In my last blog, I asked you to share the best financial lessons you learned from friends and family.
I shared the lessons my parents taught me about money and how every week, the ‘Man From the Pru’ turned up on our doorstep to collect our savings. I also asked you to share the best financial lessons you learned from friends and family.
Thank you for sending in so many valuable insights.
One of my favourite stories was:
"This sounds like my home life too: except the man from the Pru was kept waiting one day when I answered the door, just after starting work aged 17. During his wait he signed me up to a £10 pm endowment savings plan. 10 years hence this paid for patio doors in our new home and a video camera to catch our first born son's first steps – priceless"
And here's a few of the top tips that were sent in:
"When it comes to investing for the long term, patience is key."
"Don’t spend what you haven’t got!"
"Don’t put all your eggs in one basket!"
There is an important lesson to learn from all these anecdotes.
None of us are born knowing how to make good financial decisions.
True, a few lucky people have unerring financial instincts.
But most people have to learn how to manage their finances over a long period of time – sometimes making costly mistakes along the way.
There are so many different financial decisions we need to make over the course of our life.
Buy or rent? What kind of mortgage should we pick? How much should we put into our pension? What kind of insurance do we need?
What should we do with spare cash? Are particular investments worthwhile?
I could go on and on…
Unless you're a financial professional, it's very difficult to navigate all these very different decisions with complete confidence.
That’s why input from family and friends who have already ‘been there, done that’ can be so valuable.
They might have experience that we don’t. We learn from each other.
(Although, sometimes, ‘helpful’ advice from our loved ones proves anything but. More on that in a future email!)
Now imagine that the input you receive didn’t come (just) from well-meaning family and friends, but from a financial professional.
Instead of dealing with these kinds of questions once or twice in a lifetime, they deal with them day in, day out.
They don’t just know about one of these areas, but have deep expertise in all of them.
And instead of dealing with one problem at a time – Where should we invest? Should we access our pension pot early? What do we do about Inheritance Tax? – they can look at your entire financial situation, and consider all the issues together.
….Because actually, all these decisions are interlinked.
How valuable would that be? And how much better off would you be financially?
The research shows that the answer is generally, “much better”.
A study of 20,000 households published in 2017 by the International Longevity Centre and Royal London, for example, showed that those who receive regular advice from a financial planner end up, on average, £40,000 better off than those who don’t.¹
The study looked both at people who were considered affluent, and at those who were ‘just getting by’.
The findings applied to both groups. Whatever their financial circumstances, everyone was much better off with financial advice, compared to their peers who had managed their own money.
The bottom line?
Most people need help making big financial decisions. There can be lots of factors to consider and a lot to know.
There is much we can learn from family and friends.
But advice from financial professionals? It can make all the difference to our financial future.
Topics: Insights & Advice