What Haribo Goldbears can teach us about Financial Planning
You may not realise it, but you’ve probably created dozens, maybe even hundreds, of financial plans in your lifetime.
It starts earlier than you realise
It dawned on me that my children were embarking on their first mini financial plan recently when they started to receive pocket money.
Their priority was to buy something full of sugar, right here, right now and enjoy the moment. Life’s not a rehearsal.
Secondly, they wanted to save enough of it over the weeks to buy a Little Mix album.
Thirdly, they realised that they needed to keep it safe and in the right place until they had saved enough, i.e. in their piggy banks. Ideally, the ones with the bit on the bottom that is almost impossible to prise open.
The youngest also had to decide whether to give the eldest 50p for the bus one day. Big dilemma, as this threatened to derail her plan.
She eventually signed off on it, making it crystal clear it was a loan – NOT a gift!
Short term planning
As we move through life, we’ll have to create all sorts of financial plans.
Our financial plans move on from piggy bank stuff to saving for a first car, house deposit, wedding, holidays etc. Most people are fine with financial planning goals such as these.
It’s often about avoiding racking up credit card debt, through sensible budgeting, to meet a relatively short-term target.
“We need three grand to pay for the holiday in 6 months. Right, let’s save £500 a month, and away we go”. No problem, we can all do the maths here.
Where we spend a lot of time as Chartered Financial Planners is creating individual retirement plans for people. This has a much longer timeframe than these shorter-term goals and therefore can be more difficult for people to get a proper handle on.
Complicated things such as pension rules, tax and investment considerations in volatile times have to be factored into a 30 – 40…maybe even 50-year plan.
But the basic financial planning considerations aren’t too dissimilar to what the kids are trying to get their heads around.
-Whether it’s saving a tenner for a Little Mix album, or a much more considerable amount for retirement, you need to have a target figure in mind. Things are more achievable with clear goals
-You need to know how much to save and for how long, to hit this target.
-You have to consider where best to keep it; moving on from the piggy bank to bank accounts, pensions, investments etc
Just like the 50p “loan” for the bus, you may want to factor in financial assistance you’d like to give your family. This may be saving for university costs and providing a helping hand to your grown-up children.
And just like the kids living for the moment, getting off their heads on luminous Haribo, we also have to balance the above with living a good life ourselves along the way.
Enjoying experiences, and spending time doing great things with family and friends shouldn’t come at the cost of killing yourself to try to pay off the mortgage early.
Do you need a financial plan?
I’d argue that it’s better to have a plan than to sleepwalk into not being able to live the life you’d hoped for in retirement.
Whether you choose to create such a plan yourself or use a financial planner to help with this is entirely up to you. Your plan will almost certainly trump having no plan.
If you do it yourself, it doesn’t have to be “flash”, and I’d suggest writing it down.
Short and long-term savings targets are easier to stick to if they’re visible.
A one-pager with half a dozen bullet points on the front of your fridge might do the job and help you to stick to the plan!
We help people to the extent that they want us to with their financial planning needs.
For some, this may be validating their own financial/retirement plan or answering specific technical pensions questions they may have.
For others, we will create a full plan from scratch for them using specialist financial planning software to plan the duration of their retirement.
If you wish to speak to a Chartered Financial Planner
We are happy to help, whatever your needs and offer a free 30-minute phone or video call consultation at your convenience.
Please feel free to get in touch if you would like to arrange a call with one of our Chartered Financial Planners.