It’s all too easy to make excuses in life – whether in relation to exercise, diet or any other aspect of our lives, many of us put things off until tomorrow rather than being disciplined and seizing the moment. The same applies to making financial plans despite the fact that the act of engaging a financial planner, getting your existing portfolio in order and setting out plans for the future, can bring great peace of mind.
Here, we look at 5 of the reasons people avoid taking the step of addressing their financial plans.
Lack of experience
Our experience throughout life influences what we do – and do not – feel comfortable addressing or tackling. The basis of this is that it is easier to avoid things we perhaps don’t fully understand rather than delving into the unknown.
Rather than letting your lack of experience of dealing with investment propositions such as pensions or getting involved with share portfolios stop you from investing, it is often much more beneficial to contact a financial planner. You probably wouldn’t attempt to tackle an electrical or plumbing task on your own, so why would you do the same with something as important as your financial planning? We all have our own areas of expertise, and putting your hands up and seeking the help of a professional often works out to be the most cost-effective solution.
Once you have taken the decision to commit to long-term financial planning, you may quickly find that you are overwhelmed with the options available to you. Not only do you have to decide how much money to allocate to different forms of savings/investments, you then need to decide which iterations of these to use and the financial institutions that can provide them.
Try not to become bamboozled – if you keep your goals and objectives in mind, you should be able to narrow which choices are most suitable. This is also where consulting a financial adviser can really help – they will be able to help you set out the course of action most suitable for your own circumstances and then help to set everything up on your behalf.
FOFO (Fear of Finding Out)
Standing up and looking at the reality of your situation isn’t always easy to do and consequently, it can be common for people to avoid doing so. As with most things in life, turning a blind eye to your finances will only make things worse in the long run – especially if you are nearing retirement as you will be left with relatively little time to make a significant difference. There are several free-to-use calculator tools available online that give a good idea of the level of savings you will need in retirement.
Finding out where you stand might not be an enjoyable experience, but having knowledge puts you in a position of power, which can only leave you better placed in the long run.
No two sets of financial circumstances are the same so you will only be able to identify the best plan for yourself and your family going forward if you have a firm grip on what you already have in place.
Thinking you don’t have enough
The financial advice industry can seem like another world and people are often under the impression that only the highest earners need to consult a financial planner. Whilst some financial planners work on the basis of a minimum level of investable funds, this shouldn’t act as a barrier to entry – it’s simply the case of finding the right adviser for you. Once monies held in pensions, ISAs, savings and any investments are added up, individuals often have more ‘investable assets’ than they might have thought. It is also worth bearing in mind that financial advisers will often work with families or couples; looking at the combined family wealth rather than what each individual has to their name.
The need for instant gratification
It’s human instinct to have a strong desire for immediate rewards and this has only become more magnified as a result of our dealings in an increasingly digitised world. Unfortunately, financial planning often acts conversely to this psychological preference as it involves a commitment to long-term savings that mean you may not be able to access your money for several years.
Rather than let this put you off altogether, look at what you can afford to set aside and develop a set of shorter term financial goals. These goals could be monthly – for example, setting up a direct debit into an ISA every month, or annual – aiming to make an additional pension contribution of a set amount during the financial year. This isn’t an easy thing to do and may involve making sacrifices elsewhere, but once you start to see the funds accumulating, you will get a sense of gratification and your future self will almost certainly thank you!
If the time has come to ditch the excuses and make a meaningful mark on your financial plans, we’d love to talk to you. Regardless of what stage you are at or whether you already have an existing financial planner, we can help to point you in the right direction. To speak to one of our advisers, please contact us.