As a Wealth Strategist, one of the things that you learn at a very early point is that it is not the amount of money you have that makes you happy, it’s what you do with it that gives the enjoyment.
And, although the richest clients are not necessarily the happiest, it is also true to say that having no money does not bring happiness either.
“Save Save Save” is a phrase that we have had drummed into our heads from an early age, and even if you are still not the best at saving, there is hope. These days there are plenty of books, articles and even YouTube videos that help you to budget.
People often feel they need to build up large emergency funds – just in case they need it – which they often don’t. So, many of them contribute the maximum amounts to their tax-efficient retirement & ISA accounts. They pay down debt while refusing to take on new debt. In short, they lead exemplary lives from a financial point of view.
However, part of our job as Wealth Strategists is to help people feel comfortable with their money, to understand how much is enough, and to enable people to get the most out of their hard-earned money without feeling guilty.
For instance, during retirement planning, we often see cashflow analysis forecasting an ever-growing line, illustrating increasing wealth. It is our job to explore with clients what they intend to do with these funds, before they run out of time to enjoy them. Clients often surprise themselves when they really start dreaming – and it is then down to us to show that these thoughts can be turned in to reality, and this gives many clients the financial freedom to make their retirement the longest holiday they will ever have.
The current lockdown has only exacerbated this issue, putting a stop to holidays and travel plans. However, not all spending has to be related to experiences. When Wells Fargo asked affluent Americans about what they regretted most about their finances, 15 percent said “not having enjoyed their money more”. It is an honest answer that may contradict many feelings about needing to save. After all, splurging on yourself is typically seen as selfish.
People are often nervous about outliving their money, and sometimes they become too cautious as a result. The most difficult thing to overcome for many people is shifting from spending their entire life accruing assets to spending them. In particular, we have found that the wartime generation have found it hard to shake off the early deprivations that they suffered after the war.
However, it is not as simple as spending everything and emptying the coffers. Many people want to leave an inheritance, so this is still an important consideration. Perhaps spending the inheritance with loved one whilst you are still around is the best result?
An inheritance should be more than a monetary value. Surely, a set of memories, which you can create together as a family while you are still alive is a better legacy. It might mean taking the entire family on a cruise or paying the airfare to fly in to see distant relative (COVID Permitting, of course). At the end of the day, we need to understand that money is just money, but with a little effort great memories that last a lifetime can be created.
I came across a recent quote that summed this up nicely. “It’s a shame to work so hard all the best years of your life, just so you can afford to survive in the worst years of your life”.
If you would like some help in finding out how you could make more of your retirement planning, then please get in touch with us and one of our Wealth Strategists would be pleased to discuss your own personal situation with you.