Archives For Budgeting

A friend asked me what financial advice I would give a young person just starting out in the world or work. With my eldest leaving university this year, this is a topic I have given some thought to, so here are 10 tips and a reminder to the rest of us of how to stay financially healthy.

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Happy New Year!

So, here we are in 2018 and you have been thinking about your personal goals for the next 12 months. Whether you’ve been in Dubai 1 year or 10 it is a useful time to take stock of your progress towards your longer term targets. So what should be on your financial check list?

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An average person spends about a third of their lives growing up and reaching a state of independence. About another third working and accumulating assets and the final third using those assets to fund their retirement. The method of accumulating assets in your working life is an important factor, so here are three ways to supercharge your savings:

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There’s an advert on the radio at the moment which says that most of what your children will learn at school will be irrelevant by the time they leave. Certainly we live in a rapidly changing world but I am not sure the advert’s hypothesis stands up to close scrutiny. Basic skills like reading, writing and arithmetic will always be in demand. However other skills are becoming increasingly important…

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With interest rates at record lows for such a long time many savers have felt forced to become investors just to retain the real value of their money. This week I look at three reasons why you should have some cash available at all times.

The first reason is to provide for your day to day expenses. It seems obvious but if there is not enough money in the bank you will incur borrowing fees and may suffer the embarrassment of returned cheques or refused card payments at the check-out in your local supermarket.

The second reason to have cash available is to meet unexpected costs. There is always some expense or other that needs to be paid. By having cash in the bank you do not have to borrow money (which is expensive) or cash in investments (which are supposed to be long term).

The final reason is to provide you with the opportunity to time when you buy things. This may be during the sales in your favourite shop or investments after a market correction. Having cash enables you to save money by buying things when the time is right. This may not be the same as the time you actually need the item.

So, whilst holding cash does not provide you with a great return at present. It does provide you with a number of advantages that no other asset can. For this reason, most financial planners recommend you hold between 3 and 6 months’ expenses in a bank account which is available at relatively short notice but there are powerful reasons, like those above, to consider holding more.

Looking at this list, the items also make a strong argument for not spending all of your income every month as failure to save anything on a monthly basis leads to a very unstable financial position with plans being easily blown off course.

I hope the above is useful. Please let me know if you have any questions or comments.

After my last post I received some feedback about planning in a general sense, so this time I have provided some thoughts which I hope you will find helpful.  Continue Reading…

How To Plan


This week I look at financial planning and will offer  you some guidance on what you should consider when planning your future. To plan for any event such as retirement, for example, you need to consider the following:

  1. What resources do I have?
  2. Where do I want to be?
  3. When do I want to be there?
  4. Are my objectives realistic?
  5. Review

The first point is probably the easiest. A summary of your assets and liabilities as well as a detailed understanding of your income and expenditure will give you a clear picture of what resources you have available to you. In financial planning this one of the first things a financial planner will do when he meets with a new client.

Having established the current position it is necessary to know where we want to go – your financial and investment objectives. One of the problems many people have with financial planning is that it is a long process often covering decades, and, if we are honest: not very exciting. However, the end result, the reasons you make the sacrifices today are necessary, and should be personally rewarding. Having a clear vision of where you want to be and what you want to be doing is essential, as it is this picture which will keep you on course, and help you main investment discipline during your many years of investing for your future.

Failure to spend enough time on this section will result in you financially ambling from one idea to the next without any real direction, or worse still – failing to plan. Everyone’s vision is different but you need to make it as real as possible. Some people are better with pictures and others with words. You will probably know which suits you best. If it is pictures, have photos around the house or on your phone to remind you why you are making the investment. If you prefer words, write out a detailed description of your future and read it when you feel your commitment waning.

Having a timescale or investment horizon is equally important. Just as it is possible to drift away from an objective in physical terms it is also possible to let it slide in time. Putting the decision off ‘just one more month’ may not harm, but suddenly five years has gone by and you still have not done anything. This makes catching up very hard. Another common mistake is to skip payments if there were particularly high bills or a holiday one month. Your ‘future self’ will not thank you as this will further delay the long awaited day when the fruits of your labour will be harvested.

So, you have nothing in the bank, you are heavily in debt and you want to retire next year at the age of 45 with an annual income of £500,000. Yes, we are on section 4 – are the plans realistic. If after doing the sums you find you have no spare income and you need to save a lot of money, something has to give. It may be that some of the choices you make to enjoy today need to be deferred to tomorrow (i.e. cut down on current expenditure) and you may also need to trim back your goals to match your resources. Finding the balance between today’s and tomorrow’s needs is tricky. Often people completely under estimate their needs in the future. Could you afford to live on the amount you are currently saving for your future?

The final part of the process is to regularly review your planning to make sure it remains relevant. Your life circumstances are unlikely to remain the same as you age. Simply starting planning then forgetting about it is not an option. By reviewing regularly (two or three times a year) any adjustments will be small and incremental, thereby making them easier to manage. A review every five years could mean you have been off course for a long time and changes may be dramatic and hard to accommodate.

I hope the above is useful. Please let me know if you have any questions or comments.