Here are just three common reasons many medics neglect reviewing their finances “I don’t have the time!”… “I’m already too stressed!”… “I tend to ignore what I don’t understand.”
Sure, they might seem valid excuses, but let me ask you this: On a scale of 1 to 10, how hard do you work to earn your money? And on the same scale, how hard do you want your money to work for you after you’ve earned it? If your answer is 5 or above (with 10 being ‘extremely hard’), here are 5 key reasons why it’s time to stop putting off that financial review.
Reason 1: This tax year is ½ way through already!
Your allowances and tax reliefs: I’m still amazed by how many people leave their money exposed to unnecessary tax for another year when a small amount of planning could prevent HMRC from taking more of their hard-earned income.
You still have time to utilise your annual allowances and tax reliefs before they disappear on April 6th, but don’t forget the budget on 30th October. Your current allowances could be changed. It’s time to consider your allowances and what you still haven’t used:
Valuable tax-free ISA savings and pension opportunities: The longer you give yourself to use these allowances before the end of the tax year the better. You open up more opportunities for pound cost averaging with regular contributions, rather than a one-off payment being used.
If left unused you could lose important capital gains tax (CGT) and inheritance tax allowances (IHT). Also, we have no way of knowing for sure what will happen regarding CGT and IHT in the forthcoming budget. Many expect these areas to be targeted for reform by the government, so it may be a case of ‘use it before you lose it.
You could incur unexpected annual tax charges if you don’t consider and plan for your retirement carefully. Read our other article this month on why now is more important than ever to check your Annual Allowance.
Your tax bracket: There’s also an opportunity to be proactive. If you find yourself moving into a higher tax bracket—one of the main reasons our clients request a financial review—or if you’ve realised your earnings will exceed the threshold for free childcare vouchers or surpass £100,000, leading to a reduction in your personal allowance, now is the time to act. Whether your goal is to minimise your tax burden or simply reduce future liabilities, there are strategies that could help.
However, the closer we get to the end of the tax year, the fewer options remain available, so it’s important not to delay.
Reason 2: You are now the youngest you will ever be
In the words of Eleanor Roosevelt, “Today is the oldest you’ve ever been and the youngest you’ll ever be again.” Birthdays in the financial world can open some doors, close others and make many things more expensive.
Saving opportunities -for example..
Lifetime ISA: The Lifetime ISA is only available to you if you are 40 or less – in case you were wondering I now class anyone under 40 as ‘young’!
Rising costs: The older we get the more expensive certain products become. Protecting your family or mortgage debt and ensuring your children don’t have a huge inheritance tax bill when you die are prime examples.
The longer you leave putting protection and inheritance tax plans in place, the more problems can arise and the more costly it becomes.
More choice: A birthday may also present new decisions. At age 55, for example, you can access pension funds if you need to, although this is rising to 57 shortly. State retirement age now varies depending on when you were born…what is your date? At age 18, you can open an Equity ISA.
Reason 3: Are you paying the right amount of tax?
Are you paying too much tax, too little tax, or you simply don’t have a clue? Are you entering an unwelcome tax bracket, and have unknowingly not claimed all the expenses you can?
By reviewing your finances with your financial adviser, in conjunction with a good accountant, you could pay less tax or, better still, be due a tax refund. We have even had cases where clients have received a tax bill, but after looking into it, have found it to be an error!
Reason 4: Are your investment plans on the right track?
Life changes and with it your financial aims and goals. It can be anything from children staying on the payroll for longer than expected to a change in how you feel about work.
- Do your financial plans remain in line with your life objectives?
- Are the investments that you are making or have made still appropriate for your circumstances and future plans?
- Are you getting the best rate of return on your savings and investments and is this return being taxed?
- Do your savings and investments still reflect your appetite for risk?
- What costs and charges are you paying?
The questions go on and it is wise to check that you know and are happy with all the answers, especially if you haven’t assessed your existing plans for a good few years.
There are always headwinds with investing, so it’s important to regularly check that any savings and investments you have reflect your current attitude to risk, remain appropriate for your future plans, and give you the best possible rate of return. Why not take a look at our latest Investment Committee article to understand the markets now?
We often come across clients who have set up a savings plan or invested a lump sum years ago only to leave it untouched and unreviewed ever since. Does that sound familiar?
Reason 5: Practice what you preach!
We often hear from our doctors and dentists about the importance of regular health and dental check-ups to maintain our well-being and catch potential issues early. And while no disrespect to our wonderful dentists, most of us don’t exactly look forward to dental visits—even for a routine check-up. But if we skip them, what state would our teeth and overall health end up in? We all know we’ve made the right decision when we leave the dentist’s chair (well, most of the time!). The same principle applies to reviewing your finances.
Meeting with your financial adviser may be time-consuming and it’s easy to think of more appealing ways to spend your time. However, you and your finances will be glad you made that appointment. And for our part, we aim to ensure the experience is enjoyable, not something to endure!
In short, don’t delay what you should have done yesterday. Review your finances at least once a year. It’s even more important if there’s been a significant change in your personal circumstances, work situation, or the wider economy.
The concepts and suggestions in this article must not be viewed as advice. As always we recommend you approach a financial adviser who will take your circumstances into full consideration before providing advice.
When was the last time you had a good look at your finances? Let us know by adding a comment below.
Editor’s note: This post was originally published in March 2017. It has been completely revamped and updated for accuracy and comprehensiveness in September 2024.