* I actually quit smoking back in 2006 so this is actually written on the back of one of my boy’s empty raisin packets.


Attending a business seminar a few weeks ago, I was shocked into admitting my lack of adulting. Aged 35 I may be married with two kids, living in my forever home (and now owning a Ltd. company!) but that’s about as far as I’ve got with all this grown-up stuff.

The seminar was all about how to set up a limited company. But it turns out that process was a lot simpler than I had anticipated…

Ok, full disclosure, I found an AMAZING accountant in Gold Stag Accounts, and Martin Brooks has pretty much done everything for me. He’s also going to take care of my personal and business accounts for the rest of time to keep my life simple, and the tax-man happy.

But unexpectedly, the seminar had a guest speaker – an independent financial advisor called Amy Goodall-Smith.

Initially, I sat there thinking, “I came here to learn about my business – not to be sold a lot of personal insurances”…

How wrong I was.

Because as a freelancer I am my business; if I don’t work, there’s no-body here to take over – the business dies with me. And the thing that shook me to my core, was hearing that if my husband and I died, our children are immediately taken into care because I haven’t got a Will. Apparently having the conversations with our families doesn’t count unless it’s written down in a legal document.

Needless to say, I booked a one-to-one with Amy pronto.

Getting inside the world of financial services planning

Sitting in her cute little offices in Twyford, mug of freshly brewed tea clasped in my hands, Amy couldn’t have been more helpful.

Step-by-step she evaluated my financial situation, my family’s financial situation, and my company’s financial situation – considering what it looked like now, and what I wanted it to look like in the future.

Then using her model, she explained financial services planning to me simply and clearly. Before creating a bespoke plan of action to ensure my life and everything I care about in it, is taken care of.

With Amy’s permission – and after running this blog past her to check it’s factually correct – I am happy to share this amazing model with you now:

Financial services planning on the back of a fag* packet

Short-term savings

Right at the top of the pyramid sits cash – i.e. money that you can get your hands on today if you really needed to.

Think of this as your rainy-day fund. In essence, when the sh*t hits the fan, like having no client work or falling sick, you need to get your hands on some cash quickly. Amy recommended calculating your monthly business expenditure and saving about 3-6 months’ worth of outgoings in cash. Although realistically, you’ll know the number you’re comfortable with.

For example, within my business I’ve always kept a £1,000 float. For me the worst thing would be if my laptop was to break. But with my float I have enough cash available to buy a replacement today.

And this rainy-day fund should also extend to your personal life. At home, we all have things that need paying for – for me, it’s my boys, my husband and my house – and those things don’t go away because you didn’t or couldn’t have an income one month. Make sure your personal life is covered by saving an additional 3-6 months’ worth of personal outgoings.


Medium-term savings

The next level down is your ‘hard to dip into’ savings. This will be money that you place into stocks and shares. It’s possible to get your hands on it, but because the money is invested rather than sitting in an account, you want to give it time in the market to grow.

Placing your savings into stocks and shares enables your money to accumulate greater wealth over a longer period of time. After 3-5 years of being invested, you should see the returns to help you make larger capital purchases, such as a second property.

But…

You don’t want to access these savings when the market has dipped. This is why you need to ensure you have sufficient cash savings (3-6 months’ outgoings) to ensure you’re protected, before you start saving for the mid-term.


Long-term savings

Yes, we all need to plan for our retirement – even if you’re like me and don’t actually plan on retiring. Getting a pension has been on my ‘to-do’ list for years and I have 101 excuses for not doing it yet.

But Amy shocked me…

She said, “we’re not even going to look at a pension for you for at least another six months”.

Why?

Because I need to get today sorted. It’s far more likely that I’m going to get sick before I retire. And what’s the use of having a pot of money that I can’t access until I’m 55 when I need money to pay the bills today?

In six months’ time I should have built up the savings pots for the short- and medium-term so that I can afford to embark on securing my long-term financial future.

But…

Being able to embark on your financial services planning is dependent on having certain building blocks in place first.


Foundations

Will

Have you thought about what happens to your estate when you die if you haven’t got a Will?

I’ve already shared that your kids are taken into care. But your personal estate goes to the Crown, and your business dies with you.

If you don’t want that to happen, you need to write your wishes down in a legally-binding document. Amy pointed out that a Will writer could do this for me, rather than a solicitor, since my affairs are relatively simple – it would be a much cheaper option.

Lasting power of attorney

Did you know that if you lose capacity without having this in place, anything you jointly own is frozen?

For me, that would mean my husband can’t access our joint account, he can’t talk to the utility companies to pay our bills, or the bank to talk about our mortgage. But completing a simple form online with a small admin fee stops this being an issue.

Create a lasting power of attorney now…

Financial planning

Income Protection Cover, Critical Illness Cover and Life Cover

One thing that’s likely to happen during my lifetime is that I’ll get sick, and not be able to work. Amy gave me quotes for varying levels of cover – from something that would pay enough for me to hire someone to take care of our home if I was unable to perform my housewife duties, right through to clearing our outstanding mortgage balance.

Private healthcare

As a freelancer you need to be fit and able to work. And that means when you’re sick, you need to get back to work as quickly as possible. I love our NHS system and feel fortunate to live in a country that provides free healthcare. But the reality is that sometimes you’re forced to fight for the care you need, and it takes a long time to get it. Going private means you really do skip the queues and the doctors can afford the time to actually listen and help – and I say this as someone who is in this situation right now and enjoying the benefits of private healthcare.


And finally, getting your house in order…

When you die, have you considered how simple it is for someone else to sort out your affairs?

If I die before my husband, it would be really hard for him to sort out my financial affairs because he doesn’t have my account details. I’m not sure that he would know what insurances I hold, and what/how he could claim on them. Plus I don’t share any of my business information with him, so he wouldn’t be able to access my files, or a client list to be able to notify them, or to my accountant about the administration involved in closing my business.

Amy shared a really useful document with me that collates all this important information, into one place, which I can then lock in my safe, ready for Alex to access if/when necessary.

And actually, the act of performing this exercise has helped me to identify things I either no longer need, and some things I really need to get.

Complete “My documents: what I own and where it is kept” now…

Giving back to the community

When I mentioned on Freelance Heroes that I was seeing a financial advisor, I received lots of comments asking me to share my experience – so here it is!

I can’t recommend Amy enough. And I’m really looking forward to working with her to tick thing off my adulting list. But if you want someone a bit closer to your home, she’s part of St James’s Place, which is a wealth management organisation. So take a look and find someone to help you.

www.goodallsmith.co.uk


Photo by Crissy Jarvis on Unsplash