Paul Vavangas, Director at Futura, outlines the importance of planning your personal finances.
Often when we advise people about their money, they admit to us that it can be an emotive subject, and it may have taken them a while to muster up the courage to get in touch with a financial planner.
It’s also not uncommon for people in a financially co-dependent relationship to have different views about money and for it to become an awkward and sometimes inflammatory discussion.
At its heart, this usually boils down to fear. Most often, it originates from feeling that you don’t have sufficient financial knowledge – or desire – to engage with your finances, which can make people feel quite embarrassed, and possibly quite fractious when they’re asked to talk about their money.
When it comes to couples, having a disparity in knowledge/engagement within a couple can lead to one party making decisions about money that could be viewed sceptically or emotionally by the other party. In most cases, it’s not that serious, but if it’s continually one party to the relationship that’s making all the decisions and running the family finances, then it’s easy to understand why it can cause problems. For example, if the other party suddenly does something unexpected (such as spending money that hasn’t been budgeted for) when it’s not been discussed with the partner that’s trying to manage the finances on their own.
As an adviser, spotting this kind of dynamic among our clients is extremely important. It’s absolutely fine for any client to decide how much they want to engage (or not) with the actual finances themselves. The important thing is to concentrate on the ‘big picture’ decisions, and that for couples, those discussions include both parties.
When we talk about ‘big picture’ decisions, we’re talking about the things that make you happy. Not the detail about how we organise your finances, but what your goals, hopes, dreams and motivations are. The things that make you tick. The things that will make you look back over your life and feel that it was well lived.
You don’t need any financial knowledge – or a desire to learn about investing – to think about those things, or to know how you feel. All you need is the time and headspace to think about how you want your life to look, and to be comfortable sharing that information with your partner and your adviser.
The fear that I mentioned earlier often stems from not knowing enough about something to understand its impact on – or perceived threat to – you. That’s perfectly normal human behaviour. And yet, people are comfortable to take risks with things that they don’t fully understand every single day. So why is money so different?
One school of thought is that money directly impacts on our ability to achieve our hopes and dreams. If we don’t have ‘enough’ money, we fear that our life may be unfulfilling, in some way. But by keeping at arm’s length from our own finances we run the risk of confining ourselves to a belief that we can ‘only achieve this’ or ‘will never have the chance to do that’, because ‘we can’t afford to’. But how do you know what’s actually possible? Why would you not want to know that you can potentially have a more fulfilling life than you think?
As financial planners, our job isn’t to try to persuade you to engage with your money, or to bore you with technical jargon that you may have no interest in. Our job is to encourage you to think about what makes you happy. The people you love spending time with. The things that bring you joy in your life. The things that you want to be remembered for. And then, our job is to help you have as much of those things as you possibly can, as soon as it’s realistically achievable. And for virtually everyone, the things that give us the greatest peace and satisfaction cost very little money. The hardest part is in identifying what those things are in the first place.
This brings me back to the point about couples. Most of us have hang-ups about money in one way or another. A fear of not having enough. A fear of it running out too soon. A fear of losing it all on the stock market. A fear of someone else taking it away from us. A fear of how our money will affect others. These are all very real and also quite common fears from one person to the next. But most importantly, all of these things can be very easily managed by taking a few simple steps and working with a good financial planner.
It’s an immensely personal journey, and couples are seldom completely united in their views around it. And yet, when you look at the bigger picture stuff – the hopes, the dreams, the things that make us happy – those things are almost always the same for each partner in a couple. In fact, these are often the things that brought them together in the first place. Their desire to share amazing experiences with each other for the rest of their lives. Whether that’s raising children, travelling, an intellectual union of learning and personal growth, shared hobbies, or pure fun and friendship. It’s when we focus on those things, that people come alive and start communicating about the things that really matter – not just to us, but to each other.
These are the things that we focus on when we’re advising clients. The financial side of things is purely a conduit to help achieve them, and it’s up to us as advisers to address our clients’ fears and tell them how these things can be achieved. Nearly all of our clients are pleasantly surprised when we show them what they’re able to do and the vast array of options available to them. Imagine believing for the last 20 years that you’d be working until at least 65, only to find out that you can afford to retire at 60? Or maybe even earlier?
Having that kind of knowledge changes things. It changes the way you feel about your job – knowing that maybe you’re going to work every day because you want to, not because you need to. It’s extremely empowering.
And no, it’s not everyone that can afford to retire early. However, there’s good, positive news for virtually all of our clients in some way. Even if it’s just a case of reassuring them that they’re on the right track and doing all the right things. Knowing that is much more powerful than hoping it.
So, whether you’re single or part of a couple, and whether you make all the financial decisions or not, you don’t ever need to feel fearful of your financial situation or allow your doubts about it to curtail your own potential to achieve happiness. The sooner you start to ‘dream big’ and allow us to work away in the background putting all the wheels in motion, the sooner you’ll find yourself on the right path to achieving the wellbeing and satisfaction that brings about a life of absolute happiness.
For more information on financial planning and how we can help, please contact us on 01224 582 185 or submit an enquiry by clicking here.
This article is for information only and does not include or constitute any advice or recommendations.
Photo by Casey Horner (third graphic) on Unsplash.