Could we do withafinancial advisor?

[TurquoiseKiss]

Starting to feel like DH and I need to 'financial plan' more. We are 30 and 35. OK for money but we've had some changes in the past year and I feel like we have money just sitting in accounts (not gaining any interest) but in the near future we will have more outgoings, including nursery fees and hoping to move to a bigger house taking on a bigger mortgage. We don't necessarilyfritter money away but we do spend on holidays, presents for special occasions, days/nights out etc as there's always money leftover after outgoings in the debit account.Actually the lack of holidays/days out due to Covid is probably why our savings are up!

I know loads of info is available online but it feels a bit overwhelming and neither of us really understand much beyond basic budgeting,about pensions, forms of tax reliefetc.

I'd like someone to look at our current situation, short and long-term future plans, and advise how much we should ideally be paying off/putting away/contributing to pensions? Any advice on where to look appreciated. Have heard it's best to avoid a free advisor from your own bank as they won't be that impartial?

Summary:

We have a mortgage - 24 years left and LTV at the moment around 60%, started overpaying last month but just plucked a figure out that seemed reasonable/what we could easily afford.Overpayment is not much, 13% extra.

We have around £8k in savings in an easy access, practically zero percent interest, account. Neither of us have an ISA.

We have one year left on a loan we took out to buy our car, but could pay it off without incurring a fee.

Pension contributions - DH has a defined benefit public services pension, I have one where I can alter the amount I contribute. I could definitely contribute more than I do.

We have 1 DC,nursery starts imminently so that will be a new outgoing for us.

Thanks in advance.

I think you need some goals: how big do you want your pension pots to be, individually and together , do you want to retire early, have a second home, help your child(ren) get on the property ladder, travel etc. Everybody has different dreams. How do you see yours? Once you’ve come up with some goals then see a financial advisor, independent, to see how you can achieve them.
Investing in an ISA is not difficult or complicated. I use The Motley Fool website for basic advice and check out other sites to compare opinions. Mostly I use ETFs as I have less time to buy and sell shares. My ISA fund generally goes up in double figures so I’m happy with that.

You may be able to find a fixed fee financial planner who for a few £thousand would do an initial fact find and create a financial plan but then leave you to implement it.
You will need to shop around as not that many provide this but it does seem to be a bit more popular than in the past.

There is lots of information online and it does seem daunting at first but you can do things in stages.

A very simple starting point would be to go through a book like The Meaningful Money Handbook by Pete Matthew which has three main sections: Budgeting and Debt, Insurance, Investing. www.petesbook.com
At a cost of less than £15 you can learn some basics and apply them to your situation. That may then perk your interest in delving deeper about a particular aspect, such as investing in Pension, ISA.

Nursery - Be aware of funding schemes and how they work. Tax Free Childcare scheme is probably the one you would use if you
& DH earn under £100k each.

Pension: You know that DH has a Defined Benefit scheme. You have not said what type of scheme you have got. Find out what type it is, what the fees are, what the fund choices are, how much your employer contributes and if you were to pay more in would your employer pay more in (employer matching) or not. Also is it Salary Sacrifice or not.

You have £8k in savings - look at where that is kept. Do you need all of it instant access or could you have some at 3-5 day access?
This is your emergency fund so you want it to be safe, it is not an investment. Typically some is kept in a current account so instant access with a debit card, the rest kept in NS&I Premium Bonds perhaps as somewhere safe with a chance of getting a bit of a return.

Doesn’t sound like your situation is complex enough to warrant paying a financial advisor. Financial advisors are for people who have more complex sources of income then just PAYE or cash sitting around doing nothing.
You didn’t say how mild you both are or how much you earn, how big your mortgage is. Overpaying mortgage is not always the best option when interest rates are low. You could invest and get a bigger return. But it really depends on how old you are and how much you earn.

Many thanks everyone for your replies.

@PerseverancePays Thanks for theadvice re setting goals. We've definitelynot thought seriously about longer term goals i.e. early retirement etc but I will speak to DH to start the conversation off. Just thinking about the next step for now.However I guess that's the whole point of planning ahead! I will check out The Motley Fool site as a starting point. What's an ETF?

@nannynick Thanks we have opened a tax-free childcare account. My pension is a Group SIPP and my employer contributes 10% of my monthly gross pay. It is not SS however we have recently been offered to switch over to SS if we like.

It'd be fine to access savings in 3-5 days in an emergency, we both have 0% credit cards that have nothing on them should we need to pay for something big instantly.Will also check out Pete's Book.

@sst1234 Our combined take home each month is £5k, mortgage, bills, car loan etc total £1,800. We're 30 and 35.

It sounds like your savings currently cover about 3 months of your living room expenses. That’s generally what’s recommended as a safety cushion / emergencies fund, which should be kept in a relatively easy to access savings account.

Anything you save beyond that you can consider using on your mortgage, investing etc. ISAs help you save tax free. Cash ISAs are basically a savings account; currently these are a bit pointless as rates are poor and most people don’t earn enough interest to need an ISA. When/if you decide to invest in the stock market you may want to do via an ISA. (ETFs are exchange traded funds which are a relatively easy way of investing in the stock market (eg FTSE 100); you can invest your ISA in ETFs.)

In the short term, I would consider paying off your loan if it has interest. I would then put the money you would have used on monthly loan repayments back into savings. Once you have more than a few months of expenses saved, you can then look at overpaying the mortgage, investing in equities or paying more into your pension.

I think I'm in the minority in that I use a financial advisor and have done for 15+ years. Yes we pay for this advice via setup fees etc, but I'm comfortable with this - and he's explained economics to me...

Also look at money saving expert. There's a very comprehensive budget planner, courses to learn more about various aspects of money management and good advice on the impact of small changes to your spending adding up massively over time, that can literally save thousands of pounds a year.

For example, if you normally spend £10 a day on lunch and a coffee and switch to a packed lunch and a flask most of the time, that could save nearly £2k pa.

If you normally have the latest high end smartphone on a £50 a month contract, you could save another £500 pa by buying a cheaper but still good phone, keeping it for longer and having a cheaper sim only contract.

You should review what you pay for insurance, utilities, TV and broadband at least annually and never buy anything, eat at a chain restaurant or go to an attraction without shopping around and looking for a discount, because it's just about always available.

You have a decent income and you can probably save quite a bit more of it without hugely changing your lifestyle.

www.moneysavingexpert.com/family/money-help/

You don't need to pay for advice and there's a lot available for free if you look.

Have a read of the thread below. There's some good advice about what a financial advisor would probably do for you and therefore why you don't really need one.

www.mumsnet.com/Talk/legal_money_matters/4175889-Tell-me-about-your-financial-advice-experiences