We seem to have had a spate of ill health and death amongst my family and friends recently and it certainly focuses the mind. After an evening reminiscing with old friends over a couple of glasses of red, there was definitely a sense of Carpe Diem. I’m constantly bombarded with messages shared on social media that are jazzed up with pictures of lakes and sunsets and the basic message is “live for today, be happy - life’s too short”.
And then I watch the news…
A still-fragile economy, certainly a reduced state pension by the time I retire, slow-growing wage inflation…… Mmm, that feeling of needing to “seize the day” might not be such a good idea after all. And it can cost quite a bit to seize the day, in case you hadn’t noticed! The wetsuit and bike I’ve just bought so I can do a triathlon, tickets to a concert by that 60’s supergroup that have come out of retirement (small mortgage!) and of course life is too short to drink cheap wine. But that little voice is still there – “Am I living my life now at the expense of my retirement?”
You might think that financial planning is for people who are older, have more assets and need to manage their money. Well actually I need it just as much. Starting now, we can develop a plan using cashflow modelling software (rather like a business accounting tool) to predict my future assets and retirement income based on facts about what I already have, predictions about what I might earn and what I might spend, and assumptions about growth and interest rates in the future.
Then I can see if what I am spending on enjoying my life now is impinging too much on my future plans. It would be good to enjoy my holiday or a nice meal out without that nagging feeling that today me is spending tomorrow me’s inheritance (never mind the kids’!).
Then again, what is the alternative? Scrimping and scraping every penny for a retirement there is no guarantee I will reach? There has to be a balance, and good financial planning can help you achieve that balance we are all looking for.