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5 Financial fears and how to overcome them​

5 Financial fears and how to overcome them

If Frankenstein and Freddy Krueger haven’t frightened you enough this Halloween season, try confronting something more tangible — those financial fears keeping you up at night.

Money concerns don’t have to be a nightmare. Here are five common financial fears and ways you can overcome them.

1. Unexpected medical costs

We have all been there. Even with a solid health insurance plan, pricey out-of-network visits and increasing deductibles can be frightening. It’s important to not only have a solid health insurance plan that will cover you in your worst-case scenario but also to familiarize yourself with the terms.

If you know exactly what you’ll be expected to pay in the case of a medical emergency and where to expect coverage, you can better prepare, both financially and mentally.

2. Money-draining emergencies

Medical emergencies aren’t the only surprises that can put a strain on finances. These can include unexpected global pandemics and job layoffs, but also smaller costs like car maintenance or a broken hard drive.

For unplanned financial emergencies, it’s important to have an emergency fund in place. Ideally, your emergency fund will cover at least six months’ worth of expenses, including everything from insurance premiums and mortgage payments to groceries and utility bills.

If unexpected financial burdens are still giving you nightmares, direct more savings toward your emergency account as an added safeguard even after you’ve reached the six-month threshold.

The fear of something happening, if it’s not planned for, will keep you up at night. Contact us if you need further help.

3. Losing a job

Like other financial fears that stem from an inability to anticipate the unknown, some of the uncertainty can be mitigated by establishing an emergency fund. It’s also helpful to have a backup plan.

Think about what you could do with your knowledge and experience. What’s the backup plan if that were to happen? “Could you teach, could you start something of your own? What would be a side hustle if you lost your job?

If you work in tech or industrial sectors that are susceptible to layoffs. Ask yourself exactly how you would meet your financial obligations and establish a game plan.

4. Lack of retirement savings

It’s never too late to begin saving for retirement, though, even if your contributions start small. Evaluate your financial plan and make room in your budget for retirement savings. Take advantage of employer plans and catch-up contributions if you’re eligible, and set up direct deposits so you don’t even have the chance to miss the money before it goes into your retirement account.

5. Becoming overwhelmed by debt

f you’ve managed to get yourself into debt through loans, credit cards or a sizeable mortgage, working your way to being debt-free again can feel like an impossible task. But there are always actions you can take to help yourself cope with debt. Speak to your lenders to see if you can negotiate more manageable payments. Work out how much you’d need to pay each month to clear your debt in an achievable amount of time, such as five years. Finally, make sure you don’t take on further debt, otherwise you’ll simply be undermining all of your efforts.

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5 ways to look after your finances in a recession

5 ways to look after your finances in a recession

Here are our 5  tips for taking care of your finances during a recession and possibly avoiding financial stress in the future.

1) Sort your savings:​

In these days of very low interest rates (the Bank of England base rate is just 0.1% at present), it can be difficult to find a way to grow or even protect the buying power of your savings. However, you can shelter them from tax by opening an Individual Savings Account – an Isa. There are various types, the main ones being the Cash Isa, which keeps your money as cash, or a Stocks and Shares Isa, which can be slightly more risky, but with the potential for better returns. Also, if you’re prepared to lock your cash into a Fixed Rate Isa for up to 5 years, you can get an even better savings rateI

2) Be ‘pension savvy’:

Even in bleak financial times, it’s crucial to keep up our retirement savings. Remember, a pension gives you tax relief: if you’re paying basic rate tax at 20%, then for every £80 you save into your pension, HMRC tops it up by £20, making it a great option for long-term saving for retirement. The sooner you start pension saving, the longer your money has to grow. The motto is: the earlier, the better – you could reap the benefits of 40 years of growth!

3) Review fund investments:

Your financial plan is flexible, which means you can always review the funds you’re invested in. This is especially important if you’ve invested your money yourself, ie, without financial advice. That’s because, in any given year, many funds, including some of the largest, fall short of their investment targets. Your advisor can take a look inside your fund investments, and if necessary, switch you into better performing funds, ‘tweaking’ your finances to restore your money to top performance and ensuring it’s reaching its maximum potential.

4) Protect your family:

How would your loved ones fare if they were to lose your income through serious illness or even worse? Life insurance is something many of us think of when we start a family, with good reason: it can provide our dependants with financial security, or even pay off the mortgage, if the worse were to happen. Then there’s critical illness insurance, the insurance you take in case you don’t die. It can pay a once-off, tax-free lump sum if you are struck down by a serious illness such as cancer, heart attack, MS or a stroke. This would provide a financial safety net for you and your family and give you peace of mind to help you recover.

5) Take good advice:

In their report What it’s Worth – Revisiting the Value of Financial Advice, pensions company Royal London found that those who took advice were, on average, £47,706 better off when they retire. This included pensions, savings accounts and Isas, insurance products and shares investments. The rules around financial products, and pensions in particular, have never been more complex. If you want to avoid unexpected tax bills and unsuitable investments, advice has never been more necessary!

This article does not constitute financial advice, and should not form the basis for financial decisions, which should be taken only in consultation with a qualified financial adviser. The value of investments can fall as well as rise, and you may end up with less than you invested.

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Could there be a link between investing and wellbeing?

Could there be a link between investing and wellbeing?

Money is of course top of the list when it comes to issues most people worry about.

Whether it’s regarding short-term finances or our long-term future, financial insecurity can cause serious anxiety and low self-esteem.

But even though it often seems tempting to ignore money worries, recent research suggests that tackling the issues head-on can actually make people feel better than not doing it at all.

And by this they mean something as simple as opening an investment account.

In Blackrock’s Global Investor Pulse, which each year asks what people think and feel about their financial health, they report that once people start investing, 43% feel happier about their financial future, 36% of people have a higher feeling of wellbeing and 19% feel less stressed.

The results say this is true regardless of wealth, age, gender or life stage. Even more encouraging is that new investors say the improvement in their mood is immediate.

For those of you who already have a financial plan, this may simply be interesting to note. I’d love to know if you feel you are happier as a result of knowing that you have a plan in place. And even more interesting would be whether – as the research suggests – this feeling was immediate.

But it may be more meaningful to people you know who aren’t currently investing their money. Currently 63% of British adults hold no market-based investments at all. The reasons range from finding it too difficult to understand and feeling as if ‘investing is just for experts’.

However, now might be as good as any to enter the market for the first time. And tiny steps can have a huge impact. Even investing small amounts of money can lead to a greater return than just having it in a savings account where interest rates are at an all-time low.

Whether you are a current AWM client or someone just looking to get some advice, please do contact us by licking the button below or giving us a call on the number at the top of the page.

If you think it would be helpful for me to talk to anyone in need of a financial second option, then please pass on my details – I’d be happy to give them a call. Afterall, the results also say that 76% of investors who use a financial adviser report having a positive sense of wellbeing, and who am I to argue with that?!