Do one thing to improve your financial wellbeing this Talk Money Week
Talk Money Week kicks off on 6 November, encouraging everyone to feel more confident talking about money.
Each year the campaign has a theme to help you get involved. This year, they want everyone to “do one thing” to improve their financial wellbeing.
In the spirit of the campaign, read on to discover seven simple tasks you could do this Talk Money Week to improve your financial wellbeing. Which one will you choose?
1. Grow your emergency fund
An emergency fund is usually held in an easy access savings account and is designed to help you cover unexpected expenses. This could range from your boiler breaking down to covering your mortgage payments if you find yourself out of work temporarily.
It’s sensible to hold the equivalent of three to six months’ worth of expenses in your emergency fund. If you have less than this saved at the moment, it could be helpful to boost your emergency fund, as this can provide valuable peace of mind.
2. Consider taking out financial protection
While an emergency fund can provide a financial buffer to help you cope with unexpected costs, financial protection takes this up a notch.
Consider what might happen if you were unable to work for an extended period of time due to injury or illness. How would your family cope financially?
This is where insurance policies such as income protection and critical illness cover may be useful. They can provide you with a payout so that you needn’t worry about the financial implications of illness or injury.
3. Check to see if you could get a better interest rate on your cash savings
You’ll no doubt have noticed the Bank of England raising interest rates over the past two years in an effort to curb inflation. While this can be tough for borrowers, if you have cash savings you could benefit from the increases.
It’s important to shop around, though, if you’re to find the best rate, as not all banks are passing on the interest rate rises to the same extent. As of 6 October, Money.co.uk reports that the highest easy access savings rate is 5.05%, while some accounts are only offering a maximum of 2%.
4. Write or update your will
Your will can be a vital component of an effective estate plan, so you may wish to prioritise this if you don’t yet have one.
If you were to die without a will in place, your estate would be distributed according to the laws of intestacy. As well as potentially going against your wishes, this can make the process of distributing your assets more lengthy because it must go through the courts.
So, to be sure that your loved ones will inherit the assets you want them to, make sure you have a will in place. It’s also important to update your will regularly, particularly if you marry or remarry, buy or sell property, or have a child or grandchild.
5. Create a Lasting Power of Attorney
A Lasting Power of Attorney (LPA) is another helpful addition to your estate plan. It allows you to nominate a trusted person to take care of your financial or healthcare decisions in the event that you lose the mental capacity to do so.
If you lose mental capacity without an LPA in place, your family would need to apply to the Court of Protection to be allowed to manage your finances or healthcare decisions for you. This can be long and costly, adding additional stress and delays at an already challenging time.
So, it could really pay to have your LPA in place early on.
6. Make sure you’re claiming the right level of tax relief on pension contributions
One of the great benefits of contributing to your pension, aside from building a pot to fund your retirement, is the tax relief that you receive.
You’re usually eligible to receive tax relief on contributions at your marginal rate of Income Tax. Most providers will add the 20% basic-rate tax relief to contributions automatically. If you are a higher- or additional-rate taxpayer, you will need to claim your additional relief on your self-assessment tax return or by contacting HMRC directly.
It’s worth checking that you have done this each year, as the additional tax relief can provide a significant boost to your pension. Standard Life has reported that a total of £1.3 billion of pension tax relief has gone unclaimed over the past five years.
7. Consult a financial planner
There are so many benefits to working with a financial planner, but one of the most commonly cited reasons is the peace of mind that they can provide when it comes to your finances.
As well as helping you to grow your wealth, they can also guide you through economic uncertainty and big life changes such as receiving an inheritance or retiring.
In doing so, your planner can help you to feel confident about finances, knowing that you are taking the most suitable actions to save for the future, protect your family, and achieve your goals.
Get in touch
At Logic, our advisers take a holistic view of your money so that you can enjoy greater financial wellbeing while working towards your long-term goals.
If you’d like to know more, speak to us now. Please email us at info@logicfinancialservices.co.uk or check with your adviser.
Please note
A pension is a long-term investment not normally accessible until 55 (57 from April 2028). The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available. Past performance is not a reliable indicator of future results.
The tax implications of pension withdrawals will be based on your individual circumstances. Thresholds, percentage rates and tax legislation may change in subsequent Finance Acts.
The Financial Conduct Authority does not regulate estate planning, tax planning or will writing.
Note that financial protection plans typically have no cash in value at any time and cover will cease at the end of the term. If premiums stop, then cover will lapse. Cover is subject to terms and conditions and may have exclusions.
This article is for information only. Please do not act based on anything you might read in this article. All contents are based on our understanding of HMRC legislation, which is subject to change.
