Get in touch with Nicholas on 07725 784 348
your money
changing the way you think about 

My first day as a 'financial adviser' was June 28th 1982, over thirty-three years ago. The eighties were the 'glory days' for financial services – on the back of her Falklands victory Margaret Thatcher was leading a Tory government committed to entrepreneurial endeavour. Making money was good – and there was plenty of that in the City of the eighties with a Stock Market boom (at least until the fateful crash of October 1987), deregulation of the Banks and everyone a shareholder with the privatisation of BT, British Gas and others. Margaret Thatcher sold the family silver and saved the nation or so we were told. 

Gordon Gekko the protagonist of the film 'Wall Street' played by Michael Douglas as a voracious trader who believed that 'greed is good' defined the zeitgeist of the era. As did Tom Wolfe's brilliant satire of the whole self indulgent quagmire in  'Bonfire of the Vanities'. 

Me? I just plodded on quietly talking to people about savings and financial protection and inviting them to make sensible decisions, rather than not. As my career progressed and my family grew I began to experience the benefits of a good income. No champagne and swimming pools but a sense of making progress, paying our bills and putting some aside. The excesses of the City were remote and faintly distasteful to me insofar as I ever thought about it.

Imagine my delight then when I read a report recently about a new movement 'Earning to Give' which encourages young people to go into the most lucrative careers their skills allow, in order to give the money to specially chosen charities which are vetted for effectiveness. This is not idle posturing – so far 200 people have signed up to 80,000 Hours, a not for profit organisation founded in Oxford in 2011. The name refers to the length of the average career. 

There are some wonderful examples of modern day philanthropy. Sacha Romanovitch is the new chief executive of accountancy firm Grant Thornton. She has limited her own wage and implemented a scheme to apportion the firm's profits amongst staff. This could boost salaries by 25 per cent. It's happening elsewhere too: Dan Price, boss of Seattle company Gravity Payments, introduced a new minimum wage of $70,000 for staff and reduced his own $1m salary by 90 per cent to the same amount.

And it's not just the youngsters. Two of the wealthiest men in the world, Warren Buffet and Bill Gates, have signed the “Giving Pledge” agreeing to give away more than half their fortunes before they die. Our own Richard Branson is a fully paid up member of this exclusive Billionaire's Club. 

A new mantra then to replace Gekko's ghastly 'Greed is Good'. 

'Giving is Good'. 

Now that sounds more like it...I could sign up to that. 

What about you?

Regards,

Nicholas.

There it is! A simple financial plan that will never let you down. All each of us has to do is work out on a regular basis how to allocate our money between these three priorities. By doing this we learn to make choices, those sometimes uncomfortable trade-offs between ‘this’ and ‘that’, between ‘now’ and ‘tomorrow’, between the ‘right’ thing and the ‘fun’ thing. Gradually we learn to view our financial lives as a continuum not, as so many of us do, from pay day to pay day.

When do we start?

Right at the beginning of course when we are children. Here is a life-changing observation:

You can’t always get what you want.

For the Stones fans out there, the rest of the line is true too.

In his brilliant new book ‘The Opposite of Spoiled’ Ron Lieber writes:

“We parents are in the adult making business after all, and we should do everything possible to build grown up humans with 15 or 20 years of experience handling money.”

The book deserves to be read by parents who want to learn how to bring up our children to make a better job of handling money, perhaps better than we have ourselves. This is not so much about the nuts and bolts of bank accounts and savings plans, it is more about how to teach our children the art of making conscious choices while living within their means.

I particularly like one of Ron Lieber’s suggestions about allowances. After agreeing an allowance with your child, divide the money equally into three jars. It is important for your child to be able to see the money, so not a piggy bank. Then label each jar SPEND SAVE GIVE and perhaps have some fun decorating each jar.
Effectively this is a first budget because there is money for spending soon, some for people who may need it more than we do and some to keep for when we may need or want something later. As the child gets older they can begin to allocate the money themselves in whatever proportion makes sense to them. It is important that they learn so they should be allowed to spend the money on anything they want.

This system will create a simple structure around which you can have many thoughtful conversations with your child. You will be handing them control over their own money and enabling them to make their own decisions about what they want. And you will be teaching them time-honoured lessons about budgeting and self-control.

As an adult would this training as a child have helped you make a better job of handling your finances?
Me too.

Regards,

Nicholas.