Finances should be taught in school!
Monday 5th February, 2024
IN 2024, I have spent the time with the columns listing as many ideas, resolutions and tips to make your finances work for you. February will be full of them too.
Time is money they say, but money is time too.
The vast majority (75-90 per cent) of doctor visits are for stress-related health issues. Over 70 per cent of us recognise finance as the number one stress in our lives. That is no surprise of course and given that somehow all school topics take greater priority in education than money, it’s ok to feel a bit overwhelmed.
If only it was taught at school.
Financial stress hits numerous emotional needs that we need to function. Security, autonomy and control, and our status in social groupings are three obvious emotional needs, but the others will all be impacted if we lose control of our ability to function with our finances. If those emotional needs aren’t being met, nature can ensure we suffer through anxiety or even depression leading to paralysis. Just one need not being met can create that paralysis.
Stress, or the negative response to it, isn’t a good thing. Our mind is our body and vice versa. Anxiety about money, or anything else for that matter pushes your nervous system through hell. Anxiety is better described as negative imagination, but either way, it’s imagination, not fact.
So, when we are anxious we are simply imagining all the things that could go wrong.
We are psychologically wired to protect ourselves against danger and threats, prioritising bad over good, so we look for them, even if they aren’t there. We need to focus on what we can control and take the right action with that.
Digestive disorders, high blood pressure, hormone imbalances, the depletion of your brain’s chemicals that you need for happiness, damage to your immune system and a host of other issues are caused by stress. Oh, and the end caps of our DNA strands (our telemores) are shortened, which causes us to
age quicker. That’s enough to motivate us to move to control how much stress we endure and how we manage it.
We need to rethink our relationship with money. They are only promissory notes. That’s all.
As I said last week, if you earned £20 an hour, after tax, that’s just £15.80. If you see a purchase at £100, you wouldn’t need to work five hours to pay for it, you will need to work 6.33 hours. Now value that time by saying that’s 6.33 hours not doing what I really value – going for a walk on your own, with your family, or just rolling up on the settee for peace and quiet. You won’t spend as much, trust me.
I know there are various apps, but there is no greater gain than reconnecting with money, than to write it down, instead of ‘tap and go’. However, typing each month into an excel sheet what you spend, is so valuable. You can then tag them as essential, emergency, luxuries, frittered away etc.
There begins the learning - awareness.
Now your financial position is easier for the purpose of planning goals and budgeting, as you have the real numbers.
It’s hard in today’s world because of ‘social’ media and the TV’s consumerism but avoiding comparison of yourself to others is paramount to both happiness and control of spending. Someone else’s situation is never as it appears.
Your real focus should be to list your financial goals in terms of the key areas of financial planning and resolve to do them: retirement, short- and medium-term investing, inheritance tax, reducing borrowing costs, protecting your family or business in the event of a shock are the core areas to consider for your goals.
Break the goals down into small pieces and tick one off at a time and remember that “any movement in you, no matter how small, towards improvement, is stronger than any storm you will face, as it’s an expression of hope, of desire and of your control. Tie your laces, carry on…”. Oh, and always use an independent financial adviser.
If only we were taught this at school.
Peter McGahan is the Chief Executive Officer of Independent Financial Adviser Worldwide Financial Planning. Worldwide Financial Planning is authorised and regulated by the Financial Conduct Authority.