Resolution revolution + 6 steps to financial fitness

Posted on: 22 January 2014 by Olderiswiser Editorial

Break the mould, don't let the resolutions you dump be the ones connected with your money.

New Year's resolutions dumpedMost New Year's resolutions struggle to get beyond the end of January. Impossible promises regarding self-denial that are intended to stop you smoking or drinking or eating too much tend to fall at the first serious hurdle.

Even the temptation of a longer life is not sufficient enough reward to change one’s ways. Maybe the words of Sir Clement Freud do ring true: If you resolve to give up smoking, drinking and loving, you don’t actually live longer; it just seems longer.”

There’s the rub. We want to enjoy life. A recent study (2007) by the University of Bristol involving 3,000 people and their New Year resolutions showed an 88% failure rate – before the off, 52% of the participants had been confident of success.

The Australians, having disposed of England’s Ashes challenge in brutal fashion, suggest a sensible approach to your New Year’s resolution is getting your finances in shape. Not a bad idea – that way you can pile on the pounds and remain faithful to your resolve.

The Brisbane Times recommended six steps to financial fitness;

  1. set a budget and stick to it;
  2. minimise you debts;
  3. increase your pension contributions;
  4. invest outside your pension;
  5. make sure you have adequate insurance for yourself, your family and your possessions;
  6. make sure your will is up-to-date.

If only it was that simple, but it’s a start, although the Brisbane Times failed to add a seventh step, and probably the most important – get expert financial advice! The Bristol University survey showed a higher success rate when details of your goal were shared.

It’s the complexity of the personal financial world that puts many off keeping their affairs in order and up-to-date – that and the mixed financial messages that are constantly being transmitted as the UK finally begins to emerge from the recession.

A recent headline in the Daily Mail warned: “Early rise in interest rates could leave 1m at risk of losing homes” – yet a few pages on, now panicking homeowners felt some relief with a second headline: “Housing bubble fear as prices soar by 9%”.

Is that good news – or bad? Every day, there are numerous reports on the UK housing market in newspapers and on television, with various financial institutions and think tanks giving their verdict on what is happening, and the likely consequences and how it is going to affect YOU!

The verdict by the Bank of England is that the UK house-owner is showing a lot more restraint and less hysteria than some of the financial experts.

The bank’s figures revealed that “housing equity withdrawal remained negative in the third quarter of the year,” and figures suggested “that homeowners are not yet relying on rising house prices to withdraw equity from their homes for other purchases.”

The report added: “There was a £10.4bn injection of equity into UK home, as sales remained low compared with the housing boom years. The high rate of housing equity withdrawals, driven mainly by buyers taking on more debt to purchase a bigger property or borrowing against the rising value of their property to buy other items, such as a new car.”

Such extravagance and damaging behaviour appears to have ground to a halt with the 2008 financial crisis.

The individual UK taxpayer seems to be able to manage his money better than the government, or the financial institutions whose practices got us into this mess in the first place. One of the saddest recurrences of 2013 was the realisation that many of those excesses and malpractices did not stop five years ago!

This year, the City watchdog (the Financial Conduct Authority) handed out a record £472 million in fines. The banks were hit hardest, but all areas of investment, insurance, pensions and borrowing were put in the dock.             

And when a bank is fined, it’s likely we are all penalised, even if we don’t own shares in that particular institution. We have no real control over the trustees of our pension fund are investing our contributions.

We all have different financial priorities at different stages of our lives. The government claims it’s trying to encourage those at the start of their working life to save. Yet for many in their 20s and 30s, the dream is a house, a home rather than a pension and old age.

There’s always a balance to strike, and that’s when expert and experienced advice can make a real difference, if only to confirm that you are on the right track.

As we enter a New Year with renewed financial hope, let’s reflect on a couple of quirky financial facts from TV’s Q1 quiz and the wonder of money.                        

“Hangovers cost the US economy more than $220 billion in lost productivity each year.” Small wonder “The Hangover” has become such a successful movie franchise!

“Even when adjusted for inflation, the movie Titanic cost 50% more than the original ship!”

For a free, no obligation initial chat about your individual finances, call us on 0800 0112825, e-mail or take a look at our website

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