Sunday, 27 November 2011

Financial worries – a mental wall to achieving our goals

In these blogs I want to look at financial planning and why it is important to achieving your lifetime goals. However, as I know from experience these goals can be unachievable if we are not in control of our day to day to financial commitments. 

In a way this is the first step or goal to a good financial plan, and possible a financial adviser will not be able to help with this stage of the process. This is where organisations like Consumer Credit Counselling Service (@moneyaware / @CCCSPressOffice), CAP UK (@CAP_UK) etc can really help. 

I have listened to a lot of discussions over the last few weeks where people are worried about their jobs, their money and actually whether they can afford presents for Christmas. But on a more basic level there are people in the UK who cannot afford food.

Last week the IFP (@IFP_UK) during the Financial Planning Week Campaign (#FPW2011) realised press comment which said an amazing 66% of women worry about money and 54% of men. 

So I think it is fair that for this first series of blogs I look at Financial Management. To paint the scene I want to give you a case study of how financial management can be achieved and how it can help. 

In 2000 our family income dropped by 50% (my wife stopped working); however we had planned for this and had a fairly large lump sum of money in the bank. Our problem was that we continued to spend at the same level and within about six years the money had gone and although my income had increased slightly it had not replaced the drop in income. 

We ignored this still trying to save for retirement and actually failing because we had to keep cancelling policies to get more money. In 2008 we went on a Financial Management Course which has transformed our lives even to the extent that being out of work for six months in the last three years we have been able to cope. Today my income is at the level it was when our income first dropped in 2000. 

I am not going to say what we have done over the last three years has been easy and actually there are times when it has been very hard but what I can say is that our financial management is under control and that the first goal has been achieved. We are now in a position to look at long term financial planning goals. 

So before I move onto financial planning, I want to provide some practical tips as to how we approached this, how this goal can be achieved and how it can help in the ultimate goal of having strong and robust financial plans. 

What is important to understand is that over the last twenty years we have moved from a generational society who understood this concept to a society where we can have instant gratification, and actually we need to come back to a position somewhere in the middle because if we don’t then the young people coming through will have no idea how to manage money. My approach is not unique and is taken from others, so please share your tips as well.

Follow me on Twitter so please spread the word and lets change the world.

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