Failing to take a crucial financial step could leave people £110,000 poorer in the long run, significantly impacting their retirement savings.
New research reveals those with financial plans accumulate significantly more wealth than those without, regardless of income level.
The average wealth of households with a financial plan stands at £191,536, compared to just £82,364 for those without a plan in place, the Financial Health Report from St. James’s Place (SJP) found.
The findings come as UK households have seen their average wealth rise from £113,154 to £126,483 over the last 12 months.
Despite this overall increase, more people feel worse off (31 per cent) than better off (21 per cent). Seven in ten whose situation has worsened say the cost of living has impacted their ability to manage money.
Over a quarter of Britons don't feel financially resilient and would need their household wealth to increase by £61,902 to address this.
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Six in ten UK adults currently have no form of financial plan
GETTYFour in ten UK adults currently have some form of financial plan. Those who receive financial advice see an even greater boost, with their average wealth reaching £236,897.
The benefits of planning are particularly striking when broken down by income brackets.
For those earning over £80,000 annually, the difference is most dramatic - planners accumulate £698,772 in wealth compared to just £354,840 for those without plans. This represents an additional £343,931 for high earners who have a financial strategy in place.
Even those on lower incomes see significant benefits from financial planning.
Individuals earning under £20,000 annually with a plan have average wealth of £62,220, compared to £41,549 for those without - a £20,671 difference.
Even those on lower incomes see significant benefits from financial planning
GETTYFor those earning between £20,001 and £40,000, planners are £17,721 better off. In the £40,001 to £60,000 bracket, the gap widens to £49,071.
Those earning between £60,001 and £80,000 with plans have £24,222 more wealth than their counterparts without.
The data clearly shows financial planning pays dividends regardless of income level.
Alexandra Loydon, Director of Advice Policy & Operations at St. James's Place, comments: "At a headline level, pay rises and better returns on savings and investments have driven an increase in average household wealth this year, but many continue to feel the pinch when it comes to day-to-day expenses."
"High energy, food and fuel costs continue to impact both the pound in people's pockets and their ability to put money aside for the future, as well as widening the wealth divide further. To navigate this backdrop, it's crucial that people take steps to make their money work harder."
Britons are urged to start pension planning as early as possiblePEXELSSJP outlines key steps for building a strong financial plan. First, individuals should define their financial goals, distinguishing between short-term aims like saving for a holiday and long-term objectives such as homeownership or retirement.
Next, tracking income and expenses helps identify spending habits and potential savings opportunities. Building an emergency fund is crucial, with a recommended reserve of three to six months’ living expenses for unexpected situations.
To maximize savings, individuals should take advantage of high fixed-term interest rates and consider investing, such as through a diversified Stocks and Shares ISA. Regularly reviewing financial plans ensures they remain aligned with life changes, such as job shifts or pay increases.
Lastly, professional financial advice can provide valuable guidance, particularly for complex financial situations.
