New research from global investment company Standard Life found that the significant events of 2016 influenced the way over half of UK adults managed their finances.How you view your finances is as important as how you manage them. Both are crucial in achieving long term financial happiness and security. A few simple steps can help you focus on using your resources to enjoy life experiences, while making sure you have enough to sustain you for the future you envisage.
The research suggests that last year, 16% of UK adults put off making important financial decisions due to being more cautious. An additional 11% of UK adults said all the change and uncertainty made them worried about their finances and unsure what to do. Increased caution in light of unexpected events – including Brexit and the election of Donald Trump as US President – is only natural.
However, the events of 2016 also drove some people to take action, with almost one in ten, responding by becoming more proactive and taking more control of their finances. 12% said saving more became their priority, to create a bigger buffer against any potential bad times ahead.
A positive reaction to uncertainty is to improve your financial mind set, to help weather the uncertain times.Here are five key steps to help you focus on what’s important;
#1.Know your financial situation – Build a detailed understanding of your current financial situation. Once you have a clear view of your income, expenses, assets and liabilities, you’ve overcome the scary part of not knowing.
#2. Your goals–The fun bit! Think about your personal goals and what you want to achieve out of life. Make all your financial goals positive ones. When it comes to health, we don’t talk about ‘losing weight’ or stopping ‘bad habits’, but instead talk about improving our fitness and life style. The same applies to financial goals. Make your goal to improve your financial position by carrying out a regular health check on your finances once a month, rather than to reduce your debts. We’re much more likely to stick to positive goals than ones that make us feel negative and bad about ourselves.
#3. Plan of action – Look into ways you can achieve your goals. It may be as simple as saving regularly into your pension or ISA; being more disciplined on day to day expenditure, or it may be that you’re in a position to set up or add more to an investment portfolio.
#4. Do it – Turn planning into action and make it happen. Just as gym membership doesn’t make you fit, a financial plan doesn’t make you wealthy unless you do something about it. It requires commitment!
#5. Review – Circumstances rarely remain the same forever and reviews are an essential part of maintaining the right, steady course. Changes in the law, taxation, or investment conditions, may affect your plans, so it’s important to review your financial plans at least annually.
If you are struggling to get past the first 2 steps, get in touch and we’ll help you get your plan in place and moving forward.