Adviser Spotlight – Are you a slave to money?

Despite some pre-tournament pessimism (and comedic video refereeing decisions), the FIFA World Cup in Russia was the most exciting in years. Even the England team turned up and had a good go.

Now we enter the frantic period where we see football clubs scrambling to offer big wages to secure the services of the tournament’s shining lights.

The romantic in me likes to think that players follow their hearts when it comes to transfer decisions (“it’s always been my dream to one day play for Scunthorpe”), but it’s well known that many simply accept the highest wages on offer.

The real world is no different. In fact, many people do jobs they hate for people they don’t like so that they can keep on maximising their income. This is completely normal, but what always slightly confuses me is when people choose to stay in the rat race when they no longer need to.

Money: a good servant but a poor master

We only get one shot at life, so why do so many choose to keep their noses to the grindstone, even when they’ve reached a point of relative financial security?

There are many emotional, psychological and even noble reasons for this, but the all too common one I encounter is the fear of running out of money too early in life.

Fear is a powerful motivator and can keep us beavering away, blindly hoping that everything will be alright in the end. My belief is that when you’ve achieved some sustained financial success, your money should begin to work for you, not the other way around.

A particular case in point is a new client I recently started working with.

A self-made man sitting on a healthy portfolio of property, savings and investments, and living a fairly prudent lifestyle. From the outside, it would appear he has little to worry about, but he has a fundamental (and irrational) fear that he’ll outlive his money.

Some reassuring words and a pat on the shoulder might have helped him feel better for a couple of hours, but the only way to help him truly understand his position was to paint him a picture.

A thousand words

Financial forecasting is an extremely powerful tool that offers a glimpse into your financial future. It enables you to:

  • Understand your likely financial position at any point in time, taking into account your assets and the variables that will affect your money over time (risk strategy, future income needs, stock market uncertainty, inflation, interest rates, etc.).
  • Uncover your number i.e. the total amount of money you need to live life on your terms. When you know what you need to aim for, it’s far easier to understand what further action, if any, you need to take.
  • Make otherwise difficult financial decisions with more clarity and confidence. Looking at ‘What if?’ scenarios can help make sense of all manner of life choices e.g. changing career, retiring early, buying a holiday home or gifting money to the children.

As for the aforementioned client, we considered a range of scenarios and he was greatly relieved to see that he’d remain financially comfortable come what may. In fact, he realised he can afford to scale back his business and devote more time to his real priorities: time with his family and travelling the world.

Take stock

So, next time you get the money jitters, don’t be a mercenary Premier League footballer and keep chasing the almighty dollar.

Instead, ask your financial adviser to spend more time taking stock of where you are and developing your financial plan. You never know, it could lead to the dream move you’ve always wanted.

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