Weddings, births, your career, and retirement– that’s life! But how do you pay for it?
How does being self-employed affect your finances?
As a healthcare professional you might be self employed, which often means you need to take extra care around your daily funds and your financial future. Or, you may simply lead a busy life which means you haven’t had time to consider financial planning.
As well as ensuring you have enough money to live comfortably, there are life events to take into consideration, such as births, deaths, weddings, career progression and retirement. Having the means to pay for them isn’t always easy, which is why organising your short-term and long-term finances is not just advisable, it is essential.
So how do you juggle day to day living and plan for a great retirement, while managing to pay for life events that happen throughout the years?
Talk to an Independent Financial Adviser
Our Independent Financial Advisers are experts in helping you ‘see the wood for the trees’ around financial planning and potentially, financial growth.
They are, as their job title states, “independent” which means they are not tied into any specific product or plan. This means they are ‘covering your back’, not selling plans and products on behalf of other businesses.
Between them they have decades of expertise and specialise in healthcare professionals’ finances; in other words, you’re in good hands.
Income Protection
As a healthcare professional you will know better than most people that accidents can and do happen, as can debilitating or long-term illness.
How do you protect yourself against loss of income should the worst happen to you?
Income Protection can pay up to 65% of your salary until you return to work, depending on the insurer1. Compare this to the amount the state pays: (£99.35 per week for up to 28 weeks) and you might want to consider taking out Income Protection as a safeguard against potentially losing your home or being unable to pay bills and essential expenses2.
The policy can also pay you up until you retire, if you have an illness or accident that means you cannot return to work.
How to maximise your savings
While it is tempting to ‘squirrel away’ funds into a savings account, have you asked yourself whether the interest you are receiving is sufficient?
Instead of putting your savings ‘on ice’ in a savings account where they are often ‘frozen’ and can be worth less in the coming years due to inflation, saving into an Individual Savings Account (ISA) can be a great way of maximising your savings’ potential.
You can pay in up to £20,000 annually (every tax year starting 6th April) and the interest generated is tax free (exempt from income tax and Capital Gains tax)1. There are various types of ISA but the two most popular are:
Cash ISA
If you are planning to have a child, getting married, or saving for a deposit on a home, you can start saving into a Cash ISA where again you can save up to £20,000 each tax year without being taxed on the interest accrued.
Stocks & Shares ISA
A Stocks & Shares ISA is used to invest in a range of investments.
While investing may seem daunting, with the help of an Independent Financial Adviser you can potentially grow your savings long-term and in line with your individual ‘attitude to risk’.
In other words, if you feel like taking the “higher risk” (but with potentially higher returns) investment approach, you can. If you prefer your hard-earned money to have the chance to grow steadily over the years, you can do this too, by investing in “lower risk” categories. Or you can take the “medium risk” approach – the middle road. You don’t have to gamble the family home or all your savings on a risky investment, and you can start small – with ‘baby steps’. What’s more, you can choose to explore socially responsible investing, so if you would like to fund renewables rather than oil rigs, you can.
You can balance your funds between a Cash ISA for events in the next five to ten years, and a Stocks & Shares ISA to potentially fund your retirement.
Read more in Lloyd & Whyte’s Advice Zone article here.
Please Note: there is no guarantee on investments, and income from your investments may fall as well as rise.
Get smart around your pension planning
If you are self-employed you need to submit a Self-Assessment tax return each year. While this prospect probably doesn’t fill you with joy, talking to an expert around how to save money on your taxes can work wonders for your money and morale.
There are a few areas where you could save money, such as claiming for higher rates of pension tax relief, claiming allowable expenses, claiming against previous tax years, and contributing to charities to reduce your tax, but for now let’s focus on pensions and tax relief.
Pensions
You can save on your tax bill by contributing towards your pension and claiming tax relief. If you make contributions this year, it could go towards saving you money on tax next year.
If you are a UK resident and taxpayer contributing into a personal pension you will receive 20% tax relief on the amount you contribute into your pension pot. This rule applies if you don’t contribute more than you earn and you are under 754.
In addition to becoming astute around pensions and tax relief, talking to an Independent Financial Adviser can help you identify any shortfalls, either current or potential in your retirement income. For example, do you need to increase your National Insurance contributions or plug any gaps in your personal pension funds?
Planning now can pay off in the future.
If you would like support with financial planning our Independent Financial Advisers are on hand to help.
What matters to you, matters to us
- https://www.lloydwhyte.com/chiropractors/for-you/income-protection-for-chiropractors/
- https://www.gov.uk/statutory-sick-pay
- https://www.gov.uk/individual-savings-accounts/how-isas-work
- https://www.litrg.org.uk/tax-guides/tax-basics/do-i-have-join-pension-scheme/do-you-know-how-tax-relief-your-pension
Lloyd & Whyte (Financial Services) Ltd are authorised and regulated by the Financial Conduct Authority. Registered in England No. 02092560. Registered Office: Affinity House, Bindon Road, Taunton, Somerset, TA2 6AA. It is important to take professional advice before making any decision relating to your personal finances. Information within this article is based on our current understanding of taxation and can be subject to change in future. It does not provide individual tailored investment advice and is for guidance only. We cannot assume legal liability for any errors or omissions it might contain. The value of investments can go down as well as up and you may not get back the full amount you invested. The past is not a guide to future performance and past performance may not necessarily be repeated. If you withdraw from an investment in the early years, you may not get back the full amount you invested. Please note that investments in a Stocks & Shares ISA are not guaranteed and can fall in value as well as rise. Ultimately you could get back less than you invest.
