Six step wealth check

When it comes to your finances, the start of a new year is the perfect opportunity to evaluate your current situation and establish a plan for a more secure future. Whether you’re building an emergency fund, planning for retirement or investing in long-term growth, a proactive approach can bring clarity and peace of mind for your financial affairs.

Assess your spending and saving patterns

With the cost of living soaring over the past year, having a robust budget is more crucial than ever. Tracking your expenses helps uncover unnecessary costs and highlights opportunity to save. Even simple changes, such as cutting down on discretionary purchases, can make a big difference over time.

It is advisable to have a safety net of around six months’ worth of essential living costs in an accessible savings account. Once this rainy-day fund is in place, consider longer-term goals. If your objectives span five years or more, exploring stock market investments might be worth consideration. Despite its inherent volatility, the stock market has historically outperformed cash savings over the long term.

Review your investment portfolios

A lot can change over the course of a year, and regular reviews are essential to maintaining balance and effectiveness. Some investments may underperform due to market shifts or company-specific issues, while others may exceed expectations, presenting opportunities to reinvest strategically.

“Diversity is key to a resilient portfolio” says Jason Lloyd, IFA. “Overexposure to one sector or region can leave you vulnerable to market fluctuations. A well-diversified portfolio is better equipped to weather challenges and capitalise on opportunities.” Regularly reviewing your investments ensures they remain appropriately diversified and continue to reflect your financial goals, risk tolerance and timelines for achieving them.

Check up on your pension

Your pension is a key component of building your financial future, but it’s easy to lose track on its progress. Understandably, day-to-day expenses might often take precedence, but it’s worth evaluating how much you’ve accumulated for your retirement. Reviewing your pension pots now helps determine if you’re on course to meet your retirement goals or whether adjustments, such as increasing contributions, are necessary.

Tax advantages and compounded investment growth can make pensions one of the most tax-efficient ways to save for retirement.

Maximising tax allowances

Tax planning is an integral part of any financial strategy. Individual Savings Accounts (ISAs), for example, allow you to save or invest up to £20,000 annually, tax-free. Junior ISAs enable families to invest up to £9,000 per child annually, helping build a fund for future milestones like education or a first home.

Beyond ISAs, consider allowances for Capital Gains Tax and dividends. Proactively utilising these opportunities throughout the tax year can lead to significant savings.

Reviewing your protection policies

Life can be unpredictable, which is why financial protection is vital. Whether it’s life insurance, critical illness cover or income protection, having the right policies in place ensured your loved ones are protected in the event of the unexpected.

Even if you already hold policies, regular reviews are vital, especially if your personal circumstances have changed. A pay rise or a new mortgage might require your coverage to be adjusted.

A professional review can ensure your policies remain aligned with your needs and are cost effective.

Making or updating your Will

A Will ensures that your wishes are respected and your assets distributed according to your preferences. If you’ve already made a Will, consider whether it needs updating – especially if life events such as marriage, divorce or the birth of a child have occurred since it was written.

David Hulse, Head of Hugh James Independent Financial Advisers, adds

“Having an up-to-date Will not only ensures your wishes are carried out but also provides peace of mind for you and your family.”

Seeking professional financial advice

Without expert advice, navigating pensions, investments and tax allowances can feel overwhelming. We can simplify these complexities and provide strategies tailored to your individual needs and goals.

Jason Lloyd, Independent Financial Adviser, says

“Financial advice isn’t just about solving immediate issues—it’s about building a roadmap for long-term success. We’re here to guide you every step of the way.”

Disclaimer: This article does not constitute tax, legal or financial advice and should not be relied upon as such. Tax treatment depends on the individual circumstances of each client and may be subject to change in the future. For guidance, seek professional advice.