Feeling financially irresponsible, need to plan for the future - help please!

[Leeka]

Not sure where to go for advice, so thought I'd start here with you helpful people.

My partner and myself are both self-employed, although my business is running on a low-key basis atm as we have an 18 month old ds and I am pregnant again. He is a sole trader, so whatever he can earn as a day rate minus costs is his income.

We sold our house last year, and have about £20k equity from that, half in premium bonds and half in our current account...I know that's dumb but interest is so crap and I'm not sure where to put it! And we were so skint before we sold the house that it's nice to have some in the bank with no worries that the bills aren't going to be paid, etc. No other savings, investments, etc.

We rent a great house now, and we're quite happy staying here indefinitely with no desire to buy, although we would def consider buying an investment property if it seemed sensible.

We have no life insurance, no pensions, nothing for the future really. We earn enough to live on, but am feeling like now we have children and are in our early thirties, we are being a bit silly and irresponsible, and need to put a plan in place for what comes next. I pay £10/month into the CTF and £20/month into a high-interest savings account for our son, and intend to do the same for the baby.

I don't know if we need to talk to an accountant, a financial advisor (won't they try and sell us products?), or someone else.

I'm not sure where our priorities should be. What would you do?

Yes, they'll try and sell you something - cream their commission and more than likely offer you a product that you could've chosen yourself.

I suppose you need to make your own decisions as to where you see inflation/deflation going - would your money be better off in assets? Should you ought to find a long-term lock-in savings account offering a decent rate? How do you envisage your retirement? Do you trust a private pension (someone ELSE choosing where your money is invested) to have anything left in the pot by the time you're 65? Investment property? What do you know about yields? What do you know about taxation upon any return you may or may not have on that?

You don't really need a 'pension' as such, but you should be saving/investing in some regular way so you won't have to work until you drop dead.

You're right that atm interest rates are not great, but you could still do better than leaving all that money in the current account. Have a look at Money Saving Expert for ideas.

I think you should go to an independent financial advisor - they may well try to sell you some unnecedssary products, but it is a start ...

I would get some life insurance at least - at least make sure that a will and some policy in in place should something horrible happen to either of you ... it shouldn't cost a bomb either.

Look at ISA's - you can get a Cash Mini ISA which can give you quick access to the money should you need it. Interest rate won't be that great but it is tax free up to the annual ISA amount (£3600 I think at the moment).

MoneySavingExpert: What Is An ISA

Thank you for your replies - sorry, have only just come back to this.

Skihorse - I don't know anything about any of the things you mention!

So I should arrange:

-Regular savings account (I wonder how much would be sensible to save each month?).

-Transfer current savings to higher interest account (have known for ages I should do this, just not got around to it).

-Will for both of us (can this be a simple one done by us, just saying that everything goes to the other one if either were to die, rather than getting a solicitor to do it?).

-Life insurance to pay out if either of us were to die.

And perhaps see an IFA for more advice.

I'm such a finacial loser!

Alvin Hall - Money Or Your Life - is a good book to read about reorganising your finances, starting to save etc. See if your library has a copy. You can also find some of his articles online at Money.uk.Msn.com

Alvin also came on Mumsnet - Online Chat Q&A, Alvin Hall

Savings: 10% of earnings is a good starting point I think.

Consider tax free savings before those that you pay tax on... so make sure you are both using at least your Cash ISA allowance (currently £3600 each, rises next year). You don't pay tax on the interest earned by the amount invested per tax year.

Also look at Moneysavingexpert.com

Lots of people with good advice!

I would:

Def. do a Will can get one for free in Nov, as long as not complicated. Look out for WillAid in local press...

ISA is good, tax-free, but to be honest can do the same with more money in a Child's bank account.

Def. get Life insurance, contents insurance.

Go to a IFA as this is what we used and never regretted it. In fact, I could kiss the guys who sold us out Payment Protection against Unemployment!

: )

Cas

My advice is going to be basic as that's my financial understanding.

Priorities: life insurance for you both, wills including who should look after your children if you both cop it before they are 18, minimum 3 month savings 'cushion' covering your total outgoings (you've already got that!)

Pension or some form of retirement planning. Talk to an independent financial adviser but say 'I'm VERY RISK AVERSE' at all possible points.

Then other stuff, mostly savings.