informed decisions blog

What Will You Do With Your Money?! – Blog 145

8th June 2020

Paddy Delaney

Financial Planning..

We landed in Bristol Airport. For some reason we had no rental car booked, so we head over to one furtherst from the terminal (thinking it’d have the best selection and best prices!).

Rental Car Guy: “The only car we have left mate is a K-A”

Me: “Eh, a what”

Rental Car Guy: “A Ford K-A” (as he looks impatiently at his watch)

Me: “I’ve never heard of a K-A, must be a UK-only car, can we see it please?”

Rental Car Guy leads us to a small navy car, which yes, was a Ford KA!

Fiona drove a KA at the time, so in we hopped, and off we set on our weekend adventure in Cotswolds, near Cheltenham UK.We managed to get to spend time at cooking school, Cheltenham, hill-walking, and a couple of nice meals, and boozy nights into the 60 hour trip. We have some real fun memories of that one weekend, all thanks to Fiona’s planning of course!

Experiences Vs Materials

Dr. Thomas Gilovic has conducted several studies, some spanning decades, which measured the level of satisfaction and joy that people get from experiences versus material purchases. Here is a link to one particular study he was involved in, the insight of which is really quite fascinating. There appears to be three core reasons that experiential purchases give us more long term satisfaction. Marketers are very very skilled at influencing us, at getting us to associate their shiny products with our self worth. That’s the society we live in. For what it’s worth, many of the most successful people that I have ever met, and indeed that exist, manage to ignore the siren’s call!

Going back to our trip; the trip cost us in the region of €900. It was our first attempt at a Christmas gift to each other a few years ago, instead of getting each other the usual ‘Oh-that’s-lovely-thanks’ presents. It was a winner on several levels; connecting us, creating those memories, seeing somewhere we had wanted to visit, etc etc. That’s enough of me though….

How Do You Spend Yours?

You may be in accumulation mode, you are saving hard, spending what you need to spend, and savings or investing everything above your essential and perhaps a little discretionary spending.

Maybe you are in spending mode, you have stepped out of full time employment, and are now drawing on retirement income and assets that you accrued during your working life.

Or perhaps you are in full-time work, spending all of your income, whether that is on expenditure that you believe to be essential or discretionary outgoings.

An interesting question to ask yourself, irrespective of where you are at; what percentage of your discretionary spending is put towards non-essential items versus non-essential experiences? There is no right or wrong answer here, but it might prove interesting for you to hold the mirror up.

How Will You Spend It?

We’ve been beating the drum of ‘investing for a reason, and not just because you feel it the right thing to do’. Taking that up another notch, what is the point of saving at all, if not for a specific future expenditure. Of course, we can with any degree of accuracy, determine what our expenses will be in 10, 20, 30 years from now. What we can do however, is try to determine what our ‘must-pays’ might be. That will determine what our basic income need will be. We can go one step further, and consider what life we want to live, what we will want to be doing.

Not Spending At All?

An interesting phenomenon which I have witnessed with some clients, and which will be easy for any of us to experience. We can spend so so long accumulating, whereby we spend on essentials and perhaps a small element of discretionary. We save and squirrel the rest, in order to reach a final pot value or asset values. By the time we get to start spending, we can be so consumed by a desire to ‘not run out of cash’ that we struggle to spend anything above our must-spends.

Even if we know that, barring some form of natural disaster, we have more than enough to cover additional spending, we can be paralysed. We will all have levers that need to be shifted in order to potentially get our heads around that. The real danger, if we don’t adjust our mindset, we have sacrificed and saved so that we can ‘live the dream’ when we hang up our tools, but due to lack of confidence or clarity or a plan, we don’t get to reap the rewards. To add insult to injury, we die and pass it to loved-ones, and before they get their ‘grubby little hands’ on it, a third of it is taken by Revenue in further taxes. See our Blog61, all about this very danger!

If you are on the spectrum where you are not doing things, experiencing things that you want to, that you can afford to, then please please do them!

A Final Word On Planning!

Importantly, when it comes to Financial Planning, we ought to have a target we want to reach, at a specific point in time. We ought too have a plan to reach that target on-time! While this will be a moving target, without it, and without some form of tangible plan, we are less likely to get where we want to. What’s that; a goal without a plan is just a wish!???

The aspect of Financial Planning that most of know best is that concept of accumulating enough assets to allows us the freedom to step away from traditional paid employment.

What that fails to encourage us to do however, is to make use of the time that we have in the here and now. On several occasions in the past few months clients have asked me what they should do with a sum of money, how to invest it. When I have been confident that they are already well prepared, my first question invites them to consider how they could use it for their own satisfaction and joy right now!

As cliche as it may sound, none of us know what tomorrow holds. In my view at least, we must live not only for the target date in 10 or 20 years, but we should try not to do so at the expense of enjoying the choices that your spending power may offer today.

Ultimately, to my mind at least, Financial Planning is about ensuring that you are as efficient as possible, that you get the returns you need over the long term, but more fundamentally that you don’t die with too much money left-over, and that you don’t run out of money too early! It is a balancing act, with so many variables co-existing at the same time, tangible and intangible – heck, what’s not to love about it!


Blog 61: Don’t Die With Too Much Money

Blog 140: Independent Financial Advice in Ireland

A Side-Bar!

If I was to ask you now, when you lose weight, where does it go!? Really, think about that! I had no idea. Chemistry was NOT my greatest subject during school years, but personally I found it fascinating to hear the answer! It is a slow-starter, but be patient……The Mathematics of Weight Loss.

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