City thinking, local knowledge

Start the New Year with a Financial Review

By Questa Chartered

For many of us, the beginning of a new year is the right time to reset and make improvements to our lives.

That means it’s the perfect opportunity to review your finances and make sure you’re getting the most from your money and investments.

So what issues do you need to think about as you begin your financial review and aim to make your money work for you in 2022?

Set Financial Goals for 2022

The place to start is to decide exactly what you want to achieve over the coming year. Do you want to pay down debts? Plan your inheritance? Make sure you have enough in your pension pot? Broaden your investment portfolio?

Once you’ve worked out what your priorities are, you can manage your money with a clear sense of direction, and break your overall goal down into specific, achievable and measurable plans and objectives.

Assess Your Financial Habits

Look back over your earnings and outgoings from the last year and ask yourself what worked and what didn’t. Did you regularly add to your savings? Have you been spending on items you don’t need, or paying for services you don’t use? Are you sticking to a budget when managing your daily living costs and paying for big-ticket items?

Once you’ve looked at your financial habits, you can identify where changes may need to be made, how to make your finances more sustainable in the longer term and what you want to prioritise in the year ahead.

Review Debts and Borrowing

As part of your financial review, you should ask yourself if you’re in a position to pay down any debts, particularly high-interest debts, as they may be a bigger drain on your finances than you realise.

At the same time, look into your borrowing to see if you have any money saving options open to you. For example, you may be able to get a better deal on your mortgage by remortgaging your property and benefiting from a more favourable rate.

Review Your Pension

If you’ve worked for several companies throughout your working life, it’s possible that you have a number of different pensions in your name. The new year may therefore be the perfect time to review any such pensions and consolidate them if that’s the best option for you.

This pension review can form part of your wider retirement planning, as you ask yourself key questions: how much money do you need to fund your retirement? How long will this money last? Are you making the most of various tax breaks that exist?

Update Your Will and LPA

Your circumstances can change considerably from year to year. You may have made a significant investment, got married or had another child, for instance. That means your current Will may no longer reflect your wishes regarding who you want to leave your Estate to after you die.

So approach your Solicitor about updating your Will and arrange a Lasting Power of Attorney, so a trusted person can make financial decisions on your behalf in the event that you’re unable to do so yourself.

As you review your Estate plan, you can also consider options to help you get the most from your money, such as gifting money to reduce your inheritance tax liability and making donations to good causes.

Prepare for the End of the Tax Year

The tax year comes to an end on April 5th, so ensure you’re making the most of the various tax-efficient allowances on offer to help you boost your pension and savings.

Review Your Investments

The nature of your investments should reflect your wider financial goals, which we discussed earlier, so look at your portfolio to see if that’s currently the case.

It may also be that your long-term investments are leaving you exposed to a level of risk that wasn’t there originally and that you now deem unacceptable, or that the market you’ve invested in is underperforming and you feel you could do better elsewhere.

Don’t be afraid to make changes or diversify your portfolio where necessary, so you can not only achieve your goals, but also take advantage of the best investment opportunities that currently exist.

How We Can Help You

Reviewing your finances and answering complex questions isn’t easy, but that’s why it’s worth getting a professional financial planner to help you.

Here at Questa, our team of specialists can provide you with continued support and regular financial reviews, so you can respond in the right way to changes in your life and your priorities.

If you have any questions about reviewing your financial plan for the new year, please get in touch with us. It’ll be a pleasure to speak with you.

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