Does Your Financial Plan Pass a Stress Test?

Are you a planner, or more of a ‘just see how it goes’ type?

Do you start the year with a budget, look at what should be left over and think, ‘We’ve got loads of room there’?

Then spend each month watching the unexpected tip that budget on its head, hoping next month will be different. Or the bit you were planning to put away ends up fixing the car, replacing the washing machine you thought had years left in it, or sorting that leak in the bathroom.

And that’s just the month-to-month stuff you didn’t expect.

Most people have a rough idea of what they want their money to do when everything goes to plan. Pay the mortgage, build up some savings, put something away for retirement and hopefully have enough left over to enjoy life along the way.

But life very rarely sticks to the plan.

All of a sudden, you’re down to one income for a while, a big bill arrives, you change jobs, or the monthly household costs just keep creeping up. Any one of these might be manageable on its own. The question is whether your finances can absorb it without the rest of the plan being knocked off course.

Have you ever actually stress tested your situation?

Sat down and thought, ‘What if we dropped to one income for a few months? How long could we comfortably keep things going?’

If a big expense came out of nowhere, would you know where the money was coming from?

And if you have protection in place, through work or privately, when did you last check what it covers?

These are simple questions but the answers can be anything but.

You might find you have more cash sitting around than you really need. Or you might realise your rainy day fund would struggle with anything more than a light shower.

Perhaps you took out protection years ago and haven’t looked at it since. Or maybe your pensions, savings and investments have built up over time, and no one has ever really stepped back to look at how they all fit together.

We see this a lot!

Life moves on. Salaries change. Children grow up. Mortgages reduce. Priorities shift. What made sense five or ten years ago may not be quite right for you now.

A good financial plan shouldn’t just work when everything goes to plan. It should give you a bit of wiggle room when it doesn’t.

At Blackfords, we look at the whole picture and work out whether what you have in place is still doing the job. Sometimes we turn round and say it’s doing great and sometimes we need to optimise them.

Either way, it’s useful to know.

If it’s been a while since you last looked at everything together, perhaps now is a good time to give your finances a proper once-over.

Let’s do a no-stress stress test.

We offer a free, no-obligation consultation at our offices in Douglas, Port Erin and Ramsey.

Important Information: This article is for general information purposes only and does not constitute personal financial advice. The value of investments and the income from them can go down as well as up, and you may not get back the full amount invested. Past performance is not a reliable indicator of future returns. If you are unsure about the suitability of an investment or financial product, please seek professional advice.