New Year, New You – 5 simple steps to improve your finances
We all have a pile of things ‘to do’, but never get round to.
For many people, reviewing their finances sits firmly in this category.
Should do, but just haven’t yet. Don’t put it off. Declutter and free your finances with these 5 simple steps.
1. Create a plan
It doesn’t matter if it’s on the back of a napkin or a 30 page report. Writing things down improves the chances of sticking to them.
What do you want to achieve and by when? Start with the end in mind and work back from there.
Your financial plan should answer three questions:
1. Where are you now?
2. Where do you want to be?
3. How to get there?
If you’re looking for some inspiration, check out our Sample Financial Plan.
2. Stick to the plan
Sticking to the plan is arguably the hardest part. Your circumstances will change, markets will move against you, life will get in the way.
The key to sticking to the plan is remembering why you’re doing it. This will keep you on track, through the thick and thin.
If you need a little help, check out this article on how to reach your destination – in life and with your finances
3. Start saving
Easy to say, hard to do. With an endless list of things to pay for, but limited funds available, saving can get left by the wayside.
But making small, regular savings can have a big impact over time. Saving just £100 per month could be worth £90,000 in 30 years time.*
Einstein described compound interest as “the eighth wonder of the world”.
Get started sooner, you owe it to yourself.
4. Keep your costs low
In most areas of life, you get what you pay for. If you pay more, you get more. But in the world of investing, you get what you don’t pay for.
Costs matter, because every pound you pay is a pound less in returns. What’s more, just like returns, costs compound over time. Seemingly small differences in costs have a big impact over time.
5. Keep it simple
Everything should be made as simple as possible, but not simpler.
If you’ve got multiple policies, think about consolidating your pensions and investments together. It will make them much easier to manage and control – not to mention much less paperwork.
If you’re using a complicated investment strategy, think about simplifying it. You don’t need 30 funds to diversify your investment portfolio. A few well diversified funds will do.
With these 5 steps, your finances will be in far better shape. As always, if you would like a little help, why not book in for a no-cost, no-commitment initial meeting?
All the best,
Independent Financial Adviser in Bristol
P.s – if you want a little more help with navigating your investments, check out the 7 Simple Steps to Investment Success. It provides you with a proven process to help you avoid costly mistakes and tilt the odds in your favour. You can get a copy by clicking here.
* Assumes a net investment return of 5.5% p.a.