Five Financial Resolutions for 2025
As we come to the end of January, you may have been trying to increase your step count, learn a new language or simply read more books. Whether you are trying to eat 30 vegetables a week or practice yoga, we wanted to share with you five key ideas for helping you to achieve good financial health in 2025. Our financial planning team believe that these simple ideas are crucial and we encourage you all to try and meet these New Year’s Resolutions:
Be Organised – many of us have a handy drawer, folder or even shoe box that contains essential paperwork. Our first resolution is to ensure that this is organised and that all key documents are in one place. This includes records of digital assets and also passwords. We have frequently encountered loved ones who are unable to access key information because a computer, bank account or mobile phone remains locked as they do not have crucial data. It is valuable to share with those who might need to be involved in the future what key content is included. And, if you don’t already, do open your post in a timely manner, whether through the letterbox or into your email. You don’t want to miss opportunities or be hit with penalties because you didn’t read an important communication until it was too late.
Make a Budget - do you know what your income and approximate expenditure are for 2025? Does this include little regular expenses, such as coffee with a friend on Thursday afternoon or a round of golf every second Monday? What day of the month is regular income paid and how does this fit with the date for paying for utilities and other larger essentials? Understanding what money is coming in and how you are spending it is at the core of achieving financial good health. And don’t forget to share this plan with you partner too and ensure that you’ve added the budget for their tennis lessons. Do remember to focus on your plans for later in the year too. If you are planning a holiday in September, ensure that you have the funds to make the final payment available in good time and think about putting spending money aside now. Whilst the changes announced by the Government may have significant impact on your finances, the first step is to understand your personal budget today and your capital expenditure tomorrow.
Create a Legacy Strategy – you must ensure that your own living needs are met before you consider a legacy but, if you are happy that you’ve got a robust budget in place and have surplus funds, start by prioritising beneficiaries. Do you want to focus on paying off your son’s mortgage? Are school fees for your grandchildren a priority? Is the work of a charity close to your heart a core part of the strategy to ensure that their good work can continue into the future? Once you have a priority list, it is time to establish your approximate IHT liability and to ensure that you use available allowances and exemptions. This can be complex, particularly in light of recent proposed changes to pension rules, but early planning can ensure that you take advantage of all the options available. If you are gifting, do keep robust records and ensure that you fully understand the complicated rules. Creating a robust legacy strategy does not happen overnight, so do make 2025 the year that you start to work on this.
Contribute to ISAs – one of the key actions that you should take before the end of March is to contribute to your ISA if you are able. The £20,000 ISA allowance remains unchanged after the last budget and this tax free savings tool is an easy way to contribute to your financial good health. If you are already making ISA contributions, do explore the inheritance rules as part of your legacy strategy and think about setting up a Junior ISA for children (or encouraging them to do this for themselves!). With higher interest rates available, this is a great time to think about utilising a cash ISA for regular savings. Do shop around to ensure you get the best level of interest available.
Establish a Lasting Power of Attorney (‘LPA’) – having an LPA is an important priority for you at any stage of your life. It is never too early and, rather like with a will, we frequently encounter situations where it is simply too late. An LPA enables you to establish who makes decisions on your behalf once you’re no longer able to do so. You can provide guidance about what you would like and remain in control of your own destiny. Without an LPA, anyone who loses capacity to make decision for themself is under the jurisdiction of the Court of Protection. An time consuming and expensive process is needed to appoint a Deputy to act on their behalf, causing needless difficulty at a stressful time. It is worth remembering that your spouse or partner cannot make decisions for you if you are mentally incapacitated without this arrangement so make 2025 the year to get online and create an LPA.
If you’d like to discuss any aspect of your financial plans further, please just get in touch with your usual CAM team. And we wish you the very best of luck with mastering Italian, learning to juggle or any other resolutions you may have.
This article was prepared by Tracy Coghill, our Client Experience Manager. We always appreciate your feedback. If you have enjoyed this article or have any specific topics you would like to see addressed in future newsletters, please email us.