I often hear the phrase ‘making your money work harder’ thrown around in the financial advice arena, which makes me think about my money on a treadmill preparing for the marathon that is retirement. In a normal year, thousands of people globally are preparing for marathon season, so below I wanted to show how preparing for the 26.2 miles and the marathon that is retirement should be tackled in the same way. So, how do you get yourself financially fit?
‘Rome wasn’t built in a day’ – As I and I’m sure many of you can attest, you can’t lose weight or get in shape over night. There is a reason boxers like Anthony Joshua have 12 week pre-fight camps to get fighting fit. It takes time and consistency but little by little your small efforts on a daily basis will have you looking and feeling great over in the long term, translating to a longer, healthier, happier life.
Finance is no different. Shy of a lottery win or a big inheritance it’s very unlikely you’re going to miraculously wake up much richer over night. However, what you can do is by making use of the powers of compound interest (think snowball rolling down a hill) and your annual ISA and pension allowances, make subtle, unnoticeable changes, that will put you in a financial stronger position leading up to retirement.
Having a single cookie doesn’t make you unhealthy, set backs happen, however, throwing in the towel on healthy lifestyle because of one cookie can leave you with long term problems and regrets.
Having a financial set back is the same, going on a splurge and treating yourself isn’t the end of the world and I make sure to tell my clients that. Especially given the last 18months, treating yourself to something to make you feel good is completely understandable and I think needed. It’s important to simply account for it, allow for it and get back on track.
Get professional support
In the fitness world hiring a personal trainer, signing up for a few gym classes or maybe at the moment a few Zoom sessions that have you jumping around your living room is great for motivation. A good personal trainer will not only talk to you about exercise, but also your diet and relationship with food, as they know that fitness is 80% diet and 20% exercise. So what are you paying them for? Not because they know all the boring technical stuff but because they can apply that knowledge to help you achieve your goals, motivate you and help you stay on track.
This is no different to using a financial planner top get financially fit. With hundreds if not thousands of hours learning and exams behind them, a financial planner should know all the boring stuff too, however a good one doesn’t bore you with that, they just use it to help you achieve your goals. As example, one of the first things a good financial planner will do with you is discuss your expenditure and relationship with money. Regardless of your income, if you spend 10% more than you earn you’ll become financially unhealthy, the same as if you eat 10% more than your burn, you’ll become physically unhealthy.
Have a plan
In fitness, be it running, yoga or weights, to progress, you need a plan. Whether it be the route you’re running, the positions or routine you’ll do in yoga or what muscles or target your aiming for in the gym, without having a plan you just turn up and float around aimlessly, not really improving.
In finance, a financial planner can help in identifying your objectives and setting out a plan. You might know you want to retire soon, but exactly when can you afford to, or what changes would you have to make to get there by a certain date. You can get financially fit!
Ignore Social Media
The fitness industry more than most is plagued with ‘influencers’ on social media touting the latest shake, pill or scheme, that will have you in a Baywatch body over night! If you were to sit a logical person down and lay out the claims then of course they seem unachievable, but something about that tanned, toned Instagram or TikTok model seems convincing enough to part with hard earned cash.
The finance industry is now unfortunately also becoming a victim of this. I have posted several articles and comments regarding the unregulated and unfounded ‘get rich quick’ stock tips posted through social media, which seem so convincing when touted by the 20 something kid in the Lamborghini, but I promise you all these high risk, high reward tips conveniently arranged through the link in the video turn into are high regret, no reward. The old adage ‘if it seems too good to be true…’ signs true here.
If you feel that your finances could do with a health check, or your pension could do with some PT, I’m always happy to have a chat to see if I can help.