Financial Forecasting to avoid Cold Winters!
As we approach the winter of 2024-2025 in the UK, forecasts suggest a season characterised by variability, with periods of colder weather interspersed with milder conditions.
Our finances can often follow a similar pattern as we have times throughout the year where our spending habits change, life events happen, and new plans are hatched.
For this reason, winter is an excellent time for a financial review says Markland Hill Wealth Adviser Wes Lockley.
‘“New Year, new goals and a fresh look at your finances could set the foundation for a year of growth, stability, and success” comments Wes as he creates the path to a winter financial review.
Now is the perfect time to review your finances for the following reasons:
1. Year-End Reflections
The end of the calendar year is a natural checkpoint to evaluate financial goals. It allows you to assess what you accomplished during the year and identify areas for improvement.
Reviewing tax implications before the year’s end can help you make adjustments, such as charitable contributions or investment moves, to optimise tax savings.
2. Tax Preparation
Winter is the perfect time to prepare for tax season. Reviewing income, expenses, and deductions ensures you’re organised for filing and can uncover opportunities to reduce your tax burden.
If you anticipate a refund, early filing allows you to receive it sooner and put it to good use, such as paying down debt or investing.
3. Holiday Spending Awareness
The holiday season often comes with increased spending. A financial review helps you understand the impact of holiday expenses on your budget and plan for repayment or adjustments.
4. Setting Goals for the New Year
Use winter to create financial goals for the upcoming year. This includes saving for holidays, building an emergency fund, investing, or planning for major purchases.
Starting the year with a clear financial plan can set a positive tone for achieving long-term financial stability.
5. Slow Period for Planning
For many, winter is a quieter time with fewer distractions, providing an opportunity to focus on financial matters.
If you work with financial advisors or accountants, they may also have more availability in the early winter months compared to tax season.
6. Investment Portfolio Rebalancing
Reviewing your investment portfolio in winter ensures it aligns with your risk tolerance, goals, and market changes. If it doesn’t happen automatically you can rebalance as needed to manage risk and optimise returns.
It’s also a time to consider using tax-loss harvesting to offset gains if appropriate to your circumstances.
7. Evaluate Insurance and Benefits
Winter is often close to or overlaps with open enrolment periods for benefits. It’s a great time to assess whether your health, life, or other insurance policies are still meeting your needs.
You can also review contributions to retirement accounts personal or workplace pensions.
8. Preparation for Big Life Changes
If you anticipate changes such as a new job, a home purchase, or a family addition, winter is a strategic time to plan and budget accordingly.
Taking time during the winter to conduct a financial review helps set a solid foundation for the new year, ensuring you’re in control of your money and ready to tackle your financial goals.