As we embrace 2024, many of us are returning to normality, making it a perfect time to reassess our financial landscape and financial planning. Whether you’re planning for a holiday, looking at changing your car or planning a home renovation, these aspirations all boil down to one critical element: money. Without a strategic financial plan, these dreams could lead to financial mishaps. As an impartial financial advisor in Ireland, I’m here to guide you through the process of creating a robust financial plan.
The Power of a Financial Planning
The journey to financial success is a roadmap with key milestones- it’s a roadmap to financial independence. The main thing is to start planning for what it is that you want to achieve financially. It is vital to set out clear financial goals, create a budget and then prioritise them to ensure that you can achieve those goals. The aim is to achieve something called Financial Independence.
Here are three steps to a building a solid financial plan:
1. Set clear financial goals – success begins with knowing what you want to achieve.
2. Create a Budget, a budget is your financial roadmap. Check out Alpha Wealth’s complementary financial budgeter here
3. Prioritise Financial Independence – take advantage of compound growth and interest relief
The most important thing is to get financial advice to start with from a qualified financial advisor. There are a lot of advantages of getting independent advice and guidance particularly from a brokerage where you know you’re not tied to any particular insurance provider.
Understanding Financial Planning
A financial plan helps you navigate your financial journey, ensuring you achieve the goals set out at the beginning. These can change as someone goes through different stages in life (having children, changing jobs) but it is always important to review your financial plan on a yearly basis.
Getting Started
Financial decisions shouldn’t be made in isolation. Every major financial decision, from choosing a mortgage to picking an insurance policy, should align with your overall financial plan.
As we step into 2024, many of us might find ourselves grappling with the aftermath of holiday spending, particularly on credit cards. As an impartial financial advisor in Ireland, I am here to guide you through a strategic approach to not only tackle this debt but also to optimize your overall financial health for the year ahead.
Setting Financial Objectives
Envision your life in the next 5, 10, or 20 years. What does your work, living situation, leisure time, family and most importantly financial status look like? Once you have this vision, you can start translating it into financial goals.
Your financial objectives will vary based on your age, circumstances, and desires. They can be categorized into short, medium, and long-term goals. For instance, a 29-year-old teacher might aim to clear credit card debt in the short term, purchase a home in the medium term, and enhance their pension for early retirement in the long term.
Creating a Financial Checklist
Your financial objectives might include:
- Paying off debts.
- Building short term savings.
- Saving for significant purchases (a mortgage)
- Maximise a pension plan.
- Planning for educational fees.
- Growing personal investments
- Preparing for financial independence
Five Key Financial Planning Tips
- Manage Personal Debt: Prioritise repaying high-interest, short-term loans to minimize the drain on your income. Try the “snowball” method, which entails paying off the card with the smallest balance first and working upwards. Whatever way you go, the sooner you eat into that balance, the less you will pay in interest — and credit card interest is punishingly high, with some interest rates in the twenties.
- Get Your Money Working For You: Put your cash to work. While banks have generally dragged their heels in passing on interest rate rises to deposit holders, cash savers should not accept near-zero rates in this climate. You can get around 4% per cent for lump sums with the banks, or close to 3% per cent for monthly savings.
- Invest in a Pension Plan: A robust pension plan is so important for reaching financial independence. With generous tax relief of 40%, a pension plan can secure your financial future. Pension funds are typically invested in a variety of assets. Over time, these investments can benefit from tax free and compound growth, meaning that the returns themselves generate further returns. This can significantly increase the value of your pension fund.
- Tax Saving Strategies: Ensure you are looking for smart ways to invest your savings and reduce your tax bill. The Employment Investment Incentive Scheme is a tax relief initiative designed to encourage investments in qualifying Irish companies. It’s a chance for investors to support growing businesses while benefiting from significant tax relief.
- Financial Goals: Clear financial goals provide a roadmap for your financial journey. They help you focus on what’s important, guiding your spending and saving decisions towards achieving specific outcomes. Set financial goals that are achievable and align with your personality and lifestyle. Drastic changes are often unsustainable. This will all help towards achieving Financial Independence.
Conclusion
Financial planning in 2024 is not just about managing your current finances; it’s about paving the way for a secure and fulfilling future. Whether it’s paying off debt, saving for a family holiday, or planning for early retirement, a well-thought-out financial plan is your blueprint to success. As a qualified financial advisor in Ireland, I encourage you to start this journey today. Remember, foundations laid today will support the dreams of tomorrow. Let’s work together to make your financial dreams a reality.
You can contact alpha via info@alphawealth.ie or book a personal finance review through the Alpha Wealth website here