It is widely known and psychologically accepted that human beings can be very short sighted and find it difficult to see their future selves.

Imagine your own life and what it might look like in 10 years’ time? Will you still be working in the same job, will the children be leaving for University or will you be enjoying your retirement and spending time with grandchildren?

But perhaps more importantly, what would you like it to look like?

With so much uncertainty at the moment, it is difficult to even consider what will be happening in a week’s time or when your next holiday will be, but as a Lifestyle Financial Planner, I believe we should try and look beyond the next few months and think about our plans for the future.

Rewarding our future selves

Every good plan must start with the end in mind. It is vital to think and try to visualise various milestones and objectives you or your family want to achieve. Once these goals have been determined and plans put in place it is important to remain disciplined. This might sound simple, but it is not always easy.

Here are a few top tips to help keep you on track with your longer-term financial plans.

Personalise/Name your savings and investment accounts. You are much more likely to save if you can visualise the goal and see the immediate value of saving for something specific. Some new online banks make this even easier by allowing you to add the time frame and end goal.

Set up automatic savings. Pay yourself first, make it regular and make it automatic. Savings should be done upfront rather than ‘waiting to see how much is left at the end of the month’.

Increase savings and pension contributions alongside salary increases. This won’t feel painful if it’s done each year or in line with salary increases. Don’t let the extra earnings fritter away.

Separate accounts for different goals. With different goals, how much you allocate to each account and how much risk you take with each objective should be based on your time horizon. Saving for a new car and investing for retirement would require different types of accounts and strategies.

Review your savings and expenditure regularly. Take a look at your financial position periodically and make changes where necessary. Small changes will add up in the long term and make achieving your savings goals more likely.

‘Fun money’ account. Make sure you still enjoy the here and now and ring fence money for discretionary expenses such as eating out, hobbies and holidays etc. You are much more likely to enjoy the process of saving and/or investing, if you take a balanced approach.

Save to spend. When making a surplus or discretionary purchase, try and only do so if you can afford to save or invest the equivalent value into a separate saving or investment vehicle.

Whilst saving and investing for an uncertain future is important and necessary for us all, it is important to enjoy the present moment too. Money matters but life matters more.

July 2020