Financial planning

When it comes to financial planning, what comes to mind is that as we all progress through life our circumstances change. In fact we go through what is known as the Seven Ages – each of which sees us having specific financial needs and priorities.

Knowing about them in advance, can help with your financial planning, and in helping those close to us to plan.

 

1. The First Age – Minority

Very little in the way of financial planning could be expected of our children, but there is plenty of scope for parents, grandparents and other relatives to put plans in place.

Key Need(s):-Build up a fund to cover schooling costs

2. Second Age – 18 to Marriage

This stage usually starts with a first job, or continued education at college followed by the starting of a career. A time for young people to decide on what they want to do and where they would like to go.

Key Need(s):-Put something aside in a flexible plan just to be safe. This isn’t always a settled period.-Start saving for your first home-You may be borrowing for that first car-Is there a wedding on the horizon?.

3. Third Age – Married, no children

This will probably be a time of two incomes, with both you and your partner working. If the new house has been purchased this will be a time of high expenditure.

Key Need(s):-Savings plans are key, perhaps to help with the deposit on the house, or prepare for the loss of one income as the family expands.-Investments which produce capital growth and income should be considered.-There is the mortgage and the Mortgage Protection policy (of course)!-Life assurance and serious illness cover to protect your partner against the loss of your income.-Perhaps you should give starting a pension some real thought.-Draw up a simple will.

4. The Fourth Age – Married with young children

Apart from sleep, one of the two incomes may have been lost when the children arrived. Savings may start to fall and school fees may become one of the main outgoings.

Key Need(s):-There’s a continued need for savings.-Life assurance and serious illness cover become the key to protecting your family.-It’s definitely time to start that pension-Revise the will to cover additions to the family.

5. The Fifth Age – Married with older children

They may be older, but the children still cost!……although the second income may now be back to ease the strain.

Key Need(s):-You may have the money to save and invest again. Do it!-What about moving house? Permanent Health Insurance and Serious Illness Cover become important as you age and are more likely to fall ill or have an accident.-Hospital Cash Cover is now a shrewd add-on to a life policy.

6. The Sixth Age – Pre-retirement

As children are less dependent and your earnings are at their highest, disposable income should be more plentiful.

Key Need(s):-Investments are key. Boost that pension plan to make sure the future’s rosy.-A second property for renting might be worth thinking about, or even a holiday home if the money is available.-Permanent Health Insurance and Serious Illness Cover still feature as you get older.

7. The Seventh Age – Retirement

The aim here is to keep the income and standard of living you’ve set yourself. The amount you spend may fall, but you’ll still need a reserve to cope with emergencies.

Key Need(s):-Investment products are key, especially those which deliver an income to help boost retirement.-Look into Inheritance Tax Planning.-Make sure you revise that will.