In most cases, managing money is something we teach ourselves, picking it up along the way without any formal financial training or education. Due to this, many people are left without the knowledge to be able to make the most out of our own financial situation, meaning mistakes will be almost inevitable.
Whatever the reason behind financial fear, being afraid of money and what to do with it is rarely good for your bank balance.
Here we look at four things you can do if financial fear is leading you to inaction.
Fear can manifest itself in several ways but when it comes to money, it often means taking the minimal action required. For some people, this can mean as little as having a bank account set up, and perhaps having a place to file away an annual pension statement.
The first step to overcoming financial fear is to know what money you have and where – and this can’t be done by burying your head in the sand.
Once you have a good grounding of knowledge on where you stand, you can begin to look at the options available. Advice from family or friends can be a useful starting point but remember that their circumstances will likely be very different from your own.
The internet is a great source of useful information but be sure to use reputable sources and websites.
Investing is often considered to be the realm of those in a privileged position. However, anybody that ends the month with excess money in the bank could be investing that amount, however large or small.
Fear of the unknown can often prevent us from taking the first step. By starting relatively small, you can see the process in action, understand more about how it all works, and look to increase the amount you set aside over time. The proof of the pudding is often in the eating and once you start to see your money working harder, you will want to do more of the same.
Financial planning wisdom tells us that the earlier you can make a start with financial planning and putting your money to action, the more choices you will have in the future. Every day, month, or year you delay making financial decisions, the less time the plan will have to bear fruit. Whilst you may be keen to find the ‘perfect plan’, this rarely exists! Things move quickly in the financial world so to some extent; you just have to commit and make a start.
The good thing about an investment plan is that in the large part, things can be tweaked along the way to optimise performance and as and when your circumstances change.
The key thing is to strike a balance between the elements of your investment plan that can be accessed and those that will essentially be locked away until you reach retirement age. Even where investments can be accessed, being forced into a position where you need make a withdrawal can be dangerous because of their fluctuating values, meaning you could get back less than you put in. This is why it’s always advisable to have an emergency fund; a sum of easily accessible savings of between 3 and 12 months’ worth of your expenditures.
Trust in the professionals
If you have gone through all the above steps and still feel unsure as to where to start or what to do next, seeking professional advice may well be the way to go.
Once you begin to research the realm of planning for your future or the world of investing, it can soon become a minefield! For some people, the sheer number of providers and products can quickly become overwhelming and when faced with too many choices, the easiest option is to do nothing. Even though you know you should be doing something, you may decide to revisit the topic at a later date, ‘when you have more time’. The reality is, you will probably not find that time for months or even years!
Unburdening yourself of the responsibility of making key financial decisions alone can be a huge relief. A Chartered Financial planner will be able to assess all of your options against the backdrop of your individual circumstances, advising on a way forward to help devise and meet your financial goals. Additionally, as part of their ongoing service, engaging with a Chartered Financial planner will mean you are more compelled to ‘find the time’, at least once a year, to review your finances and continually evolve your knowledge.
For more information on how the team at Gresham Wealth Management can help you begin your financial planning journey, please get in touch.