According to an Opinium survey carried out in January 2024 in the Independent, well over half of people (59%) have no financial plan in place.
While the report confirms that someone aged under 34 is more than twice as likely to have one (61%) than those over 55 (27%), it’s really the case that wherever you are in your financial journey, a financial plan could help you reach your goals.
Furthermore, it’s never too soon or too late to start putting your own plan together.
Discover six good reasons why you really do need a financial plan, regardless of your age.
1. It provides you with important focus and direction
What your financial plan will consist of depends on your personal circumstances.
While no two plans are ever the same, there are certain issues that will be relevant to most people. These include:
- Ensuring you remain as debt-free as possible
- Setting aside money regularly to secure your long-term future
- Having an emergency fund in place to cover unexpected events
- Protecting yourself and your loved ones from illness and the inability to work.
A key part of your plan, both initially and ongoing, will be to define your financial goals, and then set out the necessary strategies you need to adopt to achieve them.
Your goals and objectives are likely to change as you get older and your financial circumstances alter, but the underlying principles of your plan – accruing wealth and protecting yourself and your loved ones – are likely to be present throughout.
This also relates to your legacy plan and ensuring that your accrued wealth and assets pass as tax-efficiently as possible to your intended beneficiaries when you pass away.
2. You’ll be better placed to deal with potential issues as they arise
Having a plan in place not only helps you look ahead, but it also means that you will get a clear understanding of your current financial position.
It’s clearly hard to accurately predict the future. But, with the security of a plan in place, you’ll be able to react to events from a position of strength, rather than be forced into actions that may well harm your financial future.
A financial plan helps you prepare for all eventualities, be they welcome, such as the birth of a child, or unwelcome, including losing your job or being diagnosed with a serious long-term illness.
You can then regularly review your plan as your circumstances change to ensure you stay on track towards your goals.
3. A financial plan will give you valuable peace of mind
Regardless of your age, knowing you have a well-thought-out plan in place can significantly reduce anxiety and stress.
You’ll become comfortable with your ability to deal with unforeseen events as they arise, and through knowing that your plan will keep you on track to achieve your personal financial targets.
You’ll probably get additional comfort from knowing that, according to the Independent survey you read about earlier, nearly two-thirds (65%) of those with a financial plan said they have seen their wealth increase overall in the past decade, compared with 38% of those without a plan.
4. You’ll be on the path to securing your long-term future
A robust plan will help you meet different financial targets throughout your working life. These could include:
- Accruing sufficient wealth for a house purchase
- Managing the financial challenges of starting a family
- Helping your children get on the housing ladder themselves
Furthermore, if you are planning to emigrate to Australia, or return there after a period of living in the UK, a financial plan will be important to help you manage important issues such as the transition of your assets and ensuring you are still able to meet your long-term goals.
Underlying all of this will be the longer-term aim of ensuring you have the means to live a comfortable life once you have stopped working, without any financial worries.
Regardless of your age, your plan will help guide you in terms of how much you need to save, and how to invest your money to provide you with a sustainable income stream for your retirement years.
5. Your plan will help you identify financial opportunities and take advantage of them
The underlying objective of having a financial plan is to provide you with an effective framework to help you manage your finances and meet your goals.
You’ve already read about the peace of mind you will enjoy from having a plan in place that you are following as you grow your wealth.
The reassurance that you are in control of your money will also give you the confidence to take advantage of opportunities that may occur. That might be in helping you accumulate assets, or reducing the amount of tax you are liable for.
It also means that you may be in a position to help other family members who may be facing financial issues or who would benefit from your financial support. As you have read, this could apply to helping your children (or grandchildren, even) with property purchase, but equally to supporting your parents with their own requirements or care needs.
6. You can adapt your plan as your circumstances change
The idea of having a financial plan is that it will change. The plan you have at 40 is likely to be very different to the one you have 20 or 30 years later.
Cashflow forecasting and regular reviews can help you stay on track to meet your goals. With this information to hand, you can make any required adjustments to your plans, too.
Forecasting can also help you look at the effect different scenarios can have on your finances before they happen, whether that’s those you have control over them, or that happen in reaction to external events.
Find out more: How cashflow modelling can help you plan your financial future
The four stages of your life when cashflow forecasting could be invaluable
Get in touch
We would always recommend that you get expert advice when you are putting your initial plan together, and then reviewing it at different stages on your life journey.
If you would like to talk about your own financial plans and securing your future, please get in touch with us.
Please note
The value of your investment can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.
This article is for information only, it does not take into account your personal objectives, financial situation, or needs. Please do not solely rely on anything you have read in this article and ensure that you conduct your own research to ensure any actions you may take are suitable for your circumstances.
All contents are based on our understanding of HMRC legislation, which is subject to change.