- 1.You’ll spend more than you earn
Spending more than you earn is the first step on the road to financial disaster. If you keep on spending more than you should, your debt will grow every month and your interest bill could spiral out of control. As your debt balloons, your stress levels will soar and life will be no fun at all. The best way to keep your spending under control is to draw up a budget. Monitor all your spending for and you’ll probably see areas where you could cut back.
- 2.You’ll pay too much tax
We all want to pay less tax – in theory. But, in practice, lots of people are paying more tax than they need to. Financial planning can help you cut your tax bill. A good financial broker will help show you many ways to reduce your tax bill.
- 3.You’ll have a rotten retirement
Life expectancy is getting longer all the time and there’s going to be fewer and fewer taxpayers around to support pensioners. Sure, there will probably still be a State Pension, but no one knows how generous it will be in twenty, thirty or forty years’ time. The only safe solution is to look after yourself and save for your retirement while you’re working. If you don’t make a plan, chances are, you won’t have enough.
- 4.Your children could suffer
If you have no financial plan, you’ll probably have less money to spend on your children. Not just when they’re young but also when they may need help to buy a home or cope with university costs. What’s more, financial planning can boost the amount your kids inherit when you die.
- 5.You won’t be able to cope if you’re ill or you lose your job
You need to save money that could tide you over if disaster struck. Ideally this cushion should be as large as six months’ income although we accept that’s not a realistic target for many people. Still, it’s something to aim at and you’d be mighty relieved to have that much cash if you lost your job. The other big potential calamity is illness or death. So consider taking out life insurance, critical illness or income protection insurance.
We could write about several more plan-free perils but we reckon we’ve made our point. Drawing up a financial plan makes loads of sense.