Welcome to Ireland's #1 Financial Planning Blog & Podcast. Our purpose is to help you make informed decisions with your money, and importantly to avoid some costly mistakes that they rest of us have made! We are aiming to make this THE home of Financial Planning ideas and insight for normal people in Ireland!
This week, after last weeks' cracker about clearing your loans at 32, we are back with a bang, and what more do we love than a good oul list! Which is ironic seeing as only recently I had the fortune to have attended a Workshop on using Mind-Maps....which suggest that lists are the devil's work and that our brains hate lists really. I have to say I am a fan of Mind-Maps now, I'm converted, so don't be surprised if I land a financial one on you all in the very near future!
It was actually doing a Mind-Map for myself that got me thinking about what is absolutely of most importance to me at the moment in terms of personal, family, career etc. It got me thinking of what we might say to an 18 year old version of ourselves, had we the chance to go back and give ourselves a right good talking to!! So here's my take on the 5 Simple Things I would encourage myself to have done financially from that age:
Be A Life-Time Learner: Personally I'm a little late to this party, only really getting into 'informational sponge' mode in the past 5 years. Had we forced ourselves as 18 year old's to read, and be curious about all things financial it probably fair to say we would be in a much better position financially than we are currently. So if you have found that you are still a little financially illiterate (you couldn't be if you are reading this right!!) then may I suggest starting with this book, a true gem; Millionaire Teacher.
Harness The Power Of Compounding: We have flogged this one to bits here at Informed Decisions but there is absolutely no escaping what Einstein referred to as the 8th wonder of the world. Imagine starting off at 18 years of age saving €250 per month. If you achieved a growth of 6% per annum, by the time you are 48 years of age this is worth €250,000, you yourself contributed a mere €90,000, the rest, €140,000 was magiced-up via compound interest....what possibly are you waiting for dear friend!
Become An Owner As Early As Possible: We believe that owning is much much more advantageous than borrowing. Take a home, for most us we need to be a borrower before we can be an owner.....the earlier you borrow the earlier you own (clear the friggin mortgage!). Despite the ups and downs of property value it is quite often clear to see that the sooner you can get onto that ladder, barring disaster, you may well stand to benefit earlier. The very same can be said of owning investment assets, be they property, equities, or other, it is much better from a long term returns perspective, to own as opposed to borrow, which you essentially are doing by owning Deposits Accounts!
Spend What You Have Left After Saving: Another that we beat the drum about here. Nobody enjoys the process of actually delaying gratification (usually!). Why would I save this money when I can out on the town tonight with my pals and have a whale of a time!?! By removing this choice from our hands we are ensuring that while still enjoying enough nights-out, that we also squirrel some money aside to realise our goals in the future, whatever they may be. It is so easy now to set up standing orders and savings accounts online that there is really no excuse not to, right now, go and set up a standing order out of your current account and into a savings account, the day after pay-day! Again, what oh what are you waiting for dear friend!? Most of the time people find that they can adapt to the new spending amount, so it's a win-win! And while you are at it I'd also make sure to know exactly what is coming in and what is going out each month....and to turn up or down the savings element whenever the situation warranted it...the art of budgeting!
Keep An Eye On The Small Print: So many people are swamped with jargon and terms and conditions when they do anything remotely financial related. Unfortunately it is usually one EU regulation or another that is insisting that you get this stuff. However the providers of these materials don't always make it easy for you to understand and digest them. One of the biggest culprits here is the fees and charges that you may be paying on financial products, savings, pensions, investments. These fees vary so so wildly from provider to provider that the difference between one and another can be a staggering amount of money.......make sure that that difference is in your pocket. Always always, as painful as it might be make every effort to know exactly what the fees are before you enter into anything......if you can't bring yourself to do it then ask someone for help!
So there you have it.....our 5 Simple Things....Simple but not necessarily easy....but hey nothing worthwhile is easy right!? However with a bit of knowledge and some good old fashioned effort we believe they are realistic, timely and above all hugely impactful for anyone to apply. You might want to send this or share it with someone who could do with the nudge!
Oh, and we are going to be introducing an element of 'readers & listeners questions' on the show every few weeks, so if you have any question you would like answered on the show just pop me an email here and I will do my utmost to include it in the next weeks' show and to answer it coherently!!
Thanks a mill for reading.......
Paddy Delaney
QFA | RPA | APA | Qualified Coach