Financial Planning 101

This article is taken from our autumn 2025 edition of Equinox. You can view the full version here.

A few years ago, my dad decided to build a garden table for my mum. With a questionable level of confidence, and a drill that hadn’t been charged since my brother finished school, he set out to create his masterpiece. 

By lunchtime, the table was complete. By the time the BBQ was ready, it had collapsed under the weight of a couple of burgers and a hotdog. The issue? Only three of the four legs had been properly secured. The fourth one was, in his words: “imminent”. 

Much like my dad’s DIY disaster, your financial plan needs all its legs firmly in place to stand the test of time. Whether you’re approaching retirement, considering helping your children financially, or simply wanting more control over your future, getting the fundamentals right matters. 

Here are the five essential pillars we believe form the foundation of a strong, balanced financial plan: 

1. Create a rainy-day fund 

Before anything else, make sure you can weather life’s inevitable showers.  

From car trouble to urgent home repairs – or a surprise vet bill – a cash buffer gives you breathing room when the unexpected strikes. As a rule of thumb, setting aside three to six months’ worth of essential expenses in an accessible savings account for working individuals is appropriate.  

No investment risk, no bells and whistles, just money you can access without delay. Think of it as the umbrella that stops short-term problems from soaking your long-term plans. 

2. Pay off high-interest debt

First and foremost, debt isn’t always bad. A low-rate mortgage or structured borrowing can make financial sense. But credit card balances or overdrafts with 15%+ interest? Those are financial termites quietly eroding your foundations.  

Paying off expensive debt is a risk-free return on your money. For example, clearing a credit card charging 24% interest is effectively like getting a 24% return – with zero market risk. 

This stage is about clearing the clutter, simplifying your cash flow, and freeing up more of your income to do things that actually support your goals. 

3. Protect what you’ve built

It’s easy to skip over personal protection, especially if your kids are grown and the mortgage is nearly paid off. But insurance isn’t just for rainy days – it’s for peace of mind. 

At this life stage, cover like income protection, critical illness, or life assurance can help protect your partner, secure outstanding financial commitments, or ensure a legacy for your loved ones. 

For parents, family income benefit is another under-used option too. It pays out a tax-free income until a specified date, replacing your lost income. 

We’ve seen too many otherwise well-crafted plans unravel because illness or loss of income wasn’t factored in. A safety net here can be the difference between financial resilience and financial regret. 

4. Maximise your surplus

Once you’ve got the basics in place, the next step is making your money work smarter and harder. 

ISAs and pensions are the two most effective tax wrappers available to UK investors. ISAs offer tax-free growth and withdrawals. Pensions provide tax relief on contributions and tax-free growth. Stocks and Shares ISAs are fantastic as they can be used for short-, medium- and long-term planning. 

As pensions can be accessed at age 57 (from April 2028), these are most definitely long-term growth vehicles. Although accessibility may appear frustrating, the huge benefit of pensions is that compound interest can work its magic, as it cannot be interrupted for a long time. 

Both have contribution limits, so consulting an expert is important. Annual allowance, pension carry forward, and strategies like using pension contributions for higher earning parents to retain child benefit or qualify for up to 30 hours of free childcare per week, can be complex. 

Smart tax planning isn’t about dodging HMRC. It’s about using the rules to your advantage, legally and strategically. 

5. View the bigger picture

This is where it all comes together. Referring back to my dad’s table, cash flow modelling represents the tabletop now the four legs are solidly in place, ready to use for various purposes. 

This is the single most powerful tool we use in financial planning. It gives you a visual, year-by-year projection of your financial life – from now, through retirement, to your legacy. 

You’ll be able to see clearly: 

• When you can afford to retire. 

• What level of spending is sustainable. 

• How gifting or downsizing might impact your future. 

• Whether you’re on track- or not? 

• Even better, we can stress- test your plan against different scenarios. What if inflation spikes? What if you live to 100? What if you take that once-in-a- lifetime trip? 

With the right tools, you can replace uncertainty with clarity. And clarity is priceless. 

The four-legged table you can rely on 

Financial planning doesn’t need to be overwhelming. But it does need to be balanced. Just like my dad’s second attempt, this time with all four legs secured (and double- checked by my mum) your plan should feel steady, flexible, and built for the long haul. 

Whether you’re five years from retirement or just want to tidy up the edges of your finances, starting with these pillars gives you a structure you can build on. 

If you’d like help reviewing your own financial “table” or you’re worried one leg might be a bit wobbly – we’re always happy to have a chat. 

This article is intended as an information piece and does not constitute investment advice. 

For advice on any of the points raised, please call us on 0161 486 2250 or reach out to your usual Equilibrium contact.