Financial planning

It’s good to talk!

We see it in the news every day, the cost of living is rising on a daily basis impacted by increases in energy bills with fuel and food being key contributors. No single person is immune from these changes and, for many of us, adjustments have to be made to stay on track to meet our financial needs and aspirations.

Ashana Lindo
Group Consultancy Officer
9 November 2022

As we all feel the squeeze on our finances, it has never been so important to be open and honest about our financial situations. Not only do we need to manage our financial wellbeing – which in turn can create positive effects on our overall mental and physical health – but also we should try to share our common experiences and help each other with useful hints and tips on how best to manage our personal positions. It is well reported that there are psychological consequences, including increased levels of stress and anxiety, in reaction to changes in finances.

We make financial decisions every day, some more thought out than others, and it probably does not help that we can all be a little guilty of wanting instant gratification (I mean who wants to wait five to ten business days for a delivery anymore?). With next day delivery being offered by many internet retailers, it has never been so easy to spend our money. With only a click here or a tap there, we can access what we need and what we want, easily and quickly. I am definitely guilty of loving the temporary happy feeling you get with the latter and buying something I may not necessarily need but 100% want!

This temporary happy feeling is something Mind – a registered charity in England and Wales that helps provide advice and support with mental wellbeing – often has to deal with when it comes to educating people on how their wellbeing is affecting how they manage money. Low mood or high levels of stress are just two examples that can affect spending behaviour, and now more than ever with all the challenges and additional pressures we are facing as a result of the changes in our political, economic, sociological and even technological landscape, it is easy to understand how our wellbeing may suffer, or at least be impacted as a result.

So what do we do? 

Having worked in financial services for over 15 years, somehow I have ended up being the go-to person among friends and family, because of course, working here at Mattioli Woods, I must know everything there is to know about managing finances – just to be clear, I do not! But the reason they keep coming back is because I talk to them without judgement and with discretion and, as I am not a financial adviser, when appropriate I will direct them to the professionals who are qualified and have the experience they need to help their individual circumstances.

‘Talk is cheap’ is definitely not the case here. Discussing finances in an open and honest manner has been welcomed, not only with family and friends but also with what I have witnessed in my work life. I work alongside a team of consultants and they are talking to clients every day, supporting and advising them through financial decisions and I have seen first-hand the difference this guidance can make.

Discussing your finances with the people closest to you, or even financial experts, helps you understand your situation better, which in turn has the potential to improve your overall wellbeing. As they say, ‘a problem shared is a problem halved’! Having confidence, resilience and a good relationship with how you manage your money are all key contributors to good financial wellbeing.

I read somewhere that when looking at financial wellbeing, we can consider the following three categories: survival, comfort and security. A very straightforward approach but I am sure you can relate to one, if not all, in some way.

No matter which category you are drawn to or sit within, my guidance to those closest to me has always been:

  1. Understand where you are now, by gathering all the information, facts or assumptions. 
  2. Determine what you need and want to achieve and set out your objectives, prioritising those most important to you.
  3. Once your objectives are set, you need to build a plan of how to get there.
  4. Have regular check-ins – keep revisiting the first three and do not be afraid to amend or set new objectives if your circumstances change.

This guidance, in its simplest form, is something I believe everyone should do as a minimum and it may be through this process you identify that you need expert support, guidance or advice. However, as a starting point, I have detailed the questions below that I personally think you should ask yourself at each of these stages.

Before we start, I must reiterate it is critical that, as you work through these questions, whether you are doing this yourself or with someone else, you are open and honest to give yourself the best chance of understanding, setting and achieving your financial goals.

1. Where am I? – Your incomings and outgoings

This is a process that will be well known to existing clients of Mattioli Woods or something a new client engaging with Mattioli Woods can expect, not only as a one-off exercise but something we constantly review and reaffirm to ensure you are taking the right approach to meeting your financial needs.

What do you need to think about?

  • Your household – do you have any dependants, beloved pets, etc?
  • Your employment – do you feel secure and happy within your job?
  • Income, expenditure and affordability – what is your net position at the end of the month?
  • Assets, liabilities, savings – what are your fixed bills? Are you saving and/or investing enough?
  • Attitude to risk – are you cautious or do you like to take risks with money for the potential of greater rewards? 

2. Where do I want to be and what can I afford? – Your objectives

You should consider your immediate, short-, medium- and long-term goals. What are your essential and desirable goals, otherwise known as your ‘needs’ versus ‘wants’ and do they take into account all the information garnered from the ‘Where am I?’ part of the process?

What do you need to think about?

  • What are you trying to achieve? Think back to survival, comfort and security.
  • What expenses do you need to factor in, i.e. dependants, school fees, and for how long?
  • Are you saving/investing enough for retirement to maintain the lifestyle you have/want?
  • Are your goals realistic and achievable?
  • What is your disposable income? 
  • Do your goals cover the unexpected?

3. How do I achieve my objectives? – Your plan

Having identified what objectives you are trying to achieve, with consideration given to affordability, the next step is agreeing your action plan.

What do you need to think about?

  • What are your actual priorities? There has to be a focus on the needs first!
  • How do you allocate your resources to achieve objectives?
  • What are your timescales? 
  • Have you built in any contingency plans?
  • Do you need further information, guidance, specialist advice?

4. How do I know if I have met my objectives? – Your regular check-ins

Once the action plan is in place, as with any objectives you set in life, I am sure you want to know if and when you have achieved them. This requires an ongoing review of where you are against where you want to be. 

What do you need to think about?

  • How often will you review your position?
  • Has anything fundamentally changed in your life?
  • Are the objectives still valid?
  • Are the solutions still suitable?

If at your check-in you find you have met an objective, that is a huge achievement and no matter how small deserves a pat on the back. However, do not be disheartened if you have not quite met what you had hoped to achieve. This can be for a number of reasons. Obstacles are thrown in our way all the time that may deter or impact progress and, where this is the case, as long as you continually review your position allowing yourself to be open to adapt to the changes around you, your existing objectives can be amended and/or new ones set to put you back on track.

I always remind my confidants to keep in mind where they started. ‘Slow progress is better than no progress’. It is about staying positive and keeping your eye on the goal, which in turn can contribute to a more positive outlook in respect to your financial and personal wellbeing.

Reflecting back on the four key areas highlighted, for some, the above may be an obvious approach to take; for others, it could be daunting. But in both scenarios, support and guidance are available and, if desired, this support can hand hold you through the process. There are a number of tools, information and resources I regularly guide my friends and families to in an attempt to help them improve their current and future finances as well as maintain their sanity along the way. It must be working as they keep coming back!

At Mattioli Woods, we have been working with clients for over 30 years and have experience in managing an array of financial situations. If you feel you need to discuss your individual position, please contact our team who can help advise or signpost you to the most suitable solution for you to help improve your financial wellbeing, which will in turn help your personal wellbeing. Having advised family members who initially were reluctant to speak to one of my consultant colleagues, I know they now value the advice being provided to help guide them through the financial minefield we find ourselves in today.

Feeling comfortable and secure is key. There are clearly tough times ahead and I encourage you to talk to your family, friends or your adviser for any support or assurance you need. One thing that is guaranteed is we are all in it together.

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