergenerational wealth planning. A recent survey revealed that 42% of the baby boomer generation have not discussed inheritance or gifting with their loved ones, and 39% of younger generations feel unprepared to manage an inheritance.
To ensure your beneficiaries are ready to inherit and manage your legacy wisely, consider involving your children or other heirs in discussions with your financial planner. This approach helps prepare them to handle the responsibilities that come with managing wealth and securing their financial future, particularly in light of potential changes in the upcoming budget.
Stay in Control and Plan for Success
By committing to these financial resolutions, you’re taking concrete steps towards a secure financial future. The upcoming budget could introduce changes that impact your financial planning, so staying informed and proactive is more important than ever.
If you have any questions or need further guidance on your financial planning, don’t hesitate to reach out for expert advice.
An ISA is a medium to long term investment, which aims to increase the value of the money you invest for growth or income or both. The value of your investments and any income from them can fall as well as rise. You may not get back the amount you invested.
HM Revenue and Customs practice and the law relating to taxation are complex and subject to individual circumstances and changes which cannot be foreseen.
Approved by The Openwork Partnership on 06/09/2024
