CHRISTMAS BUDGETING

TODAY’S BLOG

SO, WHAT WAS YOUR BUDGET FOR CHRISTMAS? DID YOU EVEN HAVE ONE? AND HAVE YOU KEPT TO IT?…

I have to confess … I’ve gone over mine ever so slightly. I always forget how expensive the ‘treat foods’ are … not just the turkey and all the trimmings, but the nibbles you tend to leave dotted around the place in the run up to the big day; the spare bottle of bubbly (just in case); the oversized tin of Quality Street – that seems to be devoid of toffee pennies within minutes of opening (I always feel a bit sorry for the strawberry creams that get thrown away in the New Year when I’m sick of the sight of the tin loitering on the kitchen worktop!); don’t even get me started on Turkish Delight (about which I find not one delightful thing!)

This year I congratulated myself for managing to stay within my budget for ‘gifts’, but then I chastised myself because I failed miserably (as every other year) to budget for wrapping paper, ribbons, tags, tape etc.  (Anyone who has ever received a gift from me will tell you that I take the presentation of gifts quite seriously, so this is a rookie oversight on my part!)

What does all this boil down to in the context of what we do at Solomon’s? Simple answer … contingency planning (you knew the P-word was coming surely?!).

It’s about knowing that you are never going to remember every little cost. And planning accordingly. Giving yourself wiggle room. It’s something that every builder on the planet will tell you to do. Every project manager. Every business executive. We all KNOW this. But knowing what is good for us is the easy part. It’s the following through on that knowledge that is the tricky bit!

When we talk about ‘budgeting’ in general here at Solomon’s – we are encouraging our clients to be realistic and to err on the side of ‘over-estimating costs’ … thereby giving that wiggle room to the numbers.

We recently had some new clients who put together a really detailed and carefully considered analysis of their ‘normal’ spending. The numbers revealed that they potentially have a considerable sum ‘left over’ each month. When we presented this to them, they were stunned as this was not a fair reflection of their lived experience. So they had to look again and see where they were spending and not accounting for things. It was a revelatory experience … for them and for us!  It was a really good reminder that this is an incredibly difficult but vital component of the financial planning process.

If you haven’t updated your expenditure figures for us recently – we would encourage you to be brave and have a go at this in 2022 (but maybe don’t use your December transactions as a reflection of your ‘normal monthly spending’!!)

If you need a template to work from – please click here or you can have a go at using our portal to record your numbers. Or you can just let us have your own budget/bank statements and we’ll do the legwork for you.

However you choose to do it; please just have a go. After all – it is the foundation stone of the framework that is your financial plan and it’s vital that we place it in the correct position for you, so that it can bear the weight of whatever needs to go on top.

Debbie Harris
Solomons IFA

You can read more articles about Pensions, Wealth Management, Retirement, Investments, Financial Planning and Estate Planning on my blog which gets updated every week. If you would like to talk to me about your personal wealth planning and how we can make you stay wealthier for longer then please get in touch by calling 08000 736 273 or email info@solomonsifa.co.uk

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Solomon’s Independent Financial Advisers
The Old Mill Cobham Park Road, COBHAM Surrey, KT11 3NE

Email – info@solomonsifa.co.uk 
Call – 020 8542 8084

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GET IN TOUCH

Solomon’s Independent Financial Advisers
The Old Mill Cobham Park Road, COBHAM Surrey, KT11 3NE

Email – info@solomonsifa.co.uk    Call – 020 8542 8084

7 QUESTIONS, NO WAFFLE

Are we a good fit for you?

CHRISTMAS BUDGETING2023-12-01T12:12:58+00:00

Money Box asks has your pension been burgled?

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Money Box asks: has your pension been burgled?

Once again pensions were in the news, the Radio 4 show Money Box took on the rather complex issue of annuities. Charges, fees, value for money Financial Services Consumer Pension and even the very funny Jeremy Hardy’s comments on The News Quiz also received some mild stick, following his joke about not wanting to understand anything about annuities, or listen to Money Box and his intention to be a burden to the State..of course he was being ironic.

Yawn… annuities are just so dullCatchtheburglars

Anyhow, Jeremy is pretty much right, annuities are very boring and not something to spend too much time worrying about… until you actually need to. So what is an annuity? Ok simple stuff… an annuity is an income for life.  You can have a rising income or a level income. Importantly an annuity dies with you.. eh? When you die your annuity stops… but if you want you can build in some guarantees… such as the income continues to pay a spouse or your estate, in full or part.. you can build this in at the design stage, not later on.

So why are Money Box and the FSCP talking about annuities?

Well, most people have no idea what to do and most is a lot – something like 400,000 people retire and buy a annuity each year. It’s a large market. Most people assume that there is not much between annuities (sadly and expensively wrong) there is an enormous difference and it costs you no more to get the most suitable one (on the whole). I’ve not met anyone that likes a pay cut, particularly one of 20% or even 40%… yet that is precisely what the wrong annuity is effectively like….for life!

So can I shop around for a better annuity?

littleshopoifhorrors

Yes, you should (no you MUST). Start by checking out the MAS site, the site that supposedly advisers dislike, yet pay for via our fees… and plug in some details. If you like to be frightened, do this now. This is only part of the story and did you notice all the disclaimers? You could then approach the annuity providers yourself and set up your annuity. You won’t get any more money than if you did this via an adviser, but the provider makes a bit more money out of you, and you carry the risk for picking your own.

So should I use an annuity broker?

Well you could, but be warned that they may simply focus on getting you the biggest annuity (which seems ok doesn’t it?). If the company provide guidance rather than advice, they are not liable for any mistake, you are. They will charge a fee for their selection. However, this might be akin to going to a garage with a car that has a flat tyre and won’t move… demanding a tyre at a decent price… but failing to observe that the car has no engine (ok it’s a metaphor). My point being that there is no context for good planning, it’s just selling or arranging products, as Paul Lewis reminded the listeners.

So should I pay for financial advice about annuities or retiring?

Well, I would say this wouldn’t I, but of course! There are lots of issues and lots of solutions. My main gripe with annuities is simply that once you set one up, that’s it, decision made for life. A bit of a straight-jacket if you ask me. More importantly perhaps the adviser is qualified and responsible for the advice.

So what will a good financial planner do?

Start by forgetting about products. Discuss your plans for your retirement and determine what that really means for you. In short, what lifestyle are you aiming for? How much will it cost? So this is about income, not products. The sort of things that need thinking about and understanding are your requirement for income, your tax position, your other assets, your marital status, your expectations about inflation, your health and how long you will live. Advisers need to help work through the tricky discussion about the risks of not knowing. There are alternatives (lots) and of course there is the option of not even buying an annuity at all. Good financial planning is not about products it’s about figuring out what you really need and then building a plan to get you there.

Do financial planners have to arrange products?

No, but we often do. I really wish that Money Box would grasp this point. A good financial planner may not ever arrange products at all (I have a dream)…frankly because arranging products is a pain and very, very dull. Solving problems and helping people to get the life they want… well that’s an entirely different matter…however if you want a job done properly…

Anyway, keep up the good work Money Box… time often seems against any proper full discussion on the main media channels, so I am currently toying with my own show…well a podcast anyhow.

Dominic Thomas: Solomons IFA

Money Box asks has your pension been burgled?2023-12-01T12:38:45+00:00
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