A Financial Bootcamp – A Guide To Financial Wellbeing

In the wellness space, we often talk about nourishing our body with healthy foods. Keeping active, reading self-development books and looking after our mental health. One thing I have noticed is that we don’t talk about money, or our financial wellbeing as openly as we should do.

Therefore, I have put together a financial ‘workout’ to help improve your financial wellness. Don’t worry – there are no burpees involved!

The Financial Warm-up – To Support Your Financial Wellbeing

A ‘warm up’ prepares you for what’s ahead and prevents unnecessary strain.

  • An emergency fund is a great place to start during your financial warm-up. Holding 3-6 months of expenditure within cash accounts will protect you in an emergency, should you experience an unexpected expense or loss of income.  
  • It’s a good idea to check out moneysavingexpert.com to find the best interest rates on savings accounts. Premium bonds from NS&I can also offer tax-free prizes instead of a monthly interest rate.
  • However, you should also be aware of the effects of inflation on your savings. At present, with interest rates averaging at 1.5%-2% the real value of your money is being significantly eroded by rising inflation. This leads us onto the workout part of your financial wellbeing journey. 

While a good warm up in your workout class will help to protect you against injury, a good warm up with your finances will help to protect against financial losses and financial stress. Download our free Emergency Fund Calculator pdf here.

The Financial Exercise – For Financial Wellbeing

After completing the warm up, we are safe to move on to the workout. This is where you can really get your money to work harder for you, by investing funds and utilising tax allowances. If you have excess income or excess cash above the emergency fund, you are entering the workout phase. 

  • ISAs and pensions are a great place to start, when it comes to investing for your future. These investments offer tax-free investing, which means that your funds are able to accumulate and compound at a better rate, than taxable investments. 
  • Pensions also offer tax relief at your marginal rate of income tax, increasing the contribution you make to the pot. While it can be tempting to spend your excess income on a chai latte, the effect that saving regularly to your pension could have on your future is huge!

Important Note: If you are self-employed it is important that you are making sufficient National Insurance contributions over your lifetime, to ensure you are entitled to the full state pension.

While the warm up can help to protect against any unwanted circumstances, sometimes these things cannot be helped and life throws us a curveball that we were not expecting! This is where protection comes in. 

Protection can also be very valuable during many stages of life, but it is often particularly important during the building phase. Life insurance, critical illness cover and income protection solutions can help you to maintain your finances if you become critically ill, unable to work due to accident or illness, or if you die.

The Financial Cool Down

Hopefully, by the time you have reached the cool down, you have successfully warmed up, protected yourself against unforeseen circumstances, invested your excess income and capital, and built up a pot of money that is sufficient to support your retirement – the cool down phase!

I don’t know about you, but my vision for retirement involves trying new hobbies, cruising around the world and ticking lots of things off my bucket list (a girl can dream).

  • If you have made sufficient National Insurance Contributions, you could be entitled to the state pension. 
  • It is likely, with the correct planning, you will have a pension pot to draw from in retirement, in addition to your state pensions. Now is the time to put together a strategy on how to draw an income from your portfolio without paying unnecessary tax. 

If you are lucky enough to have built a significant sum of money, you may also be considering inheritance tax planning at this stage. Inheritance tax planning can be a very complex part of your financial journey, so it is always good to speak with a financial planner to determine the most suitable route for you.

You might like to read our blog on Detoxing your Direct Debits

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