A Journey to financial confidence with a financial plan

Hello there! I’m Ernestina, and welcome to the next blog in our series: “Helping you to be money well.”

When you think about a financial plan, what is the first thing that comes to mind? Is it budgeting, saving, security or setting clear financial goals?  

Having a good financial plan goes hand in hand with financial wellbeing. Yet only 9% of the 1,000 UK adults surveyed in Schroders Personal Wealth’s 2023 Money and Mind report (PDF, 3.4MB), have a financial plan in place, and 64% said that they are concerned or very concerned about their finances.  

The same report found that 89% of UK adults understand the importance of prioritising finances. However, there is a higher emphasis placed on shorter term goals such as paying off debt compared to longer term goals like investing, retirement planning and passing on wealth. Yet it is these longer-term goals that could have the biggest impact on our financial wellbeing. 

To help you think about creating a financial plan, and to support you with knowing where to start, I spoke to Leigh Dunkley, Head of Strategic Partnerships at Schroders Personal Wealth. 
 

Here’s what she said… 

Can you share a personal experience or story that highlights the significance of having a financial plan in your life? How did it make a difference for you?

Growing up I learnt a lot from my parents when it came to finances and money. Although I don’t remember us openly speaking about money regularly, I do remember getting to the age of 15 and having a conversation with my dad about career paths and education. His words of advice back then were:

1. Get an education. He himself had a long-standing career in the fire service and had had to go back to university in his 40s to enable him to progress further in his own career and so was a big advocate of studying whilst young.

2. Work in a secure industry. Having worked in public services his entire career, he was a real advocate of a “job for life”.

3. Enrol in the workplace pension as soon as possible. Looking back I now understand that his career gave him the opportunity to be part of a Defined Benefit pension scheme and he truly saw the value of starting to save for retirement from a young age, putting you more in control of when you wanted to retire.

So that’s exactly what I did. I went to university and studied International Business and French. I graduated and joined Lloyds Banking Group on their graduate programme. And I enrolled in the workplace pension scheme as soon as I could and ensured I was maximising my contributions. At the time I didn’t really understand the WHY however my dad was someone I trusted.

Moving forward in my career, I have worked for brands such as Scottish Widows and I currently work for Schroders Personal Wealth which is a financial advice firm. My own career has provided me with the opportunity to understand my own WHY but also the importance of seeking support from professionals.
 

In your opinion, how does having a financial plan contribute to a sense of security and peace of mind?

With the complexities of modern life, from investments to taxes and retirement planning, managing your finances can often be a daunting task. This is where a well-structured financial plan may come to the rescue, providing a roadmap for your financial future.

One of the primary benefits of crafting a financial plan is that it helps you set clear and attainable financial goals. Whether you’re aspiring to buy a home, send your children to university, retire comfortably, or travel the world, a financial plan could help you reach these objectives.

Beyond your own financial stability, financial planning also considers your legacy. Considering things like wills and a Power of Attorney could help to preserve your wealth and ensure it is transferred efficiently to your heirs whilst minimising the impact of inheritance taxes. 

Life is dynamic, and your financial situation evolves over time. A financial plan is not a one-time event but a living document that should be reviewed and adjusted regularly to accommodate changing circumstances, goals, and market conditions.
 

Can you share an example of a successful financial plan. How did you make the process as stress free as possible?

Our finances and money are still seen as a taboo subject, and we’d often prefer to talk about the weather rather than our financial plans. Creating a financial plan is something that everyone can do:

• Understand your financial circumstances:
  The first step to creating a robust financial plan is to understand your financial circumstances. One way to do this is by completing a budget exercise. Clarity about these circumstances is vital for your long-term financial stability. 
• Establish your goals:
  Once you have identified your short-term, medium-term and long-term goals a plan can be devised to help you achieve them. Setting out your goals is crucial to securing peace of mind so you can aim to create the life you want.
  
  At Schroders Personal Wealth we define short-term as being money you might need immediately, medium-term as money you might need to access within the next one to five years and long-term as goals that are at least five years away or more, such as retirement.
• Get help from an adviser if you can:
  Personal finances often involve many moving parts, and it can be challenging to make financial decisions with so many options. A trusted adviser can help create a plan that offers a balanced perspective on your multiple financial demands and life goals. This can give you confidence in your financial decisions. So an adviser could potentially help improve your overall financial wellbeing as well as help you prepare for unexpected financial emergencies.
• Review your plan:
  Having a financial plan in place should give you more confidence to know where you’re heading and if you’re on track to get there. Reviewing this plan each year will help to make sure it is aligned with your goals and objectives throughout your life. Remember to put a note in your diary to review your plan each year.

What would you say are the most common FAQs asked when it comes to creating a financial plan? 

When it comes to our finances, everyone is unique so it’s worth considering what’s important to you and your family. Some key questions for you to think about when creating your own plan are: 

• What are your short, medium, and longer-term goals? 
• What financial concerns do you have for the future? 
• What protection do you have in place for you and your family? 
• When do you want to retire and what do you want your retirement to look like? 
• If anything happens to you, how would you like your wealth to be looked after and managed? 
• Are you aware of your tax allowances and have you used them for the current tax year? 

By answering these questions you will start to build up a picture of what’s really important to you and your WHY.  

Schroders Personal Wealth (SPW) is a joint venture between Lloyds Banking Group plc and Schroders plc. SPW was created as part of both companies’ commitment to help customers with their investments and financial planning. The union of one of the UK’s largest banking groups and one of the leading investment brands brings more shared knowledge and more investment options through over 400 years of heritage. You can find more information by visiting their website.