The impact of doing nothing in financial planning

Financial planning is the process of setting financial goals and deciding how to manage your money to work towards them.

It means looking at your money as a whole, then shaping a route towards the life you want.  Like plotting a financial journey, you begin with where you are now. This means looking at your: 

• income
• spending 
• savings
• pensions
• investments
• financial protection. 

A budget can show what is coming in and going out, helping you see what may be left. Your goals provide the destination, whether they include retirement, supporting your family or preparing for unexpected costs.

Your financial plan can bring these pieces together around your needs and circumstances.

Why does financial planning matter?

It matters because it could help you make informed choices and keep your money focused on what’s important to you.

Think of your plan as a map that brings different paths into one clear view. It can help you decide which goals to focus on first, set a realistic amount to save and consider how long you have to reach each one.

A plan can also make it easier to check your progress and see whether your approach still fits your circumstances. This is useful because your income, priorities and plans may change. By reviewing the map from time to time, you can choose whether to stay on the same path or adjust your route as your life moves forward.

You might delay a financial decision because you need more information, feel unsure about your options or have other priorities competing for your attention. When several paths appear at once, choosing one can feel like standing at a crossroads without a signpost. You may pause while you compare choices, check how they fit your goals or wait for your circumstances to become clearer. This can be a deliberate decision rather than neglect.

At other times, complexity can make it harder to begin. Pensions, investments, tax and protection may each come with unfamiliar terms, rules and choices. If you’re not confident about what something means, putting the decision aside can feel easier than choosing a route, especially if you’re struggling to choose because you’re afraid of making the wrong decision. This is sometimes described as “decision paralysis”. ^{Footnote [1]} Procrastination is different: you may know a decision needs attention, but keep moving it to another day.

Delaying doesn’t automatically mean that you manage money poorly. Taking time to understand your choices can be sensible, especially when a decision could affect your plans. The key difference is whether you have chosen to wait and plan to return to the decision, or whether it has slipped from view without review. A simple note of what you need to decide, the information missing and when you will look again could turn a pause into a planned next step.

Delaying financial planning may narrow some choices over time, but the effect will depend on your goals, circumstances and decisions. Like leaving a map folded in a drawer, a plan can’t guide your next turn until you open it. So, it may be worth exploring ideas like investment time and strategies, inflation and your ability to handle financial surprises with greater confidence.

Can delaying investment planning affect potential growth? 

Yes, delaying investment planning can reduce the time available for potential growth, although investing is never guaranteed to make money. Investments are designed for the long term, and their value can rise or fall. Starting gives returns more time to build on earlier returns. This is known as compounding, like a snowball gathering snow as it rolls.

For example, if £10,000 grew by 4% each year, with no fees or withdrawals, it would reach about £21,900 after 20 years. Over 10 years, the same amount and rate would reach about £14,800. These figures show how time and compounding work. They are not a forecast, because real returns vary and charges can reduce what you receive.

Time in the market does not remove risk. You could end up with less than you invested, so consider your goals, how long you can leave the money invested and how much risk feels right for you. A steady approach can be more useful than trying to guess the perfect moment to invest. Reviewing an investment plan can help you check whether it still matches your timescale and aims.

How could inflation affect the purchasing power of your savings? 

Inflation could affect the purchasing power of your savings by raising prices, so each pound may buy less than it did before. Purchasing power describes how much your money can buy. Picture a shopping basket: if its contents become more expensive while your savings stay level, the balance will fill less of it.

For example, imagine an item costs £100 today. If its price rose by 3% over one year, it would cost £103. Savings of £100 would no longer cover it. This shows a price change, rather than predicting inflation. The impact on you will depend on what you buy, because prices vary. Our inflation calculator can help you understand this further.

Interest can help savings grow, but the rate needs to be considered alongside inflation. If prices rise faster than your savings, their value in pounds may increase while their buying power falls. 

Cash can play an important role, including keeping money available for near-term needs or emergencies. The point is not that cash is a poor choice, but that different goals may need different approaches. Reviewing savings rates and timescales can help you check whether your money remains aligned with what you want it to do.

How can financial planning support your financial resilience?

Financial planning can support your financial resilience by helping you prepare for unexpected costs and changes in income or family life. Think of resilience as a toolkit: you may not need every item today, but having the right pieces ready can make change easier.

An emergency fund is one tool. Keeping savings easy to access may help cover an unplanned bill without relying on borrowing. How much is suitable will depend on your circumstances. Protection can be another part of the picture. Some insurance products provide money if illness, injury or death affects a household, although not everyone needs every type of cover. It may also be worth checking what benefits are available through your employer, as these could form part of your wider financial plan.

Longer-term arrangements matter too. Pensions and investments may support future goals, while reviews can help you see whether they still fit your plans. A change in career, family circumstances, health or retirement timing could alter what you need from them.

A resilient plan does not need to predict every bend in the road. It brings together accessible savings, suitable protection and longer-term planning, then leaves room to adapt. Financial reviews can help you spot a gap, check your priorities and decide whether action is right for you now.

A few practical steps can help keep your financial plan more firmly on track:

1. List your goals and group them by a clear timescale.
2. Check your savings, pensions, investments and protection against each goal.
3. Set a regular date to review your progress.
4. Revisit your plan when your life or priorities change.

How can you review and update your financial plan? 

You can review and update your financial plan by checking whether your goals, timescales and arrangements still work together. Start with the bigger picture: look at your aims and when you hope to reach them. Then check your savings, pensions, investments and protection to see whether each still has a clear job.

Like adjusting a route after a change in the road, you may want to review your plan when your income, family life or retirement plans change. Set regular check-ins to see whether your contributions and investment choices still suit your aims. If something no longer fits, you don’t need to rebuild everything at once. A small update can help bring the plan back into line with the life you are now building.

When might financial advice help?

Financial advice might help when you want personal recommendations about pensions, investments or savings. If you have £300,000 or more across your pension and investment savings, Aviva Financial Advice can consider your circumstances and goals, then recommend a route for you.