Money is an incredibly emotional thing. As an insider (financial adviser) who has dealt with people’s money for a number of years, I see different attitudes to money and most of this is driven by external influences rather than internal. What do i mean by this?
Let’s start with a quote from Steve Jobs:
“When you grow up you tend to get told the world is the way it is and you're life is just to live your life inside the world.
Try not to bash into the walls too much. Try to have a nice family, have fun, save a little money.
That's a very limited life.
Life can be much broader once you discover one simple fact: Everything around you that you call life was made up by people that were no smarter than you and you can change it, you can influence it, you can build your own things that other people can use.
Once you learn that, you'll never be the same again.”
As you can see, Steve Jobs like many successful entrepreneurs had figured out that life was about his rules rather than anyone else’s. This is so true when it comes to money.
I will give you an example. I am classed as a millenial (I am 33) and I cannot read a news article on money or personal finance without a survey telling me that I need to spend less or save more. Why? Whose rules are these? They are societies, not mine. That is not to say I don’t value some of the items, Steve Jobs mentions such as family, but it needs to be on my terms, not anyone else’s agenda.
I thought it would be interesting to challenge some rules about money, that other people have made up:
1) You need to buy a house -
Do you? We are seeing a new generation of renters who think differently. The people who make the rules love to see house owners and people with big mortgages. If this is something that you value and is important to you, then I am not saying that it is something you shouldn’t do. I am merely stating that you shouldn’t buy a house because of someone else’s influence or set of rules.
2) You need to save for your retirement
Is retirement a focus for you? If not, you don’t “have to” save towards it. I personally put money aside into a pension but it isn’t for retirement. I don’t even believe in the word “retirement”, I believe in “financial freedom” and I hope that comes way before my retirement age. My father didn’t make it to his retirement age! My aim for my pension is that when the pot is big enough, I can buy an asset like a commercial property and make it work for me and my family in a better way. There is a lot to be said for auto enrolment and not having to think about the money that goes into your pension but make sure it suits your circumstances and not just the set of rules we have been given by society.
3) You need to save more
I have met plenty of people with fulfilling lives that never had the “save” mentality. Most successful entrepreneurs would rather think about earning more than saving. If saving is important for you to reach a certain goal with your money such as a holiday or a wedding then I am not stopping you, it’s a good habit to have. Again, I am saying not to live by other people’s rules about saving. Understand what you want from your money and adapt to it, whether that is earning or saving, it is your money!
4) You don’t need advice until you have money
Tradition tells us that until you have serious wealth or have a lot of money, you don’t need or can’t access financial advice. I believe this is not true and is the one myth I am most passionate about. There are a number of firms in the US that solely focus on younger clients and a growing number in the UK, which hopefully I am helping to promote through nextgen planners. I have seen first hand that I can help younger clients benefit a number of ways despite not having assets that are big enough for traditional financial advice. If you need help with your money, there will always be a way to get advice, you just need to know where to look.
5) Risk and reward are linked
Most entrepreneurs have figured this out from my experience. Risk within the financial services industry is just an old fashioned way of putting people into categories as that is what financiers understand. As an individual and a human being, I know that risk and reward is a very sensitive matter and sometimes it will work in my favour and sometimes it won’t. An example of this, are investors maybe placing money into an Enterprise Investment Scheme (EIS). The regulators will classify all EIS’s as high risk and equal in risk. The reality is that every EIS is different and most good entrepreneurs look under the bonnet to stack the cards in their favour by understanding the true risk of an investment and the likely reward.
Why not start understanding what “YOUR” money agenda is
So there we go. Hopefully the above will start to help you challenge the rules that other people have made for “your money”. It is all about working to your agenda and not someone else’s. One easy way to get started is to understand "why money is important to you." Start to mull this over as Steve Jobs said “once you learn that, you will never be the same again”.