Rolling back the years...money in your 30's
Unable to watch the video today? Why not read the transcript below:
Our thirties are all about getting the balance right. Very often this is an intense period of our lives. Most of us have made long term decisions: we are in a committed relationship, we have or are intending to have children, we've bought a house and we are building a career or a business. The pace of life is fast, we are constantly busy as we move between child care, work, a social life and even (some of us) hobbies. There's no time to think and plan our finances – what we do is react and cope.
Where this goes wrong, or perhaps I should be more specific and say where this went wrong for me, is simply that I got the balance wrong. We had two very young children. Parents will know what that means for finances and sleep (!), our expenditure went up as I struggled to maintain our income. If I could send my 'thirties self' a message, it would be something like this:
1.The Big House Fallacy
Don't believe you have to move to a bigger house. You may have two or three children (we had four..) and have convinced yourself that you need more space, bigger bedrooms, a bigger garden. Consider the possibility that you don't – a well designed extension can often do the job. And believe me your children are not going to hate you because they have smaller bedrooms than some of their friends. They'll find lots of reasons – but that is unlikely to be one of them!
I didn't listen to that advice and so we bought the 'big house'.. and from that moment on our finances were dominated by THE HOUSE. It needed new purpose built window frames, a new driveway, repainting and of course it came complete a huge mortgage. It consumed thousands and thousands of pounds and kept my nose to the grindstone for ten years. The ten vital years of my children growing up. I'm not saying I didn't see my children grow up, but I worked very long hours and I was often tired by the time the week-end came round.
Our house was very impressive but from a strategic perspective it wasn't really the brightest investment because we had all our eggs in one basket – the residential property market. There was very little money left over for anything else. For the record we made no money at all over ten years, after deducting the cost of all the improvements. If we had not had the huge outgoing of the house our lives would have been easier, our holidays more frequent, our savings diversified and I would have had that most precious of assets – more time with my family.
This, more than at an other time in your life, is the moment not to scrimp on life assurance, disability cover and critical illness. If you have been lucky with your health so far then it will be relatively inexpensive and your thirties and forties are when you and your family have the biggest financial exposure – mortgage, income, education costs. So please sit down and make a sensible, rational assessment of what cover you actually need. Not what a salesman tells you and not a token bit of term cover bought on the internet. Do it properly, ideally with a financial planner who will ask the awkward questions that you prefer not to ask yourself. (Take a look at my previous blog “Things We Don't Want to Talk About").
Our thirties are an exciting time, a time of career and personal growth. By thinking things through and getting that balance right we can set the foundations for a secure financial future.
If you'd like to talk through how that might work for you, do please get in touch.