One of the things that struck me about the death of Queen Elizabeth II is how a sense of purpose is a great driving force. We saw it with the late Queen, who managed to appoint Liz Truss as Prime Minister just two days before passing away. I can imagine Her Majesty’s thought process running along the lines of ‘I haven’t got time for this illness business, I’ve got things to do’.
Various doctors on TV and radio say it’s common for people who are close to death to hold on for a particular reason – a special event like a wedding, for example, or the resolution of unfinished business.
My grandfather on my dad’s side died while my mum was expecting me. It would have been unrealistic for him to hold until I was born, but he left this world knowing my dad was happy and building a family of his own. Leaving the next generation in a good place is a massive tick against your life’s work being done and then, presumably, you can allow yourself to go peacefully.
Which brings me to our new monarch, King Charles III. Every time I caught the news in the run-up to the state funeral, he was traveling across the UK to do this and returning in time to do that. It’s his sense of purpose in his new role that seems to be driving him and other members of the Royal Family forward in such a difficult time for them personally.
It’s amazing what you can achieve when you have a sense of purpose. Crowds have managed to queue for up to 25 hours to see the Queen lying-in-state, undeterred by a lack of sleep and cold, sometimes wet, weather. I don’t have the stamina for that, but I still wanted to pay my respects and went alone to lay a floral tribute in Green Park while the kids were at school. The London crowds and queues would be too much for me if we’d gone as a family at the weekend.
That morning, I got everyone up and out of the house 10 minutes early, having already cleaned the house and walked the dog. That is unheard of. I usually do everything by the skin of my teeth as I deal with everything from missing shoes to one of the kids remembering they need a last-minute packed lunch.
So, what has all this got to do with financial planning? Well, even before the unprecedented announcement about our late Queen’s health being a cause for concern, I was thinking about a sense of purpose being a strong motivating factor in relation to money – whether that be for working beyond the traditional retirement age, saving money or passing wealth to future generations.
I remember my mum’s side of the family putting pressure on my gran, who was well into her 70s at the time, to stop working. Her response: “Why do you think I want to be put out to pasture?” She’d been financially independent since she was 14 and work was bound up with her sense of purpose and identity. The only reason she eventually retired was to nurse my grandfather through his illness – again, driven by a sense of purpose.
Saving among the older members of my family tends to be for the proverbial rainy day. It reminds me of other things you do because they’re good for you in the long term, like eating greens.
Having some money put away for the unexpected is sensible because you never know what life has in store. But I’ve noticed my younger relatives do things differently – they save for specific things, whether that be new windows for their homes, a holiday or retirement. Their money has a clear purpose right from the start and I think that makes it easier for them to stick with their financial plans than it would if their financial destination was unknown.
Of course, the retirement that older generations could expect was different to the one facing younger age groups. They had defined benefit schemes and may also have done well financially out of property prices and stock markets.
They haven’t had to think about funding their retirement and juggling that with getting on the property ladder as younger people have, so setting aside money for rainy days without digging deeply into what those might be wasn’t an issue. They’ve also not been raised in an era when it’s so tempting and easy to spend money digitally, which is a pressure they might not understand.
But now we’re grappling with the cost of living crisis and the economic environment is bucketing down, saving for unforeseen circumstances that may or may not happen will probably not be a priority for a lot of households.
I’m not saying people shouldn’t put money aside ‘just in case’. But where money is tight, having a specific purpose for saving is more engaging because it’s tangible. It’s also easier to weigh up your choices against other things you could do with your money, which I think gives you confidence.
That’s one of the things I found interesting when I first heard about lifestyle financial planning – how the focus shifts away from the money itself, away from how much you have or haven’t got – towards the things people want to do with the money they have or could have. I’d always seen money as the starting point, so it was refreshing to start from the position of possibilities.
As a child I saved into a building society account with no idea of what I was saving for and that’s when I first came across the idea of saving for a rainy day. My mum had told me that’s what I was doing, as I wasn’t planning to spend it on anything. But it sounded so boring and a bit sad to me.
Perhaps I was just a product of the time – this was the ‘greedy and materialistic’ 1980s after all – but my real incentive to save was seeing the numbers get bigger. I’d opened my first account with £70, when my Muppets money box had become full, and I felt I’d achieved something special when it reached £100.
That extra zero was exciting and made us want to continue putting money in, but at the time there was no real point to it. The purpose evolved at a later date – I started to save for a house deposit and that’s what drove me to save more than I had been.
Until I spoke to retired adviser Harry Katz, a long-standing Money Marketing reader and commentator, I wasn’t sure whether there is always a purpose to save and accumulate wealth. I was coming at it from the angle that there’s no point in saving and investing unless you know what you’re going to do with it. With no thoughts about the end game, chalking up a series of noughts on a piece of paper has no meaning beyond itself.
But I’d overlooked the potential to do something with it at a later date, as I’d done with my savings, or even carry that later date over to the next generation as a valid purpose. Someone once told me that money gave you options in life and I honestly can’t think of a more motivating factor to save or invest than that. The idea of saving for a rainy day starts to look more interesting when you think of it as giving you more choices in life.
Harry mentioned the old expression that money doesn’t bring happiness – but it can make life more comfortable for yourself and for others. Again, it’s all about having more options, as the amount of money people have determines the kind of lifestyle they and their loved ones can expect.
“People want to achieve a certain level of security,” Harry told me. But in his experience, clients always thought that to do this, they needed more money than they had. I found that interesting as it explains why very wealthy people might still want to grow their wealth, even if everyone else would say they have more than enough for their needs.
My chat with Harry was wide-ranging, but broadly around the theme of financial security. We talked about how you need to have money in the first place to achieve financial security, as people on low incomes who are struggling to cope with high inflation and the energy crisis cannot afford to create wealth.
We discussed the importance of clearing debts before making investments and how easy it is to get into debt through buy now, pay later deals. “Our economy is built on the basis of people encouraging other people to spend money they don’t have,” Harry told me. “We’ve got to export and attract investors to this country – that’s what’s important.”
Harry also said he would not be surprised if more people opted out of auto-enrolment because of the financial pressures they are under, saying it would be a terrible shame as something is better than nothing at retirement. I agree – we need to do all we can to ensure people don’t have to do this to make ends meet.
Going full circle, our late Queen was big on visibility. She is reported to have talked about being seen to be believed and I heard that is why she always wore bright colors in recent years. She’s cottoned on to the power of visual images and I think more needs to be made of that in financial services.
Advisers are always telling me how great cashflow modeling is because it shows clients what their finances look like now and what they could look like in the future if they do this or that. Seeing that picture is believing. You can talk to people about needing to increase pension contributions rather than opting out, or protecting their incomes, but seeing those needs in some kind of visual format is more likely to make a lasting impression.
I like Harry’s suggestion for people who want to save money to set up a spreadsheet so they can clearly see what they are spending money on – it’s something Harry does himself. Although things like making lunch at home to bring into work and going jogging in the park instead of paying for gym membership will not create millionaires, small cost savings add up and you probably wouldn’t appreciate that unless you see all that information in one place , like on a spreadsheet.
It’s probably too much like hard work for some people, but I can imagine once you get into it and notice the difference small changes are making to the overall picture, that sense of purpose would come into play and make it much easier to stick to it. Keeping the end goal in sight makes everything worthwhile.