Financial planning isn’t all about ‘winning’

Businesses obsess over being the biggest and best. They scrap over everything from who’s growing the fastest to whether they’re the top search result on Google. 

Blockbuster movies compete for the number one slot in the opening weekend – not hitting it can mean they’re written off as a flop. 

And, of course, in sport, nobody remembers second place. The difference between gold and silver is often razor thin. Swimmer Michael Phelps won an Olympic gold by 0.01 seconds (that’s roughly the time it takes lightning to hit the ground). As legendary American Football coach Vince Lombardi said: “Winning isn’t everything, it’s the only thing.”

But while the battle for number one often makes sense in the business and sporting world. That doesn’t mean it applies everywhere.

‍Why your finances aren’t about ‘winner takes all’

People often make the mistake of treating their personal finances like they’re a competition.

How much money should I earn? Am I on course to hit my pension target? What’s everyone else doing? But as the saying goes: ‘Comparison is the thief of joy’!

It’s all too easy to treat saving for your future like a race to make the most money. But long-term investing isn’t adrenalin-fuelled and fast paced. You’re not trying to get in first on a deal like cryptocurrency. Instead, it’s about keeping a cool head and calm decision making, sitting it out and waiting.

So, thinking about how much money you should be saving. There are many estimates out there for what you should have in your investment pot. One rule of thumb suggests it should be 10 times your income by the time you reach your mid-60s. 

But while having a headline figure in mind can be useful. Fixating too much on a race to the finish line can actually be bad for your investments. It can distract you from the real goal and inspire you to make fatal decisions. The secret is to focus on your long-term strategy and tune out anything else that vies for your attention – it’s just noise.

‍Working out what winning means for you

So how should you approach your financial journey?

• First of all, think about what constitutes success for you. Financial planning is about the individual, so setting out your life goals and what you want to achieve is the most important step. Is your aim to fund foreign holidays in retirement? Or are you more concerned with what you leave behind for your family? Are there shorter-term milestones that you want to achieve?
• Secondly, don’t get side-tracked by what others are doing. Whether it’s what you read elsewhere on the latest investment fad, or the savings choices of work colleagues, friends, or neighbours. No financial plan is the same, so keep focused on your own path. This doesn’t mean being unwilling to change, but it does keep you going in the right direction. 
• And finally, don’t lose sight of what you want to do in the meantime. It’s not the material things that matter the most, it’s those invisible, intangible factors, such as finding a better work-life balance, or taking up new hobbies. 

And that’s what having a financial planner is for. It’s not about just making more money. It’s having the confidence to make a change if it makes you happy. 

Football manager Jürgen Klopp (who’s made a habit of winning trophies) once justified why he keeps smiling even after losing a match: “I realised that football is not life or death.” There are more important things in life than winning.

Speak to us about how we can help you with your financial plans and find the plan that works best for your goals. 

The value of investments may go down as well as up and you may get back less than you invest.  A pension is a long-term investment, the value of your investment and the income from it may go down as well as up. Your eventual income may depend upon the size of the fund at retirement, future interest rates and tax legislation.