Freshen up your finances with a health check

September not only brings a new school year, student freshers’ and shorter autumnal days to truly let us know summer has gone for good! It’s also a great time of year to re-evaluate our finances. 

School holidays can take its toll on any medics bank account. After 6 weeks of financial drain trying to ‘occupy the kids’, not to mention the family summer holiday, for most of us, the start of September doesn’t come soon enough! 

With renewed work and school routines in place, it’s time to give your finances an optimistic reinvention with a routine financial health check.6 reasons not to put off reviewing your finances

Is it time to give your finances a health check?

On a scale of 1 to 10, how hard do you work to earn your money? Using the same scale, how hard do you want your money to work for you? 

If you answered 5 or above (10 being extremely hard), here are just 6 of the best reasons why you shouldn’t put off reviewing your finances any longer!

Reason 1: Get ahead of the game

The next four months can feel like one of Dr. Who’s ‘wormholes’ where the end of the tax year is drawn closer by some weird space-time shortcut! Straight after Christmas and it’s boom – the end of the tax year is upon us! 

It still amazes me how many people leave money exposed to tax for another year when a simple bit of administration would keep HMRC from taking more of your hard-earned money.

Now is your last chance to make use of your annual allowances and tax reliefs before they disappear on April 6th. If you don’t, you could:

  • Miss out on valuable tax-free ISA savings and pension opportunities.
  • Lose important capital gains tax (CGT) and inheritance tax allowances.
  • Incur totally unexpected annual and lifetime pension allowance tax charges.

Know your tax bracket. Don’t get caught out and find yourself in the higher tax bracket come April 6th. Be proactive, if you have found yourself tipping into a higher tax bracket (one of the most popular reasons our clients request a financial review) there may be opportunities to lessen the blow.

Reason 2: How’s your knowledge on all the financial rules and allowances?

In recent years there have been lots of changes, particularly regarding pensions and investments. ‘I didn’t know about them’ is not an acceptable excuse for the HMRC if you have fallen foul of any allowances, and haven’t owned up to an additional tax bill. You may be missing out on a valuable tax break and have no clue!!

Raise your game! If you plan to invest and make the most of your allowances, why wait until the end of the tax year? In the words of a famous sports brand “Just Do It”. 

By sorting out your finances early with your financial adviser, you can then just sit back and relax for the rest of the year. 

Your adviser will also be able to explain how all the changes that are coming into effect will impact your tax, income, expenditure, and/or investments. It may mean your plans need to be altered, or new arrangements need to be put in place. 

Reason 3: October is D-Day for annual allowance figures

If you are concerned about your Annual Allowance figures and potentially breaching, October is a key month. From 6th October you can call the NHS Pension Scheme on 01253 774774 to get your most up to date pension input figures. 

The sooner you provide these figures to your financial adviser or accountant the better, as we use them to accurately calculate if you have a tax liability.

Reason 4: You are now the youngest you will ever be

Birthdays in the financial world can open some doors, close others and make many things more expensive. In the words of Eleanor Roosevelt, “Today is the oldest you’ve ever been and the youngest you’ll ever be again.” 

Some ISAs are specially designed for those of us sub 40, and in fact, aren’t available to those of us passed this age.

For those medics who still remember being 40 but with a somewhat jaded memory, you may have opportunities to draw on a pension – I knew there had to be a plus side to the birthday cake now looking like a bush fire!

Rising costs: The older we get the more expensive certain products become. Protecting your family, a mortgage debt, and making sure that your children don’t have a huge inheritance tax bill when you die are some prime examples. 

The longer you leave putting protection and inheritance tax plans in place, the more problems can arise, and the more costly it all becomes.

More choices

A birthday may also present new choices. At age 55, for example, you can access pension funds if you need to. 

At age 18, you can open an Equity ISA

State retirement age now varies depending on when you were born…what is your date? 

Reason 5: Paying the right amount of tax?

Are you paying too much or too little tax?
Are you entering an unwelcome tax bracket?
Have you unknowingly not claimed all the expenses you can?
Are you still completely unaware of the pension legislation and how you can access your private and work pensions?

Or do you simply not have a clue? Well, you are not alone. By reviewing your finances with your financial adviser, in conjunction with a good accountant, you could end up paying less tax or, better still, be due a tax refund. In some cases clients have received a tax bill but, after looking into it, we have found it to be an error!

Reason 6: Are your investment plans on the right track?

Life changes, and with it so does your financial aims and goals. It can be anything from children staying on the payroll for longer than expected, through to a change in how you feel about work. 

  1. Do your financial plans remain in line with your objectives in life? 
  2. Are the investments that you are making, or have made still appropriate for your circumstances and future plans?
  3. Are you getting the best rate of return on your savings and investments and is this return being taxed?
  4. Do your savings and investments still reflect your appetite for risk?
  5. What costs and charges are you paying?

The questions go on… it is always wise to check that you know and are happy with all the answers, especially if you haven’t assessed your existing plans for a good few years. 

Going back to Dr. Who and time travel, if I could have time travelled back to the end of 2015 and told you that we were going to vote to leave the EU, and Donald Trump would win the next US Presidential election, I imagine you may have laughed at me, possibly decided to cash in your investments and run for the hills! 

Yet, throughout 2017, 2018 and 2019, so far we have seen many major equity markets push new highs. There are always headwinds with investing, your capital is at risk.  It’s important to regularly check that any savings and investments you have reflect your current attitude to risk, remain appropriate for your future plans, and give you the best possible rate of return.

So finally, practice what you preach!

All doctors and dentists recommend a regular check-up, so that we maintain our health, wellbeing, and catch any issues early – right? Well, it’s the same with reviewing your finances.

With respect to our wonderful dentists, nobody likes going to the dentist – even for a simple check-up – and yet if we don’t go, what state would our teeth and general health be in? September is a great time for a ‘financial freshen up’’ so to speak! If something big has changed either with your own personal circumstances, your work situation, or the economy then it’s time to book an appointment

It may be time-consuming and you can probably think of better ways to spend your time, but you (and your finances) will be glad you did make that appointment. 

Be honest, when was the last time you had a good look at your finances? Let us know by adding a comment below.

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