Enjoy Financial Planning

I remember, as a young lad, being given my weeks spending money, and running to the local post office to deposit some of it for “the future”. What that meant to me was for a new bike! The fact that I never got it, does not mean that I failed, it just means that I bought other “big things” such as parts to build a radio, things for my train set etc.Financial planning is, or should be a pleasure, and you should be able to see the end result, right at the beginning. Then just like my never achieved new bike, your goals will constantly change. Just a note at this point, for those with daft objections to planning your finances, if your dog is good at putting out fires, and rebuilding your house when the idiot next door tries to turn his gas meter round and blows your house to bits, then no you don’t home insurance! If you will never die, then you don’t need life insurance.Having a few grand in the bank, or at least access to a few grand is the starting point for financial planning. Often referred to as an emergency fund, it is your “comfort blanket” and the first building block in financial planning.Having something for a rainy day is something that was temporarily removed from me last year, and it was at that point, the most difficult time of my adult life. Whichever institution I turned to get help closed the door on me, and I was let adrift to fend for myself. These same institutions were the first to send me letters when the status quo was returned! Not to help me of course, but to have me invest with them!Can I just say that the number of true friends who offered me help will never be forgotten? The thing is I am a Yorkshireman, and I work for what I earn – so work appeared from my friends, that perhaps wasn’t really work, but we all felt happy with the situation, and I survived it all. So, when you have this emergency fund, what next? Well perhaps of equal importance is ensuring that your death would not stop others from carrying on, at least financially. The most basic cost is a funeral, but beyond that, is allowing those who relied on you, to continue to achieve your joint goals without the “cash generator” around anymore. Things such as your children’s future, did you plan for them to go to college? Did you plan to help pay for their weddings? Did you plan a special family trip, did you plan to move house? These can still be achieved by those left behind with good financial planning, and discussing this can be fun, as these dreams are our lives.Nowadays, many people have the family home mortgaged, and most will have the value of the debt protected, if you don’t, you should! See the previous paragraph as to why. There may be times when your planning will be interrupted as the money becomes unavailable. For example being out of work, being ill, or being injured. Again these areas can be protected, so the future plans do not have to be reduced or cancelled.The future “biggie” for us all is what happens when we are older and stop working, but at the same time we want to enjoy our lifestyle, this is where early financial planning is essential. Everything still costs the same when you are 65! When you retire, the shops don’t offer you 90% discounts, or your new car won’t get 90% off, but if you are not careful in your planning, then your disposable income could easily be cut by 90%. Take a look now at your running costs today, a good place to start your reality check is the energy bills. What will happen to them when you are in the house more than you are now? What will change in the food that you eat? Will you still want to socialize, take holidays, run a car, and buy presents for people? These are the enjoyable parts of your life and if you want to enjoy your financial future, you need to sit down and enjoy your financial planning now! If you spend 15,000 now, why will that change in retirement? It won’t is the simple answer. Okay what you spend it on will probably change, but you will still spend it. How many years do you want to live in retirement? Now this may seem like a silly question, alongside questions such as “how long is a piece of string”, but it is a genuine important question and at the end of the day we are responsible for the outcome.If you hope to live say twenty years, then you will need 15,000 X 20 which is 300,000, so saving 20 a week for 30 years just isn’t enough (if you have not got there yet, it’s only about 1/10th of your needs!). I am going to digress a little here. If you have a business, that you hope to sell when you retire, be certain that it will be salable, and that it will provide enough for your future. If what you do in your business needs you as its main ingredient, then your business may have little or no value, for example you are a hairdresser and people come to you for what you do to their hair, then without you there is no business.My final thought in the field of financial planning, is care in your old age. There is much debate in the UK at the moment, and without being political, it has to be paid for, and those who say “It’s the governments’ responsibility”, just remember, all the government do is take your money and distribute it, so if they need more money, then it is YOUR responsibility, as you are the taxpayer, and you will need to pay more now for the care in your future.