I and A Mag Jan20

Five Tasks for an Organised
Financial Life in 2020
January is the perfect time to organise your
financial life and carry out those onerous or boring
tasks you’ve been putting off for so long. Making
a will, setting up a Lasting Power of Attorney
(LPA) and checking your credit file are just three
important ‘bigger picture’ jobs that can set you
up for a secure future, and offer a little protection
from life’s uncertainties.
So here are the five tasks in more detail – tackle them in any
order, and get your financial life organised in 2020.
1. Check your state pension forecast
Checking how much state pension you might receive provides
a clearer picture of how your financial situation could look in
retirement. It also allows you to see if there are any gaps in
your National Insurance (NI) record.
.This is important, as you may be able to pay voluntary National
Insurance contributions to fill those gaps and complete your
NI record before you retire. At the time of writing you need to
make full contributions for 35 years to be eligible for the new
full state pension, so it’s definitely worth investigating.
As far as budgeting for retirement is concerned, you should
factor in the figure from your state pension forecast with any
occupational pensions, savings, or investments you hold. You’ll
discover whether you’re on track for the lifestyle you want, or
if you need to put a little more money away prior to retirement.
2. Make a Lasting Power of Attorney (LPA)
A Lasting Power of Attorney is an official document whereby
you appoint one or more attorneys to help you make financial
or health-related decisions, or to make them on your behalf if
you lose mental capacity in the future.
You need to be over the age of 18 to make an LPA, and have
the mental capacity at the time to make your own decisions.
Drawing up an LPA is often regarded as unnecessary until later
life, but it’s well worth considering at any time.
It’s possible to make a Lasting Power of Attorney without
professional assistance via the gov.uk website. Citizens Advice
may also be able to help, but if you’re unsure of your wishes
or the process in general it’s advisable to seek help from a
solicitor.
3. Write a will
Making a will ensures your assets are passed down according
to your wishes when you die, and with today’s complex family
structures it can prevent a great deal of stress for those left
behind.
It’s advisable to seek professional assistance when making a will,
particularly if you have a young family or your circumstances
aren’t straightforward. You might need to consider who would
care for your children if you weren’t around, for example, or
think about how you’d incorporate children from a previous
marriage into your will.
It’s worth knowing that March is free wills month, so you might
be able to save on legal costs if you make a will during March.
This is usually only applicable for simple wills, however, where
the instructions are relatively straightforward.
4. Take out ‘life event’ insurance
Adverse life events such as chronic illness or serious accident
can derail your plans for the future. You may not be able to
work or function in the way you used to, for instance, but if
you’ve taken out appropriate insurance it can reduce some of
the devastating financial impact for yourself and your family.
Critical illness and life insurance cover provides a financial buffer
that can help you cope with unexpected life circumstances,
and help your loved ones adjust to a new situation without the
fear of financial difficulty.
Buying insurance is something many of us consider at various
points in our lives, but taking the time to find out more about
the policies available and choosing the best one for your needs
is crucial.
5. Check your credit report
The state of your credit report affects your ability to borrow
and obtain credit, and is a fundamental part of your overall
financial situation. Lenders and credit card companies assess
your creditworthiness by checking your credit file, and decide
whether or not to sanction loans or grant credit based on its
contents.
You can view your credit report online – some credit reference
agencies provide a free report. Others offer only monthly
subscriptions, which can be useful given the
rise in identity theft, as you receive warnings
when changes are made to your credit file.
If you find mistakes, it’s possible to rectify
them either by contacting the lender
concerned or the credit reference agency. A
note can then be added that the entry has
been challenged and is under investigation.
Understanding how fraudsters operate
can also protect you from financial loss, so
researching this could be another task to
undertake as and when you’re able this year.
If you blitz these jobs in January, you can
relax for the rest of 2020 knowing that some
of the mundane but very important financial
issues that can affect your life so seriously
are all under control.
by Ann Haldon
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