The birds are singing and the clocks have gone forward – both sure signs that spring has arrived. But rather than picking up the mop and duster, this year more people are choosing to battle the recession and spring clean their finances instead…
Going through your bank statements and stripping out unnecessary Standing Orders and Direct Debits is often the first step to lightening your financial load, but doing it without the right advice can be risky. Here are five reasons why you should seek out the help of a financial adviser before setting about spring cleaning your finances:
1. You won’t be left exposed
Cancelling an existing life or income protection policy to save the monthly premium is the most dangerous ‘budgeting tactic’ of all. Not only will you be left uncovered in times of economic uncertainty but when you come to replace the policy in more fruitful times, your premiums are likely to have shot up.
This is because protection insurance tends to become more expensive the older you get, explains Kevin Carr, director of protection development at PruProtect. He adds: “What’s more, any change in health or lifestyle during this time could mean cover is declined completely by the time you come to re-apply.”
The right adviser may be able to help you reach a compromise, such as a cheaper insurance product designed just to cover death and a few core illnesses, for example.
2. You are more likely to get the best mortgage
Trying to take advantage of low interest rates and reduce your monthly mortgage payment can be harder than it looks. This is because, due to tumbling house prices, homeowners may have less equity than they thought – which means access to fewer deals. But a whole-of-market mortgage broker can point you in the right direction.
Furthermore, even if your lender is offering what looks to be a competitive deal, it is worth comparing it with what else is available to ensure that this really is the case.
3. You will be on track with your pension
When you are struggling financially on a day-to-day basis, funding your retirement can seem bottom of the priority list. But while stopping your monthly pension contributions might feel like saving money today, it will cost you a lot more in the future.
According to the Pensions Advisory Service, you need to pay in roughly half your age as a percentage of your salary to afford a reasonable retirement. For example 15% of your salary if you start paying in aged 30 and 20% if you start aged 40. In short, you will have to be parting with more cash as you get older to achieve the same result. A pensions specialist can advise on your particular circumstances.
4. You may be able to save less each month for the same result
If you are tempted to reduce your monthly standing order into your savings account, at least make sure what you do save is earning maximum interest. This means a utilising your full tax-free allowance by saving into an ISA (Individual Savings Account) as well as sourcing the highest savings rates available. The right financial adviser can help with both.
5. You have nothing to lose
Some advisers don’t charge a fee upfront so you will have nothing to lose by picking their brains anyway. You can search for all kinds of financial advice right here on Rubii.
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