4 unpredictable events that could mean you’d benefit from a financial review

With the new Labour government’s first Budget due on 30 October, you might be concerned about how any resulting changes could affect your carefully made financial plan.

Indeed, according to a BBC report, prime minister Keir Starmer as warned that the Budget will be “painful” and the government will have to make “big asks” of the public.

Of course, Budget announcements are not the only factors that could affect your finances. Unfortunately, life is full of unpredictable events that could derail your plans.

So, even if you have a robust financial plan in place, a financial review following significant announcements and major life events could help you to navigate any changes and continue progressing towards your goals.

Read on to discover four unpredictable events that could mean you’d benefit from a financial review.

1. Changes in legislation

The government can make changes to the law at any time, but key events, such as a Budget announcement, often trigger amendments to existing legislation or the introduction of new rules.

Such changes could have a significant effect on your financial situation – either positive or negative.

For example, an increase in certain tax allowances might allow you to save more of your wealth tax-efficiently. On the other hand, if the government aligns Capital Gains Tax with Income Tax as could be the case in the upcoming Budget, this could mean that you pay more tax on any assets you dispose of.

Indeed, a change in legislation could affect all aspects of your finances, from how much you can contribute tax-efficiently to your pension each year, to whether your children face an Inheritance Tax bill after you die.

That’s why reviewing your finances following any changes in legislation is crucial.

A financial planner can work with you to ensure you make the most of any beneficial changes and mitigate the potential negative effects of less advantageous changes.

So, if you’re concerned about how the Budget could affect your finances, it’s worth checking in with your financial planner, as they can help you navigate any changes that are put in place.

2. Divorce or separation

If you share your finances with a spouse or partner, a separation or divorce could have serious implications for your long-term financial plan.

Changes in where you live, your household income, your tax liabilities, and your day-to-day expenses could all affect your personal finances.

Indeed, if you’re planning on living alone after your separation, you may need to adapt to a smaller monthly budget. According to figures published by Finance Monthly, UK adults living alone spend on average 92% of their disposable income on living expenses, compared to 83% for couples.

This could not only mean that you have less to spend on everyday essentials, but also that your long-term saving and investing plans are thrown off course.

A financial planner can use cashflow modelling to help you understand your new situation by projecting your future income and financial needs. Together, you can review and update your financial plan to ensure that it aligns with your circumstances, goals, and aspirations, following your separation.

3. Unexpected time off work due to accident, illness or redundancy

Any unexpected gap in employment is likely to affect your household income, which could make it harder for you to keep your financial plan on track.

In the short term, you might need to dip into your savings or borrow money to cover essential expenses, such as your mortgage.

You may also be forced to make changes that affect your long-term goals, such as pausing contributions to your pension.

Unfortunately, building up debt or cutting back on your retirement savings could result in financial difficulties in the future.

So, reviewing your financial situation as soon as this unexpected change occurs could help you to manage your money in the short-term, while minimising any potentially negative effects on your progress towards your long-term goals.

A financial planner can help you assess your assets and plan how to use them to generate a sustainable income until you return to work.

If you receive a redundancy payout or compensation for an accident at work, your financial planner can also help you decide how to use this money most effectively to meet your immediate needs, while protecting your future financial security.

You might also have insurance – such as income protection or critical illness cover – that provides financial support during your time off work. A financial planner can help you understand your entitlement and factor this income into your financial plan. If you’re not currently protected, get in touch and we can help explore your options.

4. Receiving an inheritance

Receiving an unexpected inheritance could lead you to reconsider your financial goals, or to progress more quickly with your existing plans.

However, receiving a large lump sum in this way could feel overwhelming. Indeed, losing a loved one is likely to be an emotionally challenging time.

So, it’s important not to rush into any decisions that you might regret.

Of course, that’s not to say you can’t spend some of your inheritance when you receive it. You might want to seize the opportunity to clear any debts you may have, boost your pension savings, or treat your family to a break during this potentially difficult time.

Whatever your immediate needs are, a financial planner can objectively review your new financial situation and help you logically assess how to make the most use of your inheritance – rather than making decisions based on your emotions.

Get in touch

If you’re looking for a financial planner in Bristol who can help you review your financial plan and ensure that it aligns with your current circumstances and goals, we can help.

Please get in touch either by email at helpme@aspirellp.co.uk or by calling 0117 9303510.

Please note

This article is for general information only and does not constitute advice. The information is aimed at retail clients only.

The Financial Conduct Authority does not regulate estate planning, cashflow planning, tax planning, trusts, Lasting Powers of Attorney, or will writing.

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 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.

Note that life insurance 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.