Summer is here; but the seasons can play

havoc with our wealth

For many self-employed people the summer months bring financial highs. Businesses alongside tourist coastlines make most of their money, professional gardeners have full diaries, and producers of garden furniture, camping equipment and ice cream can all see profits peak.

But for the self-employed, a financial high in one season can be followed with a low in the next.

As Wealth Planners we often see that those who are employed find it natural to save a proportion of their regular income. Investing into an investment ISA and a pension is inevitably easier when you know how much you will be paid each month. In contrast, those who earn the bulk of their income in a few short months can feel nervous about committing to investing for the future.

Yet there are financial goals that we all have to reach, irrespective of whether we are employed or self-employed. This can be a pension at retirement, a life insurance policy to provide for our children or an investment for the future.

For the self-employed, and in particular for those with seasonal earnings, it is important to financially commit to plan for the future, putting aside money in the months when it is affordable to do so. Working with a Wealth Planner can help you to achieve this.

Our five tips to financial planning when your income fluctuates:

1. Start with a blank sheet of paper and work out where you need to be in 5, 15 and 25 years’ time. Don’t limit your thinking; it could be a geographical location to live, the idea of starting a family or making a career change. These life goals are the underpinning to wealth management and creating your monetary goals.

2. A wealth planner can help you to establish how much you need to save each month in order to achieve your plans and advise you on the best type of account to suit your need and time frame. Don’t get trapped into the idea that you have to save or invest a regular amount each month, you can make contributions into most plans on an ad hoc basis, so even a pension can fit around the highs and lows of seasonal earnings.

3. Create layers of accessibility to your money. This means easy access to some money for cash flow issues, and notice or investment accounts which are less accessible but may produce better returns in the long term. This also means reviewing cash which you may have stock piled into poorly paying instant access accounts. This money could work harder for you.

4. Look at your responsibilities. If you have a partner, children or debts, think about the financial vulnerabilities in your life, for instance what would happen if you become sick or die: what would the financial implications be? Reviewing your insurance policies need not be expensive. Too often people take out policies and forget about them. You need to make sure the information on your policies is correct and the insurable amount (the amount that will be paid out) is still enough.

5. Don’t think that you can’t save for the future. Many people who don’t have control over their wealth are those who haven’t invested the time into sorting out their money. Regaining control of your long term financial goals inevitably means that day to day spending is also addressed.

To find out more wealth management speak to your Wealth Planner.

If you currently do not have a Wealth Planner, we would be delighted to help, please email letstalk@sanlam.co.uk

This article is for information purposes and should not be treated as advice. Individual circumstances should always be considered prior to purchasing any financial products. For further information please contact your Wealth Planner.

Sanlam is a trading name of Sanlam Wealth Planning UK Ltd (Reg. in England 3879955) and English Mutual Ltd (Reg. in England 6685913). English Mutual Ltd is an appointed representative of Sanlam Wealth Planning UK Ltd which is authorised and regulated by the Financial Conduct Authority.