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Have an ALIE to organise your finances

Get to know your ALIE!

I took a call from a potential client this week, she was a well-spoken, middle aged female, who was professionally qualified and earned well into six figures, on the outside, doing pretty well.

She wasn’t embarrassed, but frustrated with her lack of financial organisation, she was missing income tax and VAT payments, late paying bills and was building a level of frustration up in her life which brought her to threshold.  She had shared this in passing conversation with a client of Lexington’s and her friend, a client, referred her to me, ‘go and see Warren, he’ll sort you out!’

I share this with you because it just shows something that I have always said, financial freedom is not linked to your education, nor income, it’s a mindset and a set of strategies that when used consistently over time, produce a pretty clearly defined outcome of peace of mind and financial freedom.

I want to share with you, what I will go through with her, so you can test yourself against my four-point plan I call ALIE which is part of Step 2;

The Money Plan

Before I get into this further I wanted to just explain that the overarching process I always follow with everyone, is my 5-Step Money Plan;

Step 1 – Know your outcome; what is it you really want from life?  Does she want to continue working the hours she is?  Does that meet her six-human needs or values?

Step 2 – Get financially well organised; once we know what we want, it is essential to know where you are now, this is where I will spend most of my time with her, before even considering pensions and investing.

Step 3 – The financial foundations; ensuring the basics are covered so if a catastrophe were to occur over the years ahead, whilst she is on her financial journey, she’s in the best place to take on the challenge.

Step 4 – Debt snowball; to ensure any unsecured debt, which includes car finance and zero percent credit cards are repaid swiftly.

Step 5 – Invest; to build up a capital sum to provide her wish independence and ultimately financial freedom.

You may have read The Money Plan and be aware of these 5-Steps; this is the overarching strategy of my financial planning meetings, but this is a 10,000-foot birds eye view of the planning, what’s underneath the bonnet, as they say.

I’ll come back to how I establish knowing your outcome in a future article, because today, I want to focus in on how I will get her financially well organised and I do this by getting to know ALIE.

ALIE – Every planners best friend

ALIE is a financial planners lifetime partner, some of us may be married, but we have a life affair with ALIEALIE is a KPI (Key Performance Indicator) or barometer to help us understand what we need to know, it’s an acronym for;


  • What money, property, pensions and other things you own.  Do you have many bank accounts spread all over the place taking up useful mental space, would it be easier for you to simplify your banking and only have one, or maybe two deposit accounts?
  • If you own a property, or land, how do you own this? Is it jointly? Or is it tenants in common?  Do you even know the difference?  Perhaps this could be a topic for a future post?
  • Pensions, I hope everyone reading this is a member of their current workplace pension, or if you are self-employed like this lady who called me, you have arranged a pension yourself, so you are not disadvantaged by being self-employed.  But what about pension from your previous employment, take a moment to review your employment history since leaving school, were you offered a pension, where is it now?  Once you obtain updated statements, you should save all these in a file.
  • You could also use the Governments Pension Tracing Service to help you find lost pensions.
  • Remember you may also have a state pension, you can easily request a updated statement from the Department for Work and Pensions using a BR19 form found on, or using this link.
  • Do you have any shares from demutualisation’s or employer share save schemes, ISA or other investments, you have neglected over the years to track?  Get updated statements and get organised.


  • Money you owe other people and yet to repay; overdraft, credit cards, loans, student debt, family and friends and mortgages.  Most of us are aware of this, more so that our assets which we often ignore.
  • I am not a fan of debt consolidation, it provides a false sense of progress and often achieves very little, I am a fan of ensuring you’re paying the least interest possible on all debts that you have, especially the larger balances, so if you have large debts which are going to take several months to repay, please make sure you’re getting the lowest interest available to you, but don’t look to consolidate everything.
  • I use the snowball debt repayment process and a spreadsheet to help you can be found in the members area.


  • You may be aware of your net take home pay, but are you are of your gross income?I was on a radio show recently and it was the radio host who brought to my attention the importance of checking your payslip.  Make sure your income reflects your expectations and contract of employment and that you understand the various deductions coming out of your pay.  You are likely to have; income tax, national insurance (tax under a different name, your workplace pension contributions, childcare vouchers and maybe other deductions.
  • For most, the amount you can earn, free of tax is £12,500 and this then gives you a tax code of 1250L, if your tax code is different to this and you do not know why, ask your payroll department at work, or read this from the HMRC
  • If you are married or in a civil partnership and one of you is a basic rate taxpayer (earning less than £50,000pa) and one is a non-tax payer (earning less than £12,500pa) you can apply for the Marriage Allowance, which means the basic rate tax payer can earn an additional £1250pa tax free or save £250 in tax (20% of the extra £1250), and you can back claim for up to six years if you qualified.
  • If you earn over £50,000 you will lose your child benefit of £1,076.40 for the first child and £712.40 for each subsequent child.  It does not matter if the child living with you is not your own child.  You can calculate your benefit using this HMRC calculator.  Would it be worth you making a pension or charity payments to reduce your income, to obtain more child benefit?
  • When you earn over £100,000 in a tax year (from all sources), your personal allowance of £12,500 (the amount you can earn without paying tax) is reduced by £1 for every £2 you exceed £100,000 up to £125,000 (2x£12,500) where you have no personal allowance.  The effective tax from £100,00 to £125,000 is 60%!  If this affects you, would it be worth you making a pension or charity payment to reduce your income, to obtain more child benefit?
  • If you earn from all sources, less the £110,000 in a tax year (for pensions this is known as your threshold income), your pension annual allowance is £40,000.  When your threshold income exceeds £110,000 you need to add on any pension payments that are made in that tax year to calculate your adjusted income (earnings plus pensions)
  • If your adjusted income is below £150,000 your annual allowance remains £40,000 pa, when your adjusted income exceeds £150,000, your £40,000 annual allowance is reduced by £1 for every £2 your income exceeds up to £210,000. With adjusted income above £210,000 pa your annual allowance is reduced to £10,000 pa for that year.
  • I appreciate this will only affect 1% of you, and is for very high earners, but this site is for people wanting to create financial freedom, who need help, that could be someone with no income, or someone like the lady who called me with a very high income!
  • A special shout out for the self-employed, if you are self-employed you must must must make provision for your pension and taxes!
  • Your income to your business is your turnover, not your pay!  From your turnover you must deduct your business costs, which includes pensions, tax and VAT and what’s remaining could be your pay.
  • You must use a separate account (and if you’re a limited company, this must be in the limited company name, not yours) and I will do a separate post on business financial planning to cover this in the future.


  • This is what you spend personally or what leaves your family unit on expenses. Make sure you use my Bank Account System, it was designed specifically for this purpose, have all your bills paid from one account and ask yourself three questions for each bill payment;- Do I need this item?
    – Do I want this item?
    – Could I get a similar experience for less?
  • Make sure you have two essential payments from your Bills Account.
  • Your snowball 12.5% of your income.  This is the first payment from yourself, to yourself, you must make a commitment if you are going to make any progress financially that you will pay yourself first.  I appreciate sometimes it’s tough, but this is the main action that differentials wealthy individuals and those who are not.
  • 12.5% represents the first working hour, of a working day.  If you work 8 hours, 1/8th is 12.5%.  So from 8:30 til 9:30 you work for your future you.  Then, 9:30-11:30 ish will be the government and the afternoon shift will be for your day to day living.
  • Where to put the money; first build a £1000 emergency fund in Premium Bonds, then repay all your unsecured debts, then once the unsecured debts are repaid build your Premium Bonds to 3-12 months of your expenditure, once this is completed, you have achieved Financial Security grade!  Well done.
  • However, this is base camp, not the summit, so now you continue with your WAM, this time allocating it as follows;- 40% overpay on your mortgage|
    – 40% invest for your future
    – 20% repay to yourself for enjoyment, the only rule you must not take out any debt
  • Your WAM (Walk About Money) is your second payment from yourself, to yourself, this is paid weekly into a separate account and covers all your variable living expenses such as groceries, lunches out, transportation, coffees and hair, absolutely every other variable expense.
  • So between your direct debits and standing orders, all of your expenses should be covered.


Once we have established where we are now, we move into the foundations stage, of the House of Wealth, but I will leave that for next time.

And there you have it, ALIE is every financial planners’ best friend, so get to know your ALIE.

Download your ALIE spreadsheet in the members area


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