Financial Planning Week is taking place this week, and is the national campaign organised each year by the Institute of Financial Planning (IFP), its members and supporters to raise awareness amongst the general public of the importance of Financial Planning. Through the website http://www.financialplanningweek.org.uk the public have access to tips, tools and guidance on how to improve their financial “fitness”. They also have opportunities to get answers to their financial questions via the “Ask a Planner” service or to attend one of the free Financial Planning surgeries taking place around the UK.
The survey, which was conducted by YouGov for Financial Planning Week in association with Liontrust questioned over 2,000 people aged 18 or over across Britain. It discovered that:
• Thinking ahead to spending plans for Christmas this year, 38% of Brits have already worked out what they will be spending and they will definitely stick to it and a further 18% are confident they can afford to spend what they like this Christmas. However, 20% say they have a vague budget in mind but they probably won’t stick to it. 9% have no idea what the cost of Christmas will be for them but said they will worry about it afterwards.
• The survey showed an increase in the amount of time people now spend worrying about money, with 82% of respondents indicating that they worry about money some, most or all of the time, compared to 80%* in 2012 and just 60% in 2011*. 38% say they worry about money most or all of the time compared to 32% in 2012*. Only 2% of people say that they never worry about money.
• Looking at the bigger picture, just 4% have a comprehensive financial plan in place with goals identified and prioritised with costs and a schedule of how and when they can achieve them financially. Only 11% say they are likely to make a comprehensive financial plan in 2014.
With rises in the cost of living outpacing the increases in many people’s income at present, it is clear that times are still tough, despite the recent reports from the Bank of England that the recovery has finally taken hold. 56% of respondents said inflation and rises in the costs of living was a fear for them.
Many households are therefore struggling to make ends meet. Almost two thirds (63%) of respondents say they are struggling to keep up with bills and credit commitments, including 20% who say it’s a constant struggle. 5% report that they are falling behind with some of their bills and credit commitments and 3% are reporting real financial problems having fallen behind with many bills and commitments.
The survey findings also showed that only 14% usually seek help or advice from a professional adviser when making Financial Planning decisions. 55% usually make their own Financial Planning decisions whilst 16% usually speak to friends, family or colleagues. This could mean they lack the direction and action that is so important.
Thinking ahead to 2014, when asked which changes they would be likely to make when it comes to managing their money, 37% plan to reduce their monthly spending, 27% intending to reduce debt, 25% are planning to save more each month and 21% will be seeking better returns on their savings/investments.
Just 4% are planning to increase their contributions into pension plans.
Consumers are clearly thinking along the right lines when it comes getting to grips with their finances in many of these key areas around budgeting. In stark contrast however, the majority could be failing to plan effectively for their future by not having a comprehensive financial plan in place.
Steve Gazzard CFPCM, CEO of Institute of Financial Planning comments: “Whilst we welcome some of these findings which show that people are planning their finances for a specific event like Christmas, and making basic changes such as paying off debts and increasing savings, it’s worrying to see that many are failing to plan when it comes to the bigger picture.
“If they are to avoid serious problems ahead, it’s essential that people take responsibility for their financial future now. Unless we can encourage people to identify what they want from life and put a comprehensive financial plan in place, it’s unlikely they’ll have the context to make the right financial decisions to help them achieve their goals.
“Financial Planning isn’t just for the wealthy it’s for everybody. Whilst getting qualified professional Financial Planning advice is the most effective route to take, unfortunately this isn’t always possible. The good news is that through this campaign, we’re highlighting simple steps people can take to manage any debt, build savings and protect their families on the journey. As a result, we aim to help them improve their current financial situation and also seeing for themselves the benefits of long term Financial Planning and the peace of mind that it brings.”
Rebecca Taylor FIFP, CFPCM, Managing Director of Dunham Financial Services and President of IFP comments: “I regularly see new clients who have previously made financial decisions with no clear idea on how those decisions will impact their future. With a little time and effort, most people can put a basic financial plan together, especially if they have some guidelines to get them on the right track. Financial Planning Week offers such opportunities for those who do not usually have access to a professional Financial Planner. The opportunity to meet with a Financial Planner, free of charge and on a no strings attached basis, is something I would encourage everyone to make the most of so they can put their own financial plan in place before it’s too late.”
Below are further findings from the survey which reveal where adults in Britain stand when it comes to their current finances, their plans for 2014 and the way they make Financial Planning decisions.
When it comes to their existing finances:
• 44% have savings for emergencies and other goals
• Only 26% have an up-to-date Will
• Whilst 25% have life insurance to protect their dependants in case of premature death, only 6% have an income protection policy in place, indicating that a large number of people risk financial disaster if accident or illness were to prevent them from working long term
• 14% have savings for retirement but not sure it’s enough to provide the income they will need in retirement
• 11% are confident they have enough savings to provide them with the income they’ll need in retirement
• 9% have savings for retirement but know it’s definitely not enough to provide the income they’ll need in retirement
When asked which changes they would be likely to make in 2014 when it comes to managing their money:
• Only 6% intend to make sure their family is protected against unforeseen events such as long term illness or premature death
How do people make decisions when planning their finances?
• 55% usually make their own Financial Planning decisions
• 16% usually speak to friends, family or colleagues when making Financial Planning decisions
• 14% usually seek help or advice from a professional advisor when making Financial Planning decisions
• Only 14 % admit to not proactively planning their finances, although half of those (7%) would like to do so
You can find out more at www.financialplanningweek.org.uk
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