We could nearly apply all three pieces of advice here to every client that walks through the door. The problem is, nobody wants to hear it!
1. You are not saving enough money
We can always save more, the problem is we fill our lives with wants and we struggle to cut down on these in order to put money towards a long term goal.
It might be that you are looking to a buy a house in 5 years, you need to save €”x” amount for a deposit. Set a target and stick to your savings goals. Save first, spend later. I am blue in the face from saying it but do not wait until the end of the month to save. The minute that you get paid, save first. If you wait until the end of the month, you will find you spend a lot more on unnecessary “wants”.
This piece of advice goes double for those of you with children. Think about funding their education. What if something were to happen to both parents? Wouldn’t it be nice to have a nest egg there for them, should you not be around anymore? It is not something we like to think about, but unfortunately we see these scenarios arise every day around us. None of us have a guaranteed future. Anything can happen.
This could also go towards saving into a pension for retirement. Is one of your goals early retirement? How can you possibly hope to achieve this without pushing harder on your retirement savings? Remember, with modern medicine we are living longer healthier lives. What a shame it would be to outlive our retirement fund, because we didn’t save enough when we should have.
2. You need to take more risk
You can complain all day about low interest rates on savings accounts, and getting no return for your money. The fact is that unless you are going to take risk with your money, you are not likely to get any real return. Inflation will eat into your savings, driving down the real value of your capital.
Of course, we would never recommend anything inappropriate for a client. It really does boil down to your individual set of circumstances and your attitude to risk. We would never recommend anything that would give our client’s sleepless nights. Usually however, we can recommend doing something with a portion of your capital. No risk, no reward.
This doesn’t mean that you should go and buy in to the next “big thing” like bitcoin or it’s predecessors. Seek professional advice, assess your financial situation, take appropriate risk for your circumstances.
3. You can’t afford that….house/car/etc.?
Many of us have delusions about what we will be able to afford. The fact is, the house that you would love is probably unaffordable. That car you will be taking out a large loan for? You can’t afford it. That mortgage with the astronomical repayments over a 30 year period? You can’t afford it.
Unfortunately, in the current climate with house prices rising, people get a nasty shock when they realise the mortgage they are restricted to. Live within your means, re-evaluate your wish list and compromise on what you can.
Remember, the big purchases like a house, car, boat etc., are assets, however, they are usually not giving you a return on your investment. This is of course with the exception of investing into big assets for the purpose of generating an income. What I mean is for your personal use. These assets will drain your money, repairs, insurance, tax etc. Remember the initial outlay is not the entire cost. Are you sure that you can afford it?
Make a plan
The good news is that it isn’t all doom and gloom, sit down and evaluate your finances. The best thing you can do is to make a plan and stick to it. Budgets can be extremely helpful when setting financial goals. Write it all down in black and white and it will all be clearer to you. If you feel overwhelmed, seek the advice of a professional.
We would be delighted to help you get on track with your finances. If you need help with any of your financial goals, big or small, please let us know.