Monthly Archives: May 2019

Improve Your Relationship with Money by Answering These 5 Questions

Many people have a complicated relationship with money. Hang-ups carried over from childhood experiences get mixed together with positive and negative experiences through adulthood. Few people ever take the time to reflect on what money really means to them and how they can “get right” with money to make smarter decisions.

Take time to answer these 5 questions and you might find that you can do a better job of living your best life possible with the money you have.

1. What’s your first money memory?

Your earliest experiences with money probably happened in your home. You saw how your parents earned and managed their money. You probably compared the quality of your family home and vehicles to what you saw at friends’ and neighbours’ houses. An unexpected job loss or illness might have led to some very lean holidays or none at all. Or, if you grew up in an affluent household, you might have taken money for granted in a way you no longer do now that you’re the one earning it.

Identifying some of these early memories is critical to reassessing your relationship with money. Are you following positive examples towards decisions that are going to improve your life? Or, without even realising it, are you repeating poor money habits that are going to hurt you in the long run?

2. Do you feel like money is your servant or your master?

Sometimes money makes us feel like we’re a hamster on a wheel, running as fast as we can without ever really getting anywhere. But if you never stop chasing after that next pound, when it comes time to retire, all you’re going to have is money, and a whole lot of empty days on your calendar.

People who get the most out of their money recognise that it’s a tool they can use to skillfully navigate to where they want to be in life. So, instead of working too long and hard for more money, think about how to put the money you have to work for you.

3. What would you do if you had more money?

You’ve probably read about studies that show lottery winners don’t end up any happier than they were before their windfalls. This is a dramatic example proving some conventional wisdom: money doesn’t buy happiness. That’s especially true if you’re stuck on your wheel for 40 hours every week just chasing more and more money.

If the idea of having more money gets you thinking about all the things you’d buy, it’s important to remember how quickly even the fanciest new car smell will fade.

If you would immediately quit your job if you had enough money to support your family and live comfortably, then maybe you need to think about a more fulfilling career.

Having more money might not “solve” some issues you’re currently experiencing but asking what you would do if you had more money might lead you to new decisions that improve your current life satisfaction.

4. What would you do if you had more time?

Imagine you don’t have to work. You can spend every single day doing exactly what you want. What does your ideal week look like? What things are you doing? What hobbies are you perfecting? Where are you travelling? With whom are you spending your time?

These things often get pushed to the side when we’re busy working. But if your money isn’t providing you with opportunities to spend time doing what you love with the people you love, then your work-life balance might need an adjustment.

5. What would your life look like to you if it turned out “well”?

Hopefully by now you’re starting to think about how your relationship to money could be keeping you from getting the most out of your money.

The successful retirees that we work with don’t look back fondly on the amount of money they made or how much stuff they were able to buy. They tell us their lives turned out well because they used money to make progress towards major life goals. They say their money provided them the freedom to pursue their passions. And their sense of well-being increased as they committed time and resources to health, spirituality, and continual self-improvement.

When you reach retirement age, we want you to look back happily on a life well-lived. Come and talk to us about how our interactive tools and Life-Centred Planning process can improve your relationship to your money.

Millennials ‘misjudging inheritance windfall’

I read an article recently which seemed to indicate that more financial planning education is needed for Millennials.

For those that don’t know, Millennials are those born between 1981 and 1996, so those currently aged 23 to 38, and who grew up during the time when the internet became a normal everyday way of life.

A new survey conducted by Wealth Manager, Charles Stanley highlighted that some young people have an expectation of the amount of money they will inherit and what it could buy. Their survey found that the majority of millennials surveyed misjudged the amount of inheritance they will receive and when they expect to get it.

The survey suggests that whilst young people expected to receive nearly £130,000 from relatives when they die, the median amount handed down was only £11,000!

Similarly, one in seven millennials expected to inherit before they turned 35, while in reality the typical inheritance age is between 55 and 64. There is also an expectation about what an inheritance can go towards. At least 22% of those surveyed planned to use any money to go towards a deposit on a house, although official statistics suggest currently only 7% actually used the funds they had in that way.

“People are living longer than ever, so relying on an inheritance to get on the housing ladder is a risky strategy as you may get less, and much later than planned,” said John Porteous, from Charles Stanley. “In reality, most people save and invest to get on the housing ladder. Starting early and planning ahead is essential to achieving the deposit you need,”

Having said that, according to Your Money, more people are inheriting. Inheritance tax receipts in the UK hit a record high of £5.4bn in the 2018-19 tax year, up £164m or 3.1% on the previous 12 months, which was also a record.

The Financial Times says,

Three Reasons Why You Should Work Even When You Don’t Need the Money

It might sound a little crazy but there are many benefits to working even though you no longer need the money for your living or retirement needs.

These “retirement workers” have discovered that part-time jobs or volunteer positions allow them to keep a nice pace in life and find a balance among using their talents, enjoying recreation, traveling, and spending time with family. Some of our most ambitious clients even start brand new companies in retirement.

Here are three important benefits of working in retirement that might persuade you to clock back in a couple of days a week.

Working is good for you.

Retiring early is a very popular goal. But while it makes sense to want to enjoy your assets when you’re younger, some studies have linked retirement to decreased mental and physical activity and higher instances of illness.

Working keeps your mind and body active. It makes you engage in problem solving and creative thinking. It keeps you mindful of your health and appearance so that you make a good impression on colleagues and customers. It challenges you to keep achieving and rewards you when you do.

And, if nothing else, it keeps you from vegging out on the sofa all day and driving your spouse crazy!

Work can give you a sense of purpose.

Many retirees struggle with the transition to retirement because their sense of purpose and identity is so tied to their work. Without that familiar job and its schedule and responsibilities, some retirees struggle to find a reason to get out of bed in the morning. A part-time job can restore some of that sense of structure and drive.

In fact, you might find that working in retirement gives you an even greater sense of purpose than your former career did. You might have worked a job you didn’t 100% love in order to support your family. Now that you no longer need to worry about that, you can take that position at your local library or work a couple of days every week at that charity that’s making a difference in your community or a charitable organisation that’s close to your heart. You can feel like you’re making a contribution to society without worrying about the size of your salary.

Work can improve your connections to other people.

Early retirement can be a period of isolation for some. Your friends and family might still be busy working and raising children. The familiar social interactions you enjoyed at work are gone. You and your spouse probably share some common interests, but you can’t spend every single second together.

It’s important for retirees to be open to making new personal connections in retirement. A new workplace is a great place to start that process as you will meet new people from different walks of life.

You will work with and help people who can benefit from your personal wisdom and your professional skill set. You might meet other people who, like you, are trying to stay active and put their talents to good use. The more involved you are in your community, the more curious and adventurous you’re going to be about trying new restaurants, shopping in new shops, and interacting with more people.

Of course, working in retirement can affect other aspects of your financial planning even if you don’t need the money, such as taxes, withdrawal rates from your investments, and your relationship with your spouse. If you’re considering a new part-time job, why not set up a meeting to discuss any adjustments we should be thinking about so that you get the best life possible with the extra bit of money you’ll soon have.

 

A New social phenomenon – the ‘sandwich generation’

In recent years, a growing realisation has formed that we’re in the middle of a new social phenomenon – the ‘sandwich generation’. The term ‘sandwich generation’ is often used to refer to those who care for both sick, disabled or older relatives and dependent children.

With an ageing population and many people starting families later in life, ‘sandwich caring’ responsibilities are on the rise. However, new research from the Office for National Statistics (ONS) has highlighted the fact that a pensions injustice could be making life even more difficult for this group.

Twin responsibility

The report shows that almost 27% of sandwich carers show symptoms of mental ill health[1] while caring for both sick, disabled or older relatives and children. With life expectancy increasing[2] and women having their first child at an older age, around 3% of the UK general population[3] – equivalent to more than 1.3 million people – now have this twin responsibility.

Sandwich carers are more likely to experience symptoms of mental ill health – which can include anxiety and depression – than the general population (22%), according to the ONS analysis for 2016 to 2017[4].

The prevalence of mental ill health increases with the amount of care given. More than 33% of sandwich carers providing at least 20 hours of adult care per week report symptoms of mental ill health, compared with 23% of those providing fewer than five hours each week.

Health satisfaction

People providing fewer than five hours of adult care each week report slightly higher levels of life and health satisfaction, relative to the general population. Some of the differences between the two groups could be explained by demographic differences. For example, more than 72% of the sandwich generation are aged between 35 and 54 years, while 62% are women. Whereas among the general population, 38% are aged 35 to 54 years, and 51% are women.

Around 76% of those providing fewer than five hours of adult care say they’re satisfied with life, while just 10% are dissatisfied. Meanwhile, 74% of the general population are satisfied with life, with 16% saying they’re dissatisfied. However, when sandwich carers spend more than five hours a week providing adult care, they report lower levels of life and health satisfaction than the general population.

Sandwich carers

Those providing between 10 and 19 hours of adult care per week are least satisfied according to both measures, even compared with those giving at least 20 hours each week. This could be because 69% of carers in the 10 to 19-hour category are in work (either employed or self-employed), compared with 41% of those providing at least 20 hours a week.

Similarly, many sandwich carers are not satisfied with the amount of leisure time they have. Those looking after their relatives in their own home – half of whom provide at least 20 hours of adult care per week – are least satisfied.

General population

Overall, around 61% of the general population are happy with their amount of leisure time, compared with 47% of sandwich carers looking after their relative outside the home and 38% of those providing care within their own home.

As well as reporting a lack of leisure time, 41% of sandwich carers looking after a relative within their home say they’re unable to work at all or as much as they’d like. The ONS report also shows that women sandwich carers – who account for 68% of those providing at least 20 hours of adult care per week – are more likely to feel restricted than men. Around 46% of women feel unable to work at all or as much as they’d like, compared with 35% of men.

Labour market

Women sandwich carers are also much more likely to be economically inactive than men – 28% are not part of the labour market, compared with just 10% of men in the same situation. It should be said, though, that the majority of sandwich carers are able to balance their job with caring responsibilities. More than 59% of those providing care at home say this does not prevent paid employment.

Clearly, caring for two generations could have an impact on carers’ finances. One in three sandwich carers say they are ‘just about getting by’ financially, while one in ten are ‘finding it difficult’ or ‘very difficult’ to cope. Meanwhile, only 17% say they are ‘living comfortably’, compared with 32% of the general population.

Preparing for a more secure financial future

As concern grows among sandwich carers, so too does the need to financially plan for ageing dynamics and family relationships. If you’d like to talk about how we can help you understand the big questions of where am I right now and how you might get to your own financial freedom then call or pop in for a coffee.

Source data

[1] This is based on the General Health Questionnaire (GHQ), where a score of four or more indicates symptoms of mild to moderate mental illness such as anxiety or depression. The GHQ is self-reported.

[2] Life expectancy at birth in the UK did not improve in 2015 to 2017, having risen consistently for decades beforehand. The ONS investigated the stalling of improvements in life expectancy and its links to mortality rates.

[3] For the purposes of this article, the general population is all adults (including sandwich carers) aged 16 to 70 years.

[4] The ONS analysis defines sandwich carers as people aged 16 to 70 years who have a dependent child (one aged under 16 years, or 16 to 18 years, who is in school or non-advanced further education, not married and living with parent) in their home, and also provide regular service to a relative (usually parents, parents-in-law, grandparents, aunts or uncles, or another relative) who is ‘sick, disabled or elderly whom you look after or give special help to’. The analysis is taken from Understanding Society, the UK Household Longitudinal Study. Households are surveyed each year either through a face-to-face interview or a self-completed online survey. Data collection takes place over a 24-month period, and the sample size for the general population in the 2016 to 2017 period was 34,000 individuals.