Caption: (L-R) Liz Singleton, Justin Urquhart Stewart & Ruth Power
As a fairly new Granddad, I was flicking through some photos the other day, (well actually scrolling through my camera memory card - but you know what I mean!) when I came across this picture of FMB friend, Justin Urquhart Stewart with FMB Directors, Liz Singleton and Ruth Power.
It brought back some great memories of a fantastic cruise we had on Lake Windermere during one of Justin's visits to The Lake District some years ago. It then reminded me of a great piece of advice he gave to families in a recent blog of his...
“If you are planning to invest – don’t! Invest in planning. It may sound trite but from personal experience I can clearly say that it’s true. Before you part with a single pound, sit down quietly and do some clear thinking as to what you to want to achieve, as well as how and when. After all, none of us would set up a business without a business plan, so why wouldn’t the same apply to your private life as well. In fact, the only thing that most of us actually plan is our holiday, and the rest we leave to good fortune – if we are lucky."
He's right. As financial planners, we often hear about people wanting to invest, but what are you investing for? Without determining that, how do you know whether it is going to achieve its purpose?
Financial Planning is all about getting to the heart of what’s important to you; quantifying your goals and objectives and finding a way to help you achieve them. With a family, this could be supporting your children with their education fees or helping them buy their first home or could be provision for retirement or long-term care costs for yourself or your partner. As a nation, we often tend to plan far too late, and we hear the phrase "I wish I had..." all too often. The thing is; it is never 'too early' to plan.
Statistics released by The Guardian recently (07.07.15) showed that people sometimes massively underestimate when it comes to their finances:-
- Their statistics showed that the cost of raising a child in Britain from birth until age 21 was shockingly underestimated by a staggering £179,000 - with the average guess being £50,000 when the actual cost was £229,000.
- Another statistic showed that, when asked how much you would need to have in a private pension savings pot to get a total income of around £25,000 a year after stopping work (assuming that they were claiming a full state pension) - this was miscalculated by £191,000 with the average guess being £124,000 when the actual figure was £315,000.
But how are you meant to know how much is enough? And how can it be calculated? We are able to use an extremely powerful cashflow modelling tool to demonstrate this. The tool can determine whether you are likely to achieve your goals or what changes need to be made to keep you on track.
If you would like to have a chat about your finances, call one of our friendly planners today.