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Do you need a financial plan? Seven questions to ask yourself

7 big questions for your financial plan

Saving for the future can be an overwhelming prospect. Gone are the days of slotting coins into a piggybank – adulthood comes with sophisticated savings options, and it’s difficult to know where to begin. It can be easier to keep putting the idea off, leaving it as something you’ll deal with next year. But the best time to start saving is right now, because the sooner you start saving, the more you’ll accumulate. Here are seven important questions and the answers will hopefully set you on the right path.

1.    What are your financial goals?

What do you want to save for? What are you planning for the future that is going to cost a lot of money? Do you want to buy a house? Would you like to celebrate a milestone birthday in style? Are you planning to contribute to your children’s university fees? Or maybe you’re dreaming of an around-the-world adventure. Whatever your goals, it’s a good idea to prioritise them as some will be looming, while others are still a way off. Giving your goals a time frame can help you decide whether to save for one goal at a time, or several simultaneously.

2.    How soon do you want to achieve your goals?

If your goal is short term – for example, you want to go travelling next year, or you aim to buy a house in four years’ time – then your best option might be to save in a straightforward deposit (savings) account. This way, you can get to your money when you need it and it won’t be at risk of any sudden fluctuations in value. But very low interest rates mean your savings may not be keeping up with the rising cost of living.
If you’re saving for a longer-term goal – for example, to help your children go to university in ten years’ time, or to make your retirement as comfortable as possible – then investing your money in funds in tune with your aims and your time frame could potentially be a good way to grow the value of your money.
Often the best way to prepare for your future goals is to have some money on deposit and some invested.

3.    Have you considered an ‘emergency fund’?

While it’s all well and good saving for events that you are planning for, it’s also important to save for the unexpected. Setting some money aside, or contributing regularly to an emergency fund is a great idea, as it will give you peace of mind to know you can cover unexpected expenses.

4.    Where is the money coming from?

Do you have a lump sum that you want to invest? Or are you planning to build up your savings with a monthly contribution from your income? What about changes to your financial situation? A pay rise could be put towards your financial goals instead of being used to increase your spending. If you feel you have no extra money and are serious about planning for your future, you could consider cutting back on additional spending and reviewing your monthly bills and providers.

5.    What about a retirement plan?

If you think you’re too young to be planning for retirement, or if you think you’ve left it too late, please think again. No one is too young to begin saving for retirement and it’s never too late to make a good plan.  If you think about it, you could be retired over 20 years.  You will need money to do all those things you always wanted to do, but couldn’t because you didn’t have time.    
Putting a pension in place should be one of the things at the top of your list when creating a financial plan.  There are many benefits and if you’re young, investing your money for your retirement early could leave you much better off in the long run. If your retirement is imminent, upping your investments and taking good financial advice now could make a big difference to your future lifestyle.

6.    Would you like expert advice?

When you’re making a plan for your financial future, we recommend speaking to a financial adviser. Terms such as investing, insurance and retirement planning can be unfamiliar to many people, which is exactly where a financial adviser can help. Talk through your finances and your goals with an adviser and they can create a realistic plan tailored to your situation. If you want to achieve your goals by investing, but don’t know the first thing about it, an adviser will help you create a portfolio based on your preferences and your tolerance for risk.

7.    What’s the best financial advice?

Start now – don’t put it off.  Spending a few hours putting a financial plan in place is well worth the sacrifice – you will be living the benefits of it for years to come and you will have the peace of mind of knowing that you have a plan.  The sooner you take control of your money and your financial future, the sooner you’ll benefit. If you think financial advice would be useful to you, take a look at the options below.

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