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7 ways to boost your wealth health this year

Buried in paperwork and burying your head in the sand? Yup, us too... We quizzed the pros at Berkshire's Essential Wealth Management about how to boost our finances to ensure we live like a VIP now and in the future.

Want to dive into a January detox? And, nope, it doesn’t involve a juice cleanse, fasting or scales. The start of the year is the best time to detox your finances. With the cost of living soaring, get your head out the sand, lady, and be proactive. We spoke to Chartered Financial Planner Sonia Wheeler of Berkshire-based Essential Wealth Management about boosting your wealth health… and it’s not as scary as it sounds.

1/ GET YOUR HEAD OUT OF THE SAND

Creating a financial roadmap is about as grown up as it gets. It’s a new level of adulting that’s hard to wrap your head around. And for added fun, it doesn’t come with an instruction manual and it’s all double Dutch. But get your head out of the sand, lady. The sooner you start the easier it will get. That said, it’s never too late.

When you start work, or start to pay rent or a mortgage, get in the habit of budgeting. Start with your income and then breakdown ALL of your expenditure. Once you know the surplus, you can put away for your future. Ideally 10%-15% of your income before tax. This might take some adjusting to achieve. The initial savings pot should be emergency money, typically about three months of your costs. You should have this money accessible, for example in a bank savings account, premium bonds, or cash ISA (individual savings account).  

Goals woman notepad coffee

2/ BECOME A GOAL GETTER

Dig deep and think about things you really really want. Make a list. Then think about what financial changes you need to make in order to achieve your goals. Everyone’s will be different. You can also breakdown your ‘wants’ under headings (for example; family, property, lifestyle, education, retirement) and include why you want each goal and how you will achieve each one. Keep reviewing them, as you have a clearer idea of your ‘why’s’, the ‘how’s’ should start to come together. Then make the money magic happen. I do this at the beginning of every year. It focuses your mind and allows you to prioritise your expenditure. It’s not to say that you won’t go on a late night online shopping spree, but you might thrash your credit card when you’re saving for renovations or a house deposit..

3/ TIDY YOUR PENSION POTS

Woman banging her head on her desk

Maybe you’ve had a number of different employers over the years and have amassed various pensions – hey, who hasn’t got some variety on their CV?! You’re probably getting piles of paperwork through the post and your inbox, but don’t have a clue what it all means. And it doesn’t help that pension providers use different terminology – talk about apples and pears. You’re best calling in the pros to review what you’ve got. There may be opportunities for amalgamating, reducing costs, and going for better/more appropriate fund choices. BUT, some schemes have hidden benefits and there could be transfer penalties. Definitely take control of your retirement just let the experts guide you… and you’ll be on that yacht in Monaco, in no time.

  • The value of investments and any income from them can fall as well as rise and you may not get back the original amount invested.
Stocks and shares app

4/ RISKS AND REWARDS

While Leonardo DiCaprio is easy on the eye in The Wolf of Wall Street, the film is not an idiots guide to stock market investments or the best advert. That said, it’s worthwhile getting your head around stocks and shares because, although they come with financial risk, the rewards can be bigger for your medium-longer term money, compared to a savings account. There are some helpful websites that explain about stocks and shares, the Financial Conduct Authority for example, who regulate financial firms and advisers.

Portrait of a young happy woman winner throwing money banknotes isolated over pink

5/ FAMILY SILVER-LININGS

Come into some money? Make it count. Although the urge to splurge on a Chanel 2.55 lambskin bag is strong (just us?), it’s better to put it towards something that ultimately makes a difference to your life. This could relate to property, retirement, your children’s future, the list goes on. Buying a home is still a wise investment, despite the current high prices. Mortgage repayments are often no more than the cost of renting. The tricky part is the deposit and fees. Once you own your home, there’s no tax payable on the gains you make when you sell it. Buying additional properties for investment is now less attractive due to the taxes when you buy them, let them and sell them. 

Don’t forget to write your own Will setting out what you want to happen in the event of your passing. Include key basic information such as who should administer your estate, guardians for your children, how you want your assets distributed and ensure pension funds and life insurance policies have the appropriate trusts or nominated beneficiaries declared. 

  • Your home may be repossessed if you do not keep up repayments on your mortgage.
Pink piggy bank drowning in ocean of copper pennies.

6/ DOING IT FOR THE KIDS

Whether you’re going down the independent schools route or thinking about softening the blow of uni fees, you need to save for your kids’ education. To fund one child through university typically costs £9,250 in fees for usually three or four years, plus about £600-£1,000 per month for living costs. In today’s money, this is between £49,350 and £85,000. The sooner you start, the better. If you invest £200 per month when a child is five, they could have a fund of about £40,000 when they are 18. This assumes averaged investment returns of 4% per year after charges.   

You can currently invest up to £9,000 per tax year into a junior ISA (individual savings account), which is £750 per month. ISAs are very tax efficient, with no tax on income, gains, withdrawals or on final encashment. 

  • HMRC practice and the law relating to taxation are complex and subject to individual circumstances and changes which cannot be foreseen. 
Woman in mustard jumper at laptop

TOP DOS AND DON’TS

DO

  • Track your expenditure and understand where your income is spent.  
  • Save a portion of your income.  
  • Think about your future and write short, medium and long-term goals.  
  • Write down why each goal is important to you and how you will achieve them.  
  • Take the time to understand your existing finances; pension schemes, savings etc.  
  • Have a will written.  
  • Ensure your assets are insured and don’t forget about your income. Protecting your income if you become ill and unable to work is too often overlooked.  

DON’T

  • Panic. It is rarely too late.   
  • Spend more than you earn. Adjust your expenditure where you can.  
  • Include additional income, bonuses for example, into your general spending and instead put it away for your future.   

Ready to call in the experts?

Berkshire-based Essential Wealth Management is just the kind of place we want to go for financial advice – it’s a local, largely female-led, long-running and no-nonsense firm where the first conversation is no obligation and no jargon.

Essential Wealth Management is a trading style of Essential Wealth Management & Advice Ltd who is an appointed representative of The Openwork Partnership, a trading style of Openwork Limited which is authorised and regulated by the Financial Conduct Authority.

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