My client, a full-time working mother of two, was in quite a strong financial situation when she came to me. Most of her assets were either in cash in the bank or low-risk investments like the property that she and her husband lived in with their two children, plus investment properties that she was receiving passive income from in the form of rent.
She was also in good shape with her second and third pillar pensions and was buying back missing years in her second pillar, which was tax efficient and would provide her with a tax rebate.
Her main concern was that she had too much cash in her bank account, and she wanted to get it working harder for her in the most tax efficient way.
We sat down together to explore what her personal goals were with her finances and the lifestyle she wished to have. Then, to stop any further build-up of cash, we redirected her surplus income into monthly investments to get it working harder for her.
This gives her the option to either retire early or carry on working up to retirement and increase her target income. She’s also been able to increase her current standard of living so that she’s enjoying the fruits of her labour right away.
When we put together her financial plan, I also showed her what position she’d be in at retirement if she carried on doing what she was doing. Seeing this mapped out helped her to decide to use some of her surplus income from her salary to accelerate her position and be ahead in case her circumstances changed.
What was your financial position? How did it make you feel?
I started my career with a very basic salary and worked my way up. It has been a lot of hard work and while I focused on that, I didn't really focus on saving money for dull days. Work hard play hard was the motto. And that was fine by me then, because I had no kids and only myself to look after.
What changed for you? What was the catalyst? How did you make the change?
With kids and a mortgage, uncertainties brought by covid and the war in Ukraine, I started to think about what needed to be done to get a view of my overall situation, as well as understand what could be done to get a good pension going. I needed help to get clarity and next steps defined.
What is your financial situation now? How do you feel about your position now? What lessons have you learnt?
I have gained clarity on reaching some of my goals (early retirement, for example) and now have the overview of my financial situation and know what to improve. I have learned that it is never too late to start to talk about your finances and getting your house in order.
Your advice – If you were writing a letter to your 18-year-old self, what advice would you give her about money?
Think ahead, anticipate! Just like when you set up a new company you must think about the exit strategy. I would apply the same to your personal life. One thing my parents told me is that they don't want to be asking their children for support in their old age (old people's homes can be very expensive) and I think that's fair, yet a lot of people don't think about this aspect of their life.
What is your message you want to share?
Don't leave your budget unmanaged because nobody will do it for you!
A key point – what impact did doing these things have on you in terms of how you feel?
One less area to clarify in terms of my future, and that feels great!
Talking about your financial situation and the future you want are important conversations to have – but they don’t have to be scary. I’m here to help you every step of the way, so please feel free to get in touch.
👩🏼💻You can reach me at: kerenjo@kerenjothomas.com