Month: April 2025

This guest blog was written by Chris Budd who wrote the original Financial Wellbeing Book, and also the Four Cornerstones of Financial Wellbeing. He founded the Institute for Financial Wellbeing and has written more than 100 episodes of the Financial Wellbeing Podcast. 

Our approach to money can be a great enabler of wellbeing. It can help us to spend our time doing the things we want to do. However, it can also act as a barrier. 

Money should be our servant, but it often acts as our master. Understanding this aspect of our relationship with money, and where it acts against our wellbeing, can allow us to create a financial plan that will help us to be happier, not just wealthier. 

There has been a lot of research over the centuries – and religious and philosophical teaching over millennia – about the sources of wellbeing in life. Financial wellbeing is firstly about understanding some of what has been learnt over the centuries. It is then about applying those principles to our own lives, a process we might call “know thyself”.

In this piece, we will look at some of what we have learnt about how money can sometimes get in the way of our wellbeing. 

Comparison is the thief of joy

The comparison theory of happiness suggests that if you compare yourself with your peers, then this will either make you happy or unhappy, depending on whether you are better or worse off than them. 

This can have a significant impact on our self-regard. Research shows that comparing ourselves with someone worse off can increase self-regard. It also helps to appreciate what we do have as we see people less fortunate than ourselves.

However, comparing ourselves with someone wealthier than us reduces our self-regard. It can also drive spending that doesn’t add to our wellbeing, and slows down progress towards achieving our financial goals. 

Society encourages us to compare upwards. We tend to present the very best of ourselves on social media, for example. When we compare upwards, we are often comparing ourselves with people who appear to be happier and more successful than perhaps they really are. 

What is success?

Your definition of success may be a significant factor in your wellbeing. We are surrounded by images of success, and they invariably involve money and fame. 

To see success in such terms is not conducive to wellbeing. A materialistic, or extrinsic, purpose, such as owning expensive things, relies on the approval of others. Achieving such a goal will only bring wellbeing as long as it is being noticed.

If you have a purpose or objective that is meaningful to you – known as an “intrinsic purpose” – then achieving this will give fulfilment and wellbeing.

“Know thyself” is about understanding what makes you happy, and what success means for you. Having clarity over your future, and a financial plan to get you there, will make a significant contribution to your wellbeing. 

Your money stories

We all have our own view of money. Think of the many phrases about money:

• Money makes the world go around
• Money doesn’t grow on trees
• Can’t buy me love
• Time is money.

Many of these phrases contradict each other. What phrases come into your mind when you think about money? For example, is it: “I’m not very good with money”.

It is worth taking some time to understand your own money stories, and asking yourself whether they are leading to you making good decisions. Perhaps discuss this with your financial adviser. 

Conclusion

As we travel down life’s stony road, it can be hard enough just concentrating on the day-to-day. Taking a step back to “know thyself” is often a luxury many of us cannot afford.

This is why the role of a financial adviser is so important. It gives us time and space to think about what a happy future might look like – and then to create a financial plan for how to get there. 

Please note:

This blog is for general information only and does not constitute financial advice, which should be based on your individual circumstances. The information is aimed at retail clients only.

You don’t know what’s around the corner, but that doesn’t mean you can’t prepare for it.

A financial shock could derail your short- and long-term plans and might mean you face additional stress at an already difficult time. So, creating a financial safety net that you can rely on should the unexpected happen could offer you peace of mind. 

Over the next few months, you can read about how financial protection might provide a cash injection if you’re unable to work due to an accident or illness. Read on to find out how appropriate financial protection may help you bridge the financial gap if your income stops. 

7% of economically inactive people are dealing with long-term sickness

No one wants to think about becoming too ill to work. However, the chances of it happening could be higher than you think.

Indeed, an April 2024 report published by the House of Commons Library estimated that around 7% of the working-age population who are economically inactive are dealing with long-term sickness.  

In many cases, those who cannot work will see their income slashed, which may mean they cannot meet essential financial commitments. This added stress could make recovery even more challenging. So, it’s important to understand how you’d cope financially if your income stopped and whether there’s a potential gap. 

3 ways you might receive an income if you’re unable to work 

Statutory Sick Pay

If you’re an employee who earns at least £125 a week, you’re normally entitled to Statutory Sick Pay (SSP). While this could provide some income if you’re unable to work, it’s often not enough on its own to cover regular household expenses. 

Indeed, SSP is just £118.75 a week, so you’re likely to face a shortfall if you’re relying on this alone. In addition, SSP will only be paid for up to 28 weeks. So, those facing a long-term illness could find the money they receive through SSP stops. 

According to Citizens Advice in November 2024, around a quarter of workers have to rely on SSP alone if they’re unable to work. 

Occupational sick pay

In addition to SSP, around half of workers would benefit from receiving their full wages through occupational sick pay. It’s worth checking your employee handbook or contract to see if your workplace would continue to pay you an income if you’re unable to work.

If your employer provides sick pay, there are two key things to check:

1. Would you receive your full salary or a portion of it?
2. How long could you receive occupational sick pay for?

It’s common for the amount you receive through occupational sick pay to reduce the longer you’re off. For example, you may receive your full salary for the first six months, and then half your regular pay for a further six months. 

So, even if your employer offers sick pay, you could still face an income gap. 

Depleting your assets

If you need to create an income while you’re ill, another option is to use your assets. You might withdraw money from your savings or investments to cover day-to-day costs.

While useful, if the money wasn’t earmarked as an emergency fund, depleting your assets might affect other goals, from going on holiday to your retirement. 

Financial protection may provide an income injection when you need it most 

Depending on the type of financial protection you take out, it could provide either a regular income or a lump sum if you’re not able to work due to an illness or accident.

So, if you’d struggle to cope financially if your income unexpectedly stopped, financial protection might be a safety net you want to consider. Not worrying about how you’ll pay the bills could make your recovery smoother or mean you have more options if returning to work isn’t possible. 

Contact us to talk about your financial safety net

We don’t have a crystal ball to predict what will happen in the future. However, we can work with you to create a financial plan that includes a safety net should the unexpected happen. 

If you’d like to understand what steps you might take to create long-term financial security, please get in touch. 

Next month, read our blog to discover the different types of financial protection that may be useful for you and your family.

Please note:

This blog is for general information only and does not constitute financial advice, which should be based on your individual circumstances. The information is aimed at retail clients only.

Note that financial protection plans typically have no cash in value at any time and cover will cease at the end of the term. If premiums stop, then cover will lapse.

Cover is subject to terms and conditions and may have exclusions. Definitions of illnesses vary from product provider and will be explained within the policy documentation.

Data released by Scotland’s largest health board has highlighted the potential challenges families could face if a loved one doesn’t have a Power of Attorney in place. 

According to a BBC report, in NHS Greater Glasgow and Clyde, a third of patients who are delayed getting out of hospital are stuck because they don’t have a Power of Attorney, the Scottish equivalent of the Lasting Power of Attorney (LPA) available to residents of England and Wales. This means there isn’t someone to make decisions on behalf of a patient if they no longer have the mental capacity to do so, which might mean they can’t be discharged. 

An LPA is a legal way to give someone you trust the power to make decisions if you’re unable to make them yourself. 

Without an LPA in place, loved ones will usually need to apply to the Court of Protection to be appointed your “deputy”. The process of becoming a deputy can be lengthy and may be costly.

In addition, the court may appoint someone as your deputy that you would not choose yourself or haven’t spoken to about your wishes. 

Despite this, a March 2025 survey from the Phoenix Group found only 8% of people have an LPA/Power of Attorney in place, and just 13% said they knew a lot about the legal arrangement. 

If you haven’t named an attorney by registering an LPA, essential decisions could be delayed.

You can name more than one person as an attorney and state whether they can make decisions separately or if they must make them together. It’s important to consider who you choose as an attorney – someone who understands your wishes and you can trust to act on your behalf.

There are two types of LPA, and both may be useful.

Health and welfare LPA

As the BBC report highlights, there are times when people cannot make health and welfare decisions themselves. It could mean you’re left in a vulnerable or uncomfortable position as your loved ones are unable to act if you don’t have an LPA in place. 

In addition to managing care following a hospital stay, a health and welfare LPA might cover decisions like:

• Your daily routine
• Moving into a care home
• Medical care, including life-sustaining treatment. 

Naming a health and welfare LPA allows your family or other loved ones to make decisions that could support your wellbeing and quality of life. 

Property and financial affairs LPA 

If you cannot make decisions yourself, your financial affairs could quickly fall into disarray.

Think about all the financial decisions you make regularly. You might need to withdraw an income from your pension, move money into a separate account to pay for utility bills, or go grocery shopping. 

A person named as your property and financial affairs attorney might make decisions about:

• Paying your bills
• Selling your home
• Collecting your pension
• Managing your bank account or other assets.

So, naming an attorney could keep your finances on track and ensure you remain financially stable, whether you live independently or move so you have greater support in your day-to-day life. 

You can complete an online form to register an LPA 

You can fill in the forms necessary to name an attorney online or a solicitor could help you. You must register your LPA with the Office of the Public Guardian for it to be valid, or your attorney will not be able to make decisions for you.

It usually costs £82 to register each LPA unless you benefit from a reduction or exemption. 

You should note that it can take 10 weeks to make an LPA if there are no mistakes. So, if it’s a task you’ve been putting off, making it a priority could be worthwhile and offer you peace of mind. 

Contact us to talk about your estate plan

It may be useful to consider naming an attorney as part of a wider estate plan, which might consider areas like funding care costs, passing on wealth during your lifetime, and writing a will. 

If you’d like to review your estate plan, please get in touch. As well as talking about your options and how to manage your finances later in life, we could also help you speak to your loved ones so they understand your wishes should they need to make decisions on your behalf in the future.  

Please note:

This blog is for general information only and does not constitute financial advice, which should be based on your individual circumstances. The information is aimed at retail clients only.

The Financial Conduct Authority does not regulate Lasting Powers of Attorney or will writing.

Worrying about your finances in retirement could dampen your excitement as you start the next chapter of your life. As you’ll often be responsible for generating your own income once you give up work, it’s not surprising that a February 2025 report from Which? revealed half of over-55s are worried about running out of money.  

Indeed, just 27% of those who have retired or are nearing the milestone said they weren’t concerned about draining their pension or other assets in retirement. 

Some apprehension about your finances as you retire is normal. 

Retirement is likely to represent a significant shift in how you create an income. No longer will you receive a regular wage for your work. Instead, you’ll often start depleting your assets, such as your pension, savings, or investments. As you can’t predict how long your assets need to last, it may be difficult to assess if the income you create is sustainable. 

Here are five strategies that could give you confidence in your retirement finances, so you’re able to focus on what’s most important – enjoying this next stage of your life.  

1. Consider inflation before you retire

A key obstacle when planning your finances in retirement is that inflation often means your outgoings will increase. 

According to the Bank of England, between 2014 and 2024, average annual inflation was 3%. So, an income of £35,000 in 2014 would need to have grown to almost £47,000 to maintain your spending power in 2024.

As a result, if you planned to take a static income throughout retirement, you could face a growing income gap in your later years or deplete assets at a faster rate than you anticipated. 

As part of your retirement plan, a cashflow model could help you visualise how your income needs might change, and the effect this would have on the value of your assets. While the outcomes cannot be guaranteed, it could highlight where you might face potential shortfalls and allow you to take steps to improve your long-term financial security. 

2. Keep an eye on retirement lifestyle creep

It’s not just inflation that could affect your outgoings. Lifestyle creep, where you spend more on luxuries, could have an effect too.

As you may be in control of how much you withdraw from your pension, it can be easy to slowly increase the amount so you can indulge in an exotic holiday, new car, or regular days out. Over time, these luxuries can become new necessities in your mind and part of your normal budget.

Spending more in retirement isn’t necessarily negative. However, increasing your spending without considering the long-term consequences might mean you face an unexpected shortfall in the future. Regular financial reviews during your retirement could help you keep an eye on lifestyle creep that may be harmful. 

3. Assess if investing in retirement is right for you

In the past, it wasn’t uncommon for retirees to take their money out of investments to reduce exposure to market volatility. However, keeping some of your money, including what’s held in your pension, invested might make financial sense for you.

Retirements are getting longer. With the average life expectancy of a 65-year-old now in the 80s for both men and women, you could spend three decades or more in retirement. So, continuing to invest with a long-term time frame during retirement could help grow your wealth and mean you’re at less risk of running out of money.

It’s important to choose investments that are appropriate for you and recognise that investment returns cannot be guaranteed. If you’d like to talk about investing in retirement, please get in touch. 

4. Be proactive about retirement tax planning

While you might no longer be working, you’re very likely to still pay Income Tax in retirement. Indeed, according to the Independent, in March 2025, retired baby boomers were paying more Income Tax than working people under 30. 

If your total income exceeds the Personal Allowance, which is £12,570 in 2025/26, Income Tax will usually be due. With the full new State Pension providing an income of £11,973 in 2025/26, most retirees will pay some Income Tax even if they’re only taking small sums from their personal pension.

It’s not just Income Tax you might be liable for either. You might need to pay Capital Gains Tax if you sell assets and make a profit or Dividend Tax if you hold shares in dividend-paying companies.

An effective retirement plan could identify ways to reduce your tax bill, so you have more money to spend how you wish and are less likely to run out during your lifetime. 

5. Maintain an emergency fund throughout retirement 

During your working life, you may have had an emergency fund in case your income stopped or you faced an unexpected expense. In retirement, a financial safety net might still be important.

Having a fund you can fall back on in case you need to pay a large, unforeseen cost, like property repairs, could be essential for keeping your retirement finances on track.

In addition, it may be prudent to contemplate how you’d fund the cost of care if it were needed. According to an August 2024 report from the Joseph Rowntree Foundation, the number of older people unable to perform at least one instrumental activity of daily living without help will increase by 69% between 2015 and 2040.

This rise is partly linked to a growing population of elderly people and rising life expectancies leading to more people relying on informal care, such as family members, or formal care, like a nursing home. 

Whether you need to pay for care will depend on a variety of factors, such as the value of your assets and where you live. However, in most cases, you’ll often need to pay for at least a portion of the costs if you require formal care. 

So, considering care when you assess your emergency fund could be essential. Knowing you have the savings to pay for care could provide you with peace of mind and mean that should it be required, you have more options to explore, such as choosing a care home with facilities you’d enjoy or one that’s easily accessible for loved ones. 

Get in touch to discuss your retirement finances 

As your financial planner, we could work with you to build a retirement plan that reflects your circumstances and goals. Whether you’re worried about running out of money or you have other concerns, we’re here to listen and discuss your options. Please get in touch to arrange a meeting. 

Please note:

This blog is for general information only and does not constitute financial advice, which should be based on your individual circumstances. The information is aimed at retail clients only.

Please do not act based on anything you might read in this article. All contents are based on our understanding of HMRC legislation, which is subject to change.

The value of your investments (and any income from them) can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance. 

Investments should be considered over the longer term and should fit in with your overall attitude to risk and financial circumstances.

A pension is a long-term investment not normally accessible until 55 (57 from April 2028). The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available. Past performance is not a reliable indicator of future performance. 

The tax implications of pension withdrawals will be based on your individual circumstances. Thresholds, percentage rates, and tax legislation may change in subsequent Finance Acts.  

The Financial Conduct Authority does not regulate cashflow planning.

When people think about financial wellbeing, they often link it to frugality or building wealth. Yet, an effective financial plan isn’t always about that, sometimes, it might make sense to spend more.

It can be difficult to get your head around. After all, as a child, you’re often taught that being sensible with money means putting it in a savings account rather than spending it. Yet, this approach only focuses on growing your wealth, rather than using it in a way that helps you reach your goals. 

So, here are three scenarios where your financial plan might involve increasing your outgoings. 

Spending more could help you reach lifestyle goals

At the heart of your financial plan should be your lifestyle goals – how do you want to use your time and what makes you happy?

To reach these goals, you might need to spend more. Perhaps you enjoy getting creative and want to attend regular art classes, or maybe you love to attend gigs across the country so want to boost your disposable income to see more of your favourite bands. 

Of course, simply increasing your spending could lead to a shortfall later in life. This is why making it part of an effective financial plan is important.

Working with a financial planner could help you assess how the decisions you make today, including spending more to reach your lifestyle goals, could affect your future income. 

You might find that you’re in a position to boost your disposable income to spend more on the things you enjoy. 

If spending more to reach lifestyle goals could affect your long-term security, a financial plan may help you assess where compromises might be made so you can strike the right balance between enjoying your life now and being secure in the future. 

Higher outgoings now could boost your future income

There might be times when spending more money now could boost your finances in the long run.

For instance, if you’re thinking about returning to education to pursue a career change, you might need to fund the costs yourself. Or, if you’re an aspiring entrepreneur, you may choose to increase spending to get your idea off the ground.

In both of these scenarios, you might hope that the initial outgoing will lead to a higher income and greater financial security in the future.

Making this decision part of your financial plan could help you assess if it’s the right option for you and understand the potential short- and long-term implications it may have on your finances. 

You want to create a legacy during your lifetime

Often, when people speak of a legacy, it’s what they’ll leave behind when they pass away, but it might also be something you do during your lifetime. Indeed, there could be benefits to creating a living legacy.

Your loved ones might have a greater need for financial support now than they will in the future. For example, a helping hand to purchase a home when they want to start a family could be more useful in terms of creating long-term financial security than an inheritance later in life. 

Alternatively, you might want to leave a legacy to a charitable cause during your lifetime.

Again, a benefit is that you have the potential to see the impact your gift will have. You might choose to support the charity in other ways too, such as acting as a trustee or organising a fundraiser. 

If your estate could be liable for Inheritance Tax (IHT), creating a living legacy might be one way to reduce the potential bill. As well as reducing the value of your estate through gifting, if you leave more than 10% of your entire estate to charitable causes on your death, the IHT rate your estate is liable for would fall from 40% to 36%. 

When gifting to reduce IHT, it’s important to note that not all gifts are immediately outside of your estate for IHT purposes. Indeed, some may be included in calculations for up to seven years after they were gifted. If you’d like to discuss how to pass on wealth tax-efficiently, please get in touch.

Contact us to talk about your financial plan

If you’d like to create a financial plan that’s tailored to your goals and circumstances, please get in touch. We could help you balance short-term spending with long-term aspirations so you can have confidence in your future. 

Please note:

This blog is for general information only and does not constitute financial advice, which should be based on your individual circumstances. The information is aimed at retail clients only.

The Financial Conduct Authority does not regulate tax planning or estate planning.

Have you ever made a decision to continue with a course of action based on what you’ve already put into it? This bias, known as “sunk cost fallacy”, might mean you don’t make rational decisions and stick to a path that’s no longer right for you.

If you’ve been affected by the sunk cost fallacy, it doesn’t automatically mean you made a wrong decision. In fact, factors outside of your control could mean that what was once an excellent decision for you, no longer makes sense. However, by basing your next decision on what you’ve already done, you could hinder your ability to make the “right” choice now.

Feeling like you’ve already invested resources may mean you don’t want to turn away

The sunk cost fallacy refers to the resources you’ve lost and can’t get back. This loss might mean you’re less likely to assess alternative options, as you don’t want it to be in vain.

So, your past effort affects the decisions you’re making about the future. 

The sunk cost fallacy is more likely to occur if you’ve already invested heavily in something. It doesn’t have to be a financial investment. The time you’ve poured into a project or the emotional energy you’ve dedicated to it could cloud your judgement too.

It’s often linked to other types of cognitive bias. 

For example, loss aversion theory suggests you feel emotions connected with loss more keenly than those associated with winning. So, if you feel like you’ve lost resources, you might be more emotional, and less likely to focus on logic than you usually would.

Another bias sunk cost fallacy is often linked to is confirmation bias – where you seek out information that supports your preconceived idea. If you’ve already decided you want to proceed with a plan because you’ve invested in it already, you might start to prioritise data that suggests this is the right thing to do.

There are plenty of examples of the way sunk cost fallacy might affect you.

If you’re taking the lead on a project at work, you might be reluctant to change course, even if it’s clear it isn’t going to work as well as alternatives, because of the time you’ve already invested.

With your finances, you might refrain from selling an investment that no longer aligns with your financial plan because the share price has fallen recently so you feel like you’ll be “losing”. 

4 useful steps that could help you avoid sunk costs affecting your decisions 

1. Imagine it’s a new decision 

While it’s difficult, try to look at the decision with a fresh perspective – if you hadn’t already sunk costs, how would you view the decision today?

Doing this could highlight where your past efforts might be influencing the decisions you’re making now. 

2. Focus on the future

When you’re reassessing your decisions, look forward as well. For example, if you’re reviewing an investment, what are the expected returns and how much risk would you be taking? Looking forward, rather than back, could help focus your mind so you’re not dwelling on perceived losses. 

3. Set goals 

One effective way of avoiding the sunk cost fallacy is to set goals from the start. If you have a clear idea about what you want to achieve, you’re more likely to be able to evaluate whether sticking to a plan continues to be the right decision.

Taking an objective-based approach means you’re less likely to focus on the emotional side of decision-making, and, instead, pay attention to the expected outcomes.  Understanding how decisions might support long-term goals could mean you feel more confident when the evidence suggests a different course of action could be better suited to you.

4. Get an outside view

Sometimes it’s impossible to look at a decision you’ve made objectively, as you may be emotionally attached to it. This is where an outside perspective could be useful.

A person who isn’t thinking about the “losses” could help you see why you’re holding on to a decision that might no longer be right for you.

As a financial planner, we could act as an alternative perspective when you’re assessing financial decisions. If you’d like to talk to us, please get in touch.

Please note:

This blog is for general information only and does not constitute financial advice, which should be based on your individual circumstances. The information is aimed at retail clients only.

The value of your investments (and any income from them) can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance. 

Investments should be considered over the longer term and should fit in with your overall attitude to risk and financial circumstances.