Month: May 2023

Teach your children good financial habits…

Wanting to look after your family is one of the most natural impulses in the world, and that’s one reason why you’ll want to make sure your finances are in order, so you can provide for them after you’re gone.

But another way to help your loved ones is to instill good financial habits into them early on in life, so they’re in a stronger position to achieve their goals in the future.

So where do you start?

Start early
Your children will start gaining an awareness of what money is early on in life, perhaps because they’ve pestered you for a toy or gadget and you’ve told them you can’t afford it.

This is the perfect opportunity to start teaching them in more detail about the value of money, saving and how you manage your various expenses, from paying household bills to paying for luxuries and non-essentials.

Encourage them to save
You can get your children actively saving money from an early age, from giving them a piggy bank or opening a Junior ISA.

Set a good example
If you want to instill good financial habits into your children, you’re in a position where you can give them a positive example to follow.

If they can see you actively setting a household budget, weighing up how to spend your money and thinking about the choices you make, it will hopefully become second nature to your children, and they’ll grow up emulating your actions.

Set financial goals
You’ll have various financial goals in mind, from making sure you can afford a family holiday to paying for a future wedding.

You can encourage your children to get used to doing this by suggesting they set goals for whatever they want to buy. It doesn’t have to be on a large scale. For instance, it could be a holiday with friends, a night out, a new smartphone or a laptop. But even so, it will get them used to the idea of making sure they’re able to pay for things before they buy.

Teach them budgeting skills
When your children are starting to earn their own money, perhaps because they have their first Saturday job, sit down with them and teach them how to budget.

Show them ways of tracking their income and outgoings, so they can see what spending must be prioritised and how much money they have left for discretionary purchases.

If you have any questions about managing your finances and helping your family become more confident about managing their money, please feel free to get in touch and we’ll be happy to speak with you.

Are you getting caught in the inheritance tax threshold ?

Average house prices rose by 5.5 per cent in the year to February 2023, according to the latest official figures, taking the average price of a property to £288,000.

That’s £16,000 higher than it had been a year earlier – and this surge in house prices has had wide-ranging consequences, most notably, pricing many people out of buying a property.

But it’s also having a huge impact on those who are already on the property ladder in one area that most homeowners may have overlooked – inheritance tax.

The current inheritance tax threshold is £325,000, so there’s nothing to pay if the value of your estate falls below this amount.

Worryingly, this threshold has remained frozen now for more than a decade – despite soaring house price inflation over this period.

As a result, more and more people are finding themselves liable to pay inheritance tax, which has led to many labelling it a stealth tax.

In fact, the government raised £7.1 billion from inheritance tax during the last financial year, according to HM Revenue and Customs. This is £1 billion more than the amount collected in 2021-22.

These figures will almost certainly reignite the debate about inheritance tax and whether the current system is fair.

At the same time, they highlight exactly why it’s so important for people to get their finances in order if they wish to avoid getting caught up in the inheritance tax net.

The Treasury has insisted the “vast majority” of estates do not pay inheritance tax, saying that “more than 93 per cent of estates are forecast to have zero inheritance tax liability in the coming years”.

But with inflation remaining high and the inheritance tax threshold staying frozen until at least 2028, how long this line can hold remains to be seen.

For now, those who are concerned about how the rising value of their home might affect their inheritance tax liability should seek professional financial advice.

You’ll undoubtedly want to leave the bulk of your wealth to your loved ones or good causes that mean something to you.

So speaking to a regulated specialist in this field could help you achieve this ambition and not be left paying too much to the state.

Please get in touch with us if you have any questions about how to reduce your inheritance tax bill and we’ll be happy to discuss this with you.

Have you left instructions on what happens to your estate ?

Many of us don’t like to think about what will happen after we’re gone, and that’s perfectly understandable. But it’s really important to overcome this psychological hurdle if our wishes are to be carried out and our loved ones get the inheritance they deserve.

According to new figures from the National Will Register, more than four in ten adults haven’t yet spoken to anyone about what should happen to their estate when they pass away.

A quarter of people said this is because they find the subject too morbid to think about, while almost one in five admitted they simply weren’t concerned about what happens to death.

Interestingly, even people aged over 55 are apparently reluctant to discuss this issue, with three in ten people in this age group not having spoken to anybody about their estate.

Similarly, almost half of those polled said their parents hadn’t discussed any instructions or details or a will, and only a third said their parents had informed them where a will could be found.

Of course, the simple reluctance to discuss or think about death is at the heart of this issue, but there will be many other factors influencing these worrying trends.

For example, many people who cohabit but aren’t married may have mistakenly assumed that if they die without a will, everything will automatically go to their partner, when in fact it would go to their closest living blood relatives.

As a recent study from the Women and Equalities Committee showed, 46 per cent of people in England and Wales wrongly believe that cohabitants living together form a common law marriage, automatically gaining rights equal to a marriage or civil partnership.

Others, meanwhile, simply assume they don’t need to have a will. The National Will Register survey found that nearly one in three people don’t believe they have enough assets to warrant making one, and one in ten felt their estate was too simple.

All this suggests that much more needs to be done to educate people about estate planning, as they can end up making costly mistakes that don’t reflect their actual wishes.

More effort to show people how to make a will could also be necessary, as a staggering one in ten said they didn’t know how to go about it.

How many people have a will?
Figures from the National Will Register show that just 44 per cent of adults in the UK have made a will.

Notably, men were found to be more likely to have a will in place than women (50 per cent of males, compared with 39 per cent of females).

Similarly, men were also more likely to be willing to discuss what happens to their estate. Some 62 per cent of men were found to have raised the issue with their loved ones, compared with just 55 per cent of women.

Two-fifths of those who haven’t yet made a will said they just hadn’t got around to making one yet.

But sadly, we can never be sure when we’ll pass away and how quickly that will might be needed.

You really shouldn’t delay getting your affairs in order, so you can be confident that your wishes will be carried out and your loved ones will be well cared for, if the unthinkable happens.

If you want any advice on making a will, estate planning and managing your wider financial affairs, please don’t hesitate to get in touch with us.

Our professional, regulated specialists will be happy to discuss these important issues with you, so you can be properly set up for the future.