Now that we’re finally starting to see a way out of lockdown and a route to ‘normality’, it’s a good time to reflect on 2020 and think about the things we can take away from the year that most can only describe as a nightmare.
Only 3 months in, the global pandemic threw the UK into a nationwide lockdown. And during this time, people weren’t just tackling financial difficulty, they were also combatting the fear and grief of losing vulnerable family members to the virus. Initially the general public were in a state of shock, but as we started to adjust, it became clear that with its destruction, the pandemic also brought with it some important truths.
Losing family, careers and financial security highlighted that the unexpected absolutely can happen- and when it does, it doesn’t take any prisoners. People from all walks of life were rocked not only by the cause, but also by the Government’s response. Where furlough covered a high level of earnings which did offer support, individuals and families were still hit by a 20% drop in income – which at surface level might not seem life-changing, but certainly was for those with no savings, living month by month.
In spite of the devastation caused, more and more individuals began to invest in their local communities to keep businesses open – some even thrived in these unusual circumstances (eg. local butchers). A sense of togetherness was realised during these tough times, whether it was family collecting medication, doing neighbours’ shopping or donating to local food banks.
Not only that, but many also believe the pandemic has made them truly understand the value of having a strong family network. Research by ChannelMum.com found that 4 in 5 parents believe that the pandemic has brought their family closer together.
So what should be done with this newfound realisation?
It’s actually really simple. You need to agree and put in place a sturdy financial plan to protect yourself and your family against unforeseen circumstances. Although we’d hope none of us experience anything like this again in our lifetimes, you can’t say with 100% certainty that we won’t. And although we have no control over that, you do have control over how prepared you can be.
When we say ‘financial plan’, we don’t just mean getting some life cover for yourself and your assets. A financial plan goes way beyond that, and puts a central focus on your lifestyle choices and goals. Obviously life cover can play a part in your comprehensive plan, but it’s primarily about making your money work for you in your lifetime, in an emergency and even when you’re gone. A thorough financial plan considers your levels of saving, your pensions, your investments and potential care and inheritance requirements/wishes.
No matter what stage of life you’re in, it’s always important to have an effective financial plan should the unexpected happen. That’s why our financial planners adjust your plan to suit your circumstances as you and your lifestyle evolves.
For example, if you have a family, your main focus should be protecting your income, building savings and ensuring that any dependent children can be cared for until the age of 18 at least. But at the other end of the scale, if you have accumulated significant wealth over your lifetime and want to pass it down in the most tax-efficient way when you die, an Inheritance Tax plan could be a priority.
It’s all well and good knowing all of this, but the important part is actually doing something about it.
As some plans (like IHT planning) can take years to become effective, it’s not something you can afford to put off. In the context of COVID, if you started planning the day we went into lockdown, you’d still be a long way off the plans being effective. You can’t wait until you can see the problem around the bend. By that point, it’s usually too late.
So the message in all of this is, there’s no better time to get advice than as early as possible. The pandemic has been a big reality check for a lot of people, and has really hammered home the reality that we are NOT immortal and we don’t know what the future has in store for us. It’s a morbid topic and it’s not always comfortable to discuss because it’s scary. But the ostrich approach doesn’t protect or benefit anyone.
It may seem like a lot to try and keep up with your financial planning priorities throughout each life stage, but if you have a financial adviser, the pressure is reduced significantly. An experienced professional can identify changes in your needs and priorities, and adjust your plan as appropriate – so you don’t have to worry. And with regular reviews, you can rest assured that everything is up to date, giving you the best chance of achieving your goals and making your money work for you, and not the other way around.
If, like many others, these strange times have got you thinking about the effectiveness of your current financial plan, there’s no time like the present to find out for certain.
Our advisers can help you review an existing financial plan or help you construct a new plan from scratch to help you achieve you financial and lifestyle objectives. Most of our client relationships start with an informal conversation over the phone to see if we think we can help, and all initial calls are held at our own expense.
So the real question is ‘can you confidently say you have a financial plan in place that will support your family in a worst-case scenario?’. If your honest answer is no, what are you waiting for?
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