Financial prudence - The basics

Wednesday, 15th July 2009 16:57 - by Resident IFA

Otherwise known as ‘Teaching Granny how to suck eggs’. I always think if you do the basics of any task well, it gives you a good chance to tackle the harder bits. If you don’t take care of the basics, it is a shoddy foundation you lay. Cheesier than a snowstorm memento of the Statue of Liberty, but holding water nonetheless, is the phrase ‘If you fail to plan, then you plan to fail’. Please stop slinging those ripe tomatoes at me! When was the last time you did something as simple as sit down with pen, paper, and your recent bank statements? With these, you can see quite simply and clearly how much money is coming in and going out. The height of simplicity I know, but the simple things are often overlooked. After you see how healthy your basic finances are from the above exercise, you can start to isolate ‘luxury’ items (if necessary), allowing you to make clearer financial planning decisions. To re-visit the drone of my previous Blog, if you have Sky TV, this probably costs in the region of £35 per month. If you perceive it as something you can do without, why not channel the money into something that has wider protective implications...such as Income Protection insurance? Using very broad figures, a male non-Smoker in his mid-thirties (in a non-hazardous occupation) could protect around £20,000 income per annum until age 65, choosing a 3-month deferred (waiting) benefit period. What would see you better through a longer-term sickness storm...Sky or the Income Protection insurance?! If Sky is too sacred to part with, there may be other things that can be jettisoned...the oft-mentioned £2 per day sandwich or cup of frothy coffee leads to a monthly (28-day) saving of £56. Think of all the lovely Income Protection and Life insurance (Family protection) you could have instead! Until next time...