10 money matters to master

If you want to have more control

GP Doctor

This is my second Insight on how to approach your financial planning.

Here, in this quite chunky post – I’ve outlined ALL 10 of the big financial ‘areas’ of your life – that you may need to address.

You might want to check which of these need your immediate attention.

If you’ve not yet read the first post in this series, please do so before reading on.

In that first post, I explain why you will never find a ready-made plan in any blog, video or book.

And that includes my own books – which are some of the best 😊

Once you understand that, you’ll know why you need an intelligent and personal approach for planning YOUR money.

This could save you hundreds of hours of wasted reading time too.

Getting Lost

Financial planning is NOT investing

The striking thing about most of the money advice ‘sprayed’ around on social media, is how much of it is selling you on a promise of ‘clever’ investing.

In Niamh’s post – which we’re using as our starting point here – the comments were crammed with recommendations to buy this or that book from this or that ‘alleged’ investment guru.

Robert Kyosaki’s, Rich Dad Poor Dad book got a lot of mentions.

As did Tony Robbins book, Money – master the game.

Now, I’ll offer some thoughts on these books another time, but you might want to look at this general warning about unqualified ‘guru’ advice before moving on.

The problem with most books and blogs on money is their assumption that you need a clever investment scheme.

The truth is that you almost certainly do not need any of those.

Whatever you’ve read about clever investing (and there a lot of ‘not so clever’ ideas out there) please be clear on this:

Financial planning is not (just) about investing.

A good financial planner is like a good doctor

GP Doctor

Imagine you’ve gone to see your doctor and you’re told that you need to take a specific kind of medicine . . .

before you’ve even sat down to reveal your problem!

That wouldn’t be right would it?

No, and it’s not the right way to approach your financial life planning challenges either.

Ideas on investing are the last thing you need to create a financial life plan.

If you start your financial journey by looking for ‘super’ investment ideas, you’ve got your process upside down.

And there’s a very good chance that it’ll go badly wrong for you.

Sadly, this happens to a lot of people all the time.

If you want this to work then you need to get the process the right way up.

And you can start on this by downloading an outline of my financial planning process right here if you like.

It’s free  – along with a chapter of my boom, ‘Who misleads you about money?’  – when you sign up to my newsletter.

Learn more about money mastery

So, whatever you read about money, just keep one thing in mind:

Decide why you're investing to work out how

Yes, that was the main message of the first Insight in this series.

But I think it’s worth repeating because most people forget it.

Millions of people waste their time running around looking for clever investment ideas – and quite often get hurt in the process.

So, if you’ve still not read that first post, do, please read it now.

Now, what will drive your financial life plan?

Well, if you’re on board with that first idea – about your uniqueness, then this next bit should make perfect sense.

Your personal financial plan will be uniquely tailored to you.

And that means it will need to fit with:

  1. Your goals – for yourself and your loved ones.
  2. Your income – from your business or your work.
  3. Your outgoings and expenses.
  4. Your financial and material assets
    • and, possibly, those of your wider family too ! (Yes, that could also be relevant – as you’ll learn towards the end of this post) 
  5. Your attitude to investment risk.
  6. Your capacity to take risk. Yes, that’s a very different thing and can vary for each of your financial life goals – as we saw in part 1 of this series.
  7. Your other (personal) assets – like your knowledge, skills and strengths.
  8. Your current and planned family situation.
  9. Your health and
  10. A solid attitude to money
    • and, being straight with you again on this point, you might need to be open to the idea of changing yours.
    • A great many people have ‘curious’ beliefs about money – that have no basis in fact.
    • And it’s these false beliefs that can lead to our biggest money mistakes.
    • So, getting your beliefs straightened out (with this sort of education) is a great place to start 😊

And when you look at this list above – it’s easy to see that most of what you read – day in and day out – in the papers and on the blogs . . . is pretty much useless.

No one can advise or guide you – unless they’re qualified in these matters and they know all about you.

Okay, so how can you approach this?

Well, a great way to engage yourself in a challenge is to ask yourself some questions.

The only trouble with that – when it comes to money – is that most people don’t know what questions to ask.

All we seem to get is people offering us answers to problems we might not even have!

So, here is YOUR key question

What are your money challenges

Now, you might want to grab a notebook to jot down your thoughts as we explore these – one by one.

And don’t worry if you struggle for answers.

Very few people have this stuff sorted until they ‘engage’ seriously with it.

The good news is that you’re making a start.

So, here are your 10 financial challenges to think about

10 money matters to master

What happens if you die tomorrowAhgghhh, yes, sorry, I know that the idea of death is a grisly place to start.

But it really is the first thing to think about when making your financial life plan.

However unlikely it is to happen – and for most of us it’s very unlikely – we simply can’t guarantee that we won’t die tomorrow. So, it makes sense to get this risk covered in the first instance.

And, because the chances of this disaster happening are so low, the cost of insuring against it is super low too.

You will be amazed at how little you’ll pay for the life cover you need – especially if you take care about how you find it.

What’s more, if you run your own business here in the UK . . . you might even be able to get tax relief on the cost of this insurance too. (Ask your adviser or accountant about that)

Anyway, getting back to the need for this . . .

. . . ask yourself – who would be affected by your death and how?

Which of your current responsibilities would need to be picked up?  And who would do them?

And what would they not be able to do – either because they’re not YOU – or because they’ll be too busy doing their current duties after you’re gone?

Makes you think right?

And, obviously this is a KEY issue whatever your situation. But it’s critically important to get sorted if you have dependent children and a partner who depends on your income to look after them.

Making sure that your partner is covered against this risk is important too.

After all, who is going to look after the kids if anything happens to them?

How much money (and other assets) would you hope to leave your loved ones – to help them cope in this scenario?

Do you have insurance in place right now – either through your job or that you’ve set up yourself?

And is it enough?

If you have some life insurance alongside your pension scheme at work . . . are your nomination forms up to date?

Have you set up trusts on personal life insurances – to ensure that you leave the right money to the right people at the right time?

Using trusts can also avoid probate delays on payments out of life insurance policies.

Do you have a will and is it up to date? And, if you have children, does it cover arrangements for their guardianship?

Having an up to date will is incredibly valuable if you have a partner and or family.

What’s more, it doesn’t have to be difficult to set up.

Some useful thoughts on this – from the Guardian – can be found here.

But, as ever, I’d recommend that you take professional advice on all that.

What if you became ill?

Yes, sorry, I know that’s another horrible question !

But these are the real issues to deal with – before we get into all that ‘exciting’ saving and investing stuff.

And similar questions  – to what would happen on your death – will apply here.

The difference is that you’d still be around and need feeding too!

So, in short, do you need insurance for this and, if you do, do you have enough?

Rainy day fund

Do you know what sort of emergency fund (short term cash deposits) would make sense for someone in YOUR situation to have?

Once again – the amount will depend on your personal situation so rules of thumb are not much use here.

And what’s the best way to build it up?

Pay off loansAs you’re probably aware – it makes sense to do this before getting into longer-term savings.

There’s no point saving money into a ‘high growth’ fund with the hope of getting 6% p.a. return – if paying off a credit card debt will save you 20% p.a. in interest on the same money – fair?

However, it can make sense to keep your mortgage (and even student loans) running alongside long term savings.

Once again – the right choice will depend on your situation and how comfortable you are with the potential risk / reward balance of each road towards debt freedom.

Funding your housing needs

You might have noticed that I didn’t say ‘getting on the housing ladder’  – and that was quite deliberate.

The thing is – owning a home is not a one way road to riches. And never mind ladders – sometimes the housing game turns into a nasty game of ‘snakes and ladders.

Of course, you need to have been around a long time to have any personal experience of that.

But the data is easy enough to find. See here and here

And the pros and cons of buying vs renting (if only for a while) are worth knowing too.

See here for an article on that.

If you already own a home  – with a mortgage – it’s always worth reviewing whether:

  1. You’re paying a fair rate of interest on it ?
  2. Your plan to repay it – is the most efficient for you personally?
  3. You have the right type of mortgage for your situation?

These are ‘chunky’ subjects in their own right but any ‘good’ mortgage broker should be able to help you make sense of them.

Just make sure you find a really good one – and get (at least) two opinions on your options.

Adviser ideas vary – and so do their fee scales !

Escape plan

Okay, so, now we’re getting into the juicy saving and investing zone.

And, arguably, the first item in this list is your plan to fund an income for your later years.

Do you have one?

You might have noticed that I’ve avoided the word Pension 😊 – simply because ‘that’ word puts a lot of people off saving.

And let’s be clear  – there are many ways to tackle this particular financial challenge.

The important starting question here is:

What fund (roughly) will you need?

And what’s your plan to build that fund?

You might, for example, have a plan to make a fortune in business – and then sell that for your pension income.

So, if your business does well – and is a saleable asset when you need the money – then that could work out for you.

Oh, and as an aside, I also help my business owner clients in this area . . . 

. . . with ‘high impact’ business marketing and sales skills coaching.

So, just let me know if that’s of interest to you.

But don’t forget those ‘boring old’ pension plans.

They’re not as boring as most people think.

They’re still a super tax efficient way to save.

So, even if you do run your own business, it can make sense to build funds inside a tax relieved pension as well.

And if you’re employed ?

Well, assuming that you’re entitled to a company pension contribution . . .

. . . it might make a lot of sense to take it.

It is FREE money – after all 🙂

Two warnings here

In your searches for help in this area, you will almost certainly find invitations to (allegedly) FREE seminars on property investing – and ‘trading’ (aka ‘spread betting’ ). . . 

And I must warn you now . . .

. . . there’s a lot of dangerously misleading nonsense presented at these ‘seminars’ 

I know because I attend such ‘seminars’ for research purposes.

I even report these ‘charlatans’ to the FCA (our financial regulator) from time to time.

See here

and here

My hope is that the regulator will crack down on them – but don’t hold your breath, I’ve been writing about this stuff for years now – and it still goes on.

Indeed, if you fancy a bit of fun – you could join me  – in the audience – at yet another ‘seminar’ on ‘trading’ very soon.

You might even see me expose the presenter’s misleading claims – if they follow their normal form.

(Message me for details if you’re interested)

And I’ll tell you about the next event I’m attending.

And, if you work for the FCA, why don’t you come along too, and police the event 🙂

Saving for life goalsWhat other (non-pension type) financial life goals do you have?

Are you saving enough to be on track to achieve those goals?

What’s the most efficient way to save for them – to avoid wasting money?

Are you factoring in the key issues  – like tax and charges (on your funds and for advice) and investment returns too?

If you get these things right – you can significantly reduce your ‘costs’ of saving to achieve your longer term goals.

In some cases it’s possible to cut your savings costs in half!

Why does that matter?

Well, because you’ll then have a LOT more money left over – to spend on what you want today 😊

lump sum investmentsWhat lump sums of money can you allocate towards your important life goals?

How could these lump sums reduce the amounts that you need to save regularly – making your life a lot easier today?

Do you know how to invest lump sums efficiently . . .

. . . to avoid unnecessary ‘drags’ on your money from tax, excessive charges or poor investment returns ? 

And do you how to avoid silly investment risks?

And how to spot a SCAM?

Are you aware that it can sometimes make sense to invest lump sums differently to the way you invest your regular savings?

Plenty to think about under this heading – and getting competent guidance is vital.

The saving and investing arena is where I focus my educational workshops.

Pension income options

Okay, I know what you’re thinking . . .

If you’re many years away from this situation then you’ll think this is irrelevant to you right now.

But it’s actually quite important because once you understand the basics here – you can make better decisions on how much you need to save on challenge number 6 – your escape plan

And the issues here extend beyond pensions too.

Do you really understand the fundamentals  – and risks – of investing for a sustainable income?

If you’re not familiar with the term ‘Pound (or dollar) cost savaging’ – then you might want to get to grips with that one soon.

Try this article for help on that

Wealth and Inheritance TaxSpoiler  – if you think this section is for old wealthy folk – think again – and keep reading.

You might just be amazed at what you discover below – if your parents are the wealthy ones.

Right, so, this is the final big financial challenge in this list. And yes, sorry again . . . but we’re back to where we came in – with the challenge of what happens on death.

You probably know that Benjamin Franklin once said that the only certainties in life were death and taxes.

But when it comes to the Wealth tax that’s taken on death (here in the UK) – he’s wrong!

Inheritance tax is, for many people, a “voluntary tax” because there are so many simple ways to escape it.

And we’re not talking about dodgy tax schemes here.

Even Roy Jenkins, the former Labour chancellor,  said that inheritance tax (IHT) was voluntary.

This is how he described it:

“Inheritance tax is a voluntary levy paid by those who distrust their heirs more than they dislike the Inland Revenue.”

Quite witty really 🙂

The question is  – do you know the perfectly legitimate ways to avoid IHT – if you want to?

Will your current arrangements ensure that your assets are left to the people or organisations you wish to benefit – and in the shares that you want them to have?

Do you know if and by how much your estate will be hit by Inheritance tax after you’re gone?

Did you know that it’s quite common for the taxman to end up taking more from an estate than is left to any other beneficiary!

Would you be happy with that?

And if you’re younger – with wealthy parents

but struggling to find the money you need to fund your pension (item 6 above) try this for an idea

How about asking (or getting someone else to ask!) your parents to fund your pension for you?

Are they wealthy enough to afford it?

Are they going to leave you a lot of money in their will?

If so then, absent any other tax mitigation strategies . . .

. . . YOU are going to lose 40% of your inheritance – at the margin.

Of course, if some money were passed to you today – it might very well escape IHT.

And if you put it in your pension (which might please your parents because they’ll know you can’t spend it today) . . .

. . . it’ll get a minimum boost of 25% in tax relief too.

Let’s look at a quick example

Say your parents gave you £4,000 today  – to put into your pension.

So, that would normally become £5,000 immediately (with the boost of basic rate income tax relief – or more if you’re a higher rate taxpayer but I’ll assume you’re not in this case)

Now that £5,000 could also become £10,000  – almost immediately, if you’re getting matched payments on your pension from your employer.

And it could easily turn into £20,000, in today’s money terms (assuming very modest investment growth) over the next 15 to 20 years.

Alternatively, if your parents simply hold onto their money – in a nice safe bank deposit account – until they’re gone then . . .

. . . you’ll likely only get £2,400 (in today’s money terms ) after the tax man has his 40% IHT!

So, then you have £20,000 vs £2,400!

It’s a bit of a no brainer eh?

Not one Bitcoin was used

Shockingly Amazing Financial PlanningOkay, so, now you know that there’s quite a bit to this ‘financial life planning game’

Long term, personal financial life planning is . . . well,  ‘long term’ and ‘personal’ 😉

Some of this stuff is obvious and simple whilst other bits are rather more complex.

There’s no getting away from that – if you want a solid financial plan – to gain all these benefits.

But there’s no need to panic!

This is a lifetime’s list of financial planning challenges.

And, if you’re relatively young, (in your 20s, 30s or even 40s) you might only need to attend to few of these things in the near term.

Rome wasn’t built in a day – and nor are most (solid) financial life plans.

What you have here is a list to help you deal with the various elements of your plan . . . in a sensible order.

And it’s precisely in line with how professional advisers are taught to help you.

I know because I’ve passed their exams 😊

So, with this list you can create a future proof plan.

You can use it with a financial adviser – if you need one – when you come to purchase financial products in the future.

What’s more, if you draw up a clear plan (of your financial situation and your life goals) – perhaps with some help from a qualified financial life coach 🙂 . . .

. . . then you could save yourself a lot of money on those product purchases when you need them.

and you might also save yourself a lot of money for ongoing advice.

After all, you will have done a lot of the leg work already. And most (good) advisers that I speak to are very happy to work with people on this ‘better prepared’ basis. It makes their life easier too.

This is just one of the many ways that I help my coaching clients . . .

. . . and some of those people have saved hundreds or thousands of pounds in fees compared to their original plan.

The KEY to all of this – is your education.

And the key to that is knowing where to learn.

Next steps

If you’ve read this far – good for you.

I hope it wasn’t too heavy a read – but we all know that this is a subject that most people avoid  – like the plague!

Indeed, did you know that about 20% of people would rather visit the dentist for a filling – than address this issue !

Afraid of dentistThe question that most people have, after reading about these realities, is whether to draw up their financial life plan on their own . . .

. . . or to buy in some expert education and guidance to help them get started.

Obviously, it’s for you to decide how you approach this.

The simple fact is that you’ll learn a lot more – and in a lot less time – if you work with a competent and qualified coach.

And you might save yourself from a lot of unnecessary fees and crazy investment risks too 🙂

If you think you might like some help on all this – from me – just contact me here.

Help with moneyThere’s no obligation of course – and I do not charge for initial consultations

My terms after that are clearly set out here and please note . . .

I don’t charge unless you make progress

that’s my money back guarantee.

In the meantime, you can grab more ideas by joining my Wealth builders Facebook Group

Or by signing up to my occasional Newsletter.

You’ll find the links to these FREE services in the images below

All the best for now


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