We came across a quote recently that has really got us thinking, as it hit home on one of the most important aspects of financial planning. The quote is, “Money always moves when life is in transition”.
The reason the quote had such an impact is because it makes financial planning real. When some people think about financial planning, they think only of life assurance, income protection, pensions and investments. This is a mistake, as these are simply products that are sometimes used to enable a financial plan to be implemented. Financial planning itself is about helping you to identify what you want to do with your life, and then devising a plan to help you financially achieve that life. Yes, we might suggest that some products as mentioned above are used – but these are simply vehicles to help you achieve your goals.
And when we talk about your financial goals, we’re not talking about some random figures such as, “My goal is to have €800,000 in my pension plan when I retire”. Because that means nothing… It’s far more important to know what you want your money to do for you. When you know what you want your money to do, you can then put a price on these events. Your financial plan is then about generating enough money to enable these events to become a reality.
All our lives go through a series of “transitions”
While of course we can trace life events (or instead call them transitions) right back to birth, for the sake of financial planning we can start with transitioning from being a student to working, and then progressing through life. Transitions are those significant life events that cause a relatively significant change in your life. Each of these changes will have a fundamental impact on your financial situation and include the likes of,
A new job: Usually this will result in an income increase (hopefully!) and probably a change in your employee benefits.
Marriage: A very significant financial change where you and your better half marry your fortunes together. Also now your financial goals and needs substantially change.
Moving House: A new home usually results in new debt and changed regular expenditure.
Children: Apart from the obvious immediate costs, your attention will soon turn to increased living costs and future education costs etc.
Retirement: A significant financial event as the income tap turns off and it’s time to live off savings.
Death: This could be your own death or the death of your spouse or parent. Each of these events will have a significant financial impact.
Other events: And then there are lots of other possible events – buying a holiday home, a significant gift for children, the world tour, winning the lotto or maybe a divorce! Whatever it might be, there will be a significant financial impact.
The point to remember is that every time there’s an event, money moves. Think about it. The question is, who is going to help you financially plan though these transitions?
We passionately believe that we are best placed to help you financially manage your way through these transitions. Yes, you will need a solicitor when buying a house, or an accountant when selling your business. But because we focus on your financial picture for all of your life and not just a single point in time, we can help you plan strategically for all of life’s transitions.
We’ll help you to capture all of these goals, desires and events in your financial timeline. We’ll then help you to draw up a financial battle plan to achieve the life you want. So, when you actually come to that major life event, your financial situation is an enabler rather than a problem.
Of course, we don’t ignore the positive impact of products – investments, pensions and protection products. They may well be needed to achieve some of these events, but they are simply vehicles to drive the plan. The real value that we can bring is helping you to live your life, to move your money wisely in preparation for and during each of the transitions throughout your life.
So, focus on the events that are important in your life. And then let us help you achieve them to the full.