Continuing our Carbon Christmas Carol, in which the three ghosts of Christmas Past, Present and Yet to Come pay us visits to give timely warnings, we adjust our eyes to focus on our second spectral visitor: the Ghost of Financial Present.
The ghost of our financial past has left and, whilst still shaken by our decision to take a ‘refund of pension contributions’ from our first job, we are now joined by the ghost of our financial present.
As with our earlier pension contributions, every financial decision should be a consideration of plans for the future versus things we want to do now. However, as we get older, our wider financial aspirations come into sharper focus. The question to answer at this stage in our financial journey is – do I have enough?
By mapping out a financial plan, you can monitor your progress whilst answering a number of ‘worst case scenario’ questions, such as: is my life-cover sufficient to meet my family’s need in the event of my death; how would I cope if I became unable to work due to accident or illness; can I afford private education costs; could I afford to retire early; or, how will I pay for my sickly child’s (Tiny Tim’s) expensive medical costs?
Regularly reviewing this plan and updating it as your circumstances and objectives change is also another important aspect. No first draft of your financial journey should be set in stone and understanding that your plan should evolve with you is an important point to understanding the financial planning process as a whole.
The construction of a wider financial plan to help balance current enjoyment against moving towards our financial objectives is key at this stage and not doing so would be the biggest ‘ghost of our financial present’.
(Corporate Director Mark Christie will be writing in depth on the Financial Planning process and its benefits in the New Year so please look out for this.)
Tomorrow we meet our final visitor: The Ghost of Financial Yet to Come.
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