Our article in “Hertfordshire Life”: Creating a balance between life and money
Simon Brown, lifestyle financial planning specialist and Partner at BpH Wealth Management LLP in Harpenden, tells us some truths about money, and gives us some tips to improve our financial health
Conventional financial advice has served us badly. Too many people’s hopes are being dashed when they discover their pensions and savings have not grown enough to help them maintain their desired lifestyles in retirement, let alone retire as early as they had hoped.
Most people don’t know that their investment pots have been eroded by hidden costs paid to financial product providers in yearly fees and commission. Most people don’t know that you can’t beat the stock market. That following hot tips picked up from the financial pages will get you precisely nowhere. They may perform in the short term but not consistently over time. Over five decades of academic research demonstrates this.
So what do we do? How can we all ensure we have enough money?
We focus all our energy on the things that we can control rather than on the things that we can’t.
These are things like earnings, assets, savings, costs, spending and taxes.
The starting point, however, shouldn’t be the money. Before money has meaning, it’s essential to look at what you need and want it for. To ask yourself some searching questions about what you want from life. What would you be doing right now if you had the choice? What do you like? What do you dislike?
These questions can be incredibly hard to answer but once you’ve taken time to think about them and to plot some achievement milestones, you can start to work out how much money you will actually need to achieve your goals.
The next step is a detailed look at your income and expenditure both now and going forward. This is where you condense all your vital financial information into one place. This includes income, all your outgoings, assets, debt and likely events that will affect your position.
Having a real picture of your lifetime cash flow gives you the ultimate reality check. It removes the guesswork and allows you to make informed decisions. Sometimes life changing ones. It tells you how much you need to earn or save. For one client it told us how much he needed to sell his business for. For another it meant giving up work far earlier than she had ever anticipated.
By having an idea of your life goals and the various pieces of your financial jigsaw in one place, it gives you what you need to do some relevant and robust financial and investment planning.
The whole issue of money is a complicated one but if you break it down into some simple elements such as wants, needs and how best to fund them, you will feel more in control and hopefully happier and healthier as a result.