Debt Advice: Financial Planning Week
Week commencing 7th September 2009 marks Financial Planning Week, held by the Institute of Financial Planning (IFP). This is the second anniversary of the scheme which aims to offer debt advice about how we can deal with our finances more effectively and improve our situation by planning ahead. One of the key goals is to improve our “financial fitness”.
Their website, www.financialplanningweek.org.uk offers a wealth of debt advice and information for a number of different household groups, such as families, older couples and young professionals. The website offers financial tips about how to control cash flow, saving and debt advice. They have highlighted their 10 “simple tips” for better household finances which are as follows:
1. Identifying future goals. Identifying your life goals, such as moving home, travelling or planning for your retirement, allows you to understand the true cost of these goals and work out how much you will need to save to meet the timescales. As the site says: Don’t forget – fail to plan then plan to fail!
2. Knowing your financial worth. Understanding your net worth (difference between what you own and what you owe) helps you understand your true financial position. Armed with this information you will be able to get the targets to go with your future goals and avoid having to seek debt advice in the future.
3. Budgeting. Spending less than you earn is the key to a happy financial future. IFP recommend that you draw up a realistic budget to stick to and work out how you can cut your costs and increase your income.
4. Debt Advice. The obvious message is to borrow only what you need and be sure that you understand the true cost of borrowing, such as the rate on interest that you will be charged on your purchases. Work out how to deal with your debt as quickly as possible.
(One Advice can help you deal with your debt and offer you debt advice. If you are struggling to pay your bills and find that you are falling behind on your payments, please get in touch for debt advice. We have a number of financial solutions which could lower your monthly unsecured debt repayment.)
5. Emergency Funds. Saving an emergency fund for two to three months worth of income could help cover any financial emergencies which which may face in the future, such as being made redundant or expensive car repairs. This cash cushion means that you shouldn’t fall into debt at a later date.
6. Learn how to save. It is often more important to tackle your high-interest debts and build an emergency fund first. But saving on a monthly basis for short or medium-term projects, such as a summer holiday or new car, can make these big-ticket purchases more affordable to you.
7. Protect yourself. Protecting yourself and your assets against unforeseen events is an important consideration to make. Ensure that you and your family have the right amount of cover against illness or accidents, otherwise your finances could easily become destabilised.
8. Planning for your retirement. No matter how old you are it is important to think about your future. Investigate your workplace pension scheme and see if your employer makes a contribution to it too.
9. Consider Investing. IPF believe that investments are not just for those who have a high level of disposable income. They say that investing can open up opportunities to make your money work harder for you over the long-term.
10. Share your debt advice and knowledge. Spread the word about the financial knowledge and teach your children about how best to deal with their money. The earlier they understand the future impact of their finances, the easier it should be for them to manage their money in the future.
Nick Cann, CEO of IPF, commented: “The last 12 months have been awful for everybody and there are no concrete signs that things will get better until 2010. It isn’t however time to panic. It is however time to put some context around the finances… Now is the time for action, for people to give themselves the best chance of achieving their goals and objectives and make a real difference to their lives.”