5 examples of how personal financial planning can be beneficial

Life throws a lot at us. From weddings and babies to dream holidays and new cars, there’s always something to work towards. But without a plan, those dreams can remain tantalisingly out of reach for longer than necessary.

This is where personal financial planning comes in, providing a roadmap to navigate life’s financial twists and turns.

Here, we outline five examples of how financial planning can benefit your personal finances.

5 Occasions when financial advice can help

Financial planning can be beneficial throughout your lifetime, especially in the following circumstances:

1. Making life transitions

Planning can help you to manage your personal finances during major life changes. For example, getting married, buying a house, or having children. Financial planning can help you to budget for additional expenses.

While these major life events come with a great deal of excitement (not to mention a degree of stress!), there’s also the not-so-glamorous aspect of finances to consider along the way.

This becomes a necessity when you consider the average cost of a wedding is £20,700, the average house price is £375,131, and the average cost of full-time nursery fees for children under two is £15,709 in 2024.

Conversely, the average cost of a divorce was £14,561 in 2018. With inflation, it’s only becoming more expensive.

Financial planning helps you to anticipate the increased expenses that come with merging households or raising children together. So you can account for things like mortgage payments, child care, and that dream honeymoon.

This way, you can avoid any unwanted financial surprises and focus simply on making memories.

2. Saving for major purchases

We all have those things we’re working towards – a luxurious getaway to somewhere exotic, a sleek new car, or perhaps the perfect renovation. Financial planning helps you to transform those dreams into achievable goals.

To add some context here, the average price of an SUV in the UK is in the region of £26,000 to £32,000, while renovating a three-bedroom house is likely to set you back between £82,900 to £164,300 on average.

A financial plan can help you to save for these types of major purchases. It can help you to determine exactly how much you need to save and create a realistic plan that enables you to reach your objectives.

Imagine the peace of mind that comes from knowing exactly how much closer you are to achieving your goals.

3. Paying off debt

Debt can feel like a heavy weight around your shoulders. However, financial planning empowers you to develop a strategy to tackle that debt burden and finally breathe freely once more.

According to figures from The Money Charity, Britons owed just over £1.8 billion of debt at the end of February. That’s an increase of 9.5 million compared to the same period last year and equates to ££65,569 per household (including mortgages).

If you have accrued debt, a financial plan can help you to create a coherent strategy to pay it off faster. You can identify areas where you can cut back on spending and allocate that money towards debt repayment.

A solid financial plan also helps you to choose the best debt repayment method, whether it’s tackling the highest interest rate debts first or focusing on paying off smaller debts for a morale boost.

4. Planning for retirement

Retirement is a time to relax and enjoy the fruits of your labour. But without proper planning, those golden years might not be as golden as you had hoped.

Standard Life surveyed more than 6,000 retirees for their Retirement Voice Report and found that the average retiree had amassed £119,000 less than they’d hoped to save for retirement.

The average respondent expected to accrue £250,000 by retirement. However, in reality, the average pension pot was actually £131,000. Of more than 6,000 people surveyed, 42% regretted not seeking financial advice.

Personal financial planning is essential for ensuring the retirement of your dreams. You can establish your retirement goals, determine how much you need to save, and choose the right investment vehicles for you.

Financial planning also helps you to evaluate your retirement needs, encompassing factors like inflation and healthcare costs. You can then explore investment and savings options to ensure you have enough to live comfortably.

5. Building an emergency fund

Life is full of surprises, and not always the pleasant kind. A financial plan can help you to establish an emergency fund to handle unexpected expenses, like costly car breakdowns or medical emergencies.

Most people are aware that they should have a “rainy day” fund in place. Most experts suggest a cushion of at least three months of savings to cover essential outgoings when faced with an emergency, such as a redundancy.

However, according to the Resolution Foundation, 11.2 million people – the equivalent of around one in three working-age households – live in households with savings of less than £1,000.

As such, financial planning can help you to establish a safety net that gives you valuable peace of mind and helps to prevent unwarranted financial stress during challenging times.

Take control of your personal finances with Acumen

Financial planning isn’t about deprivation or living a frugal life forever. It’s about taking control of your finances and making informed decisions. By taking charge of your money today, you can secure a brighter financial future and achieve your life goals.

Take the first step towards financial freedom by enlisting Acumen’s personal financial planning services. Our highly trained IFAs and support staff go the extra mile to provide exceptional financial advisory services and products that are 100% unbiased and tailored to your unique needs.

For more information or to book a consultation, please contact us on 0151 520 4353 or email [email protected].