15 Steps To Improve Your Financial Wellbeing In 2023

Emma Watson, Head of Financial Planning at Rathbones Group, says…

While you may be used to budgeting and have a rough estimate of you future spending in mind, it’s hard to know how much you’ll need in 15 years' time. This is where financial planning can help you account for any variables that you might not have considered. This will be key in working out what will be enough, both today and in the future. Using a budgeting forecast will project spending alongside future interest rates and inflation to calculate how much cash will be needed in the long-term.

Investments tend to outperform cash over the long term, so you may consider investing some of your money this year. You can work with an investment manager to help you put cash that is not needed in the short term to work for the long term. The investment manager can also be on hand to clarify any assumptions made on investment growth to make sure they are realistic or achievable. Plus, they’ll consider factors such as your risk appetite and ability to withstand loss, as well as the charges, fees and taxes payable over time.

You should start thinking about your financial priorities. There are a lot of questions you’ll need to ask yourself and a good financial planner will ask them too. For example, you may want to focus on your grandchildren’s or children’s financial futures, such as education or care costs, or you may simply want to focus on your own. If you start thinking about your financial priorities now, you can start putting together a plan for cashflow and budgeting, which will help you feel comfortable and confident about your financial position.

Will Stevens, Head Of Financial Planning at Killik & Co, says…

If you don’t know what is coming in and what is going out, you won’t be able to decide what to cut back on or know how much you could save. In this exercise, you may also find direct debits or standing orders that you no longer use, which might bring down your outgoings further – a point of increasing focus as we deal with a cost-of-living crisis. However, it is also important to make a budget realistic, so set yourself budgets for the things you enjoy in life too – whether that be dining out, clothes or holidays – this will help you stay on track for longer by making it feel like less work.

Whether it is clearing small residual balances or putting in place a larger plan to repay debt over time, this should help give you peace of mind that your liabilities are under control. Once this has been done, or if you have no debt, build a rainy-day fund of somewhere between three and 12 months’ expenditure to protect you should there be an emergency by giving you some cash to rely on without needing to take out any debt.

Financial protection in the form of insurance (whether life insurance or income protection) has historically been at low levels in the UK compared to other major economies. Making sure you have some form of protection in place should the worst happen will give you peace of mind that you can survive any nasty shocks – income protection is particularly poignant here, as it can ensure you are not left short should you be unable to work due to accident or sickness. If you are unsure about any of the above or where to start, speak to a professional in the form of a financial planner or The Money Advice Service to get started.

With interest rates rising, now is a great time to be shopping around for the best rate. Some institutions are slower to move their rates, relying on apathy to avoid a loss of customers. As a result, it can be possible to get uplifts by looking elsewhere; however, it is also important to focus on security and ease of access – rather than solely chasing a return on your cash. Comparison websites like MoneySupermarket are a great place to start.

Split your savings into rainy-day savings, foreseeable expenditures and lifetime savings. The first pot should be the emergency fund (three to 12 months of expenditure) held as cash at a bank with instant access. Foreseeable expenditures are those things you know are coming up in the future years, but you may not have a date for (i.e. a new car in three to five years’ time); this money should be set aside in safer investments depending on the time frame to avoid any volatility of investing in markets – as we saw in 2022. Lifetime savings are then the rest of your savings, which are going to provide an income for you after work or a legacy to your children and grandchildren. These funds should be invested fully with a view to growing them ahead of inflation, provided you have the risk appetite for it.

A Will is a key document to have in place for any individual with assets or dependants. The rules around inheritance are not as simple as they appear, especially when children are involved, so it is imperative that everyone put one in place. A Will ensures your wishes are followed after your death and that any savings or properties are left to those they should be. If you die without putting a Will in place, the rules of intestacy will kick in and default routes will be followed, regardless of your or anyone else’s desires.

A power of attorney is another must for anyone with any level of financial wealth. It is essentially a living will, allowing the nominated attorney the power to manage your financial affairs should you be unable to. Without one in place, it usually takes at least six months to get a court order in place to take over managing a person’s financial affairs. If you have bills to pay, mortgages or children to look after, this can be a real hindrance. You never know when the worst might happen that could leave you unable to make decisions for yourself – whether that be a car accident or a stroke.

For more advice & information visit Fidelity.co.uk, Rathbones.com & Killik.com. 

*DISCLAIMER: Anything written by SheerLuxe is not intended to constitute financial advice. The views expressed in this article reflect the opinions of the individuals, not the company. Always consult with an independent financial advisor or expert before making an investment or personal finance decisions.