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Making the most of Today

Would you rather be: A: Young and poor, B: Old and rich? C: Neither A or B?

A person who is young and poor has an abundance of life and no money. A person who is old and rich has an abundance of money and not much life left. Would you rather be battling student or Warren Buffet?

In reality most of us are neither A nor B. Most of us have been through the poor student phase of our lives and have accumulated some level of wealth. In my view it would be better to be A because you have plenty of time ahead of you to accumulate wealth. You can always make more money but you can’t make more time.

Being old and rich is attractive if you want to give your wealth to others. Warren Buffet is a good example in that he recently gave away $40 billion to charity. A noble gesture indeed. Rupert Murdoch is unlikely to give most of his fortune to charity but he has certainly set up his children well with future inheritance of roughly US 1 billion each. Leaving a legacy is a noble goal but for most of us we need to look after our own personal needs first.

So how do you make the trade off between spending now and spending later? Are you saving enough to fund your future? Is there a tried and tested methodology that we can all follow?

In my view, today is worth more than tomorrow. If you woke up this morning then there is a very high chance that you will survive today. Make the most of it! However, tomorrow is less certain.

Tomorrow is less certain because there are all sorts of variables we can’t control. Those who have driven in city traffic would know that even if you are the best driver in the world, you can’t be guaranteed of not being involved in an accident.  Stuff happens…

Having been a financial planner for five years, I have concluded that my job is to help people to plan their future such that they can make the most of today.

There is nothing worse than being worried about money. Whether you are worried about making ends meet from one day to the next or whether you are worried about not having enough money in retirement. Worry is something that we can all do without.
Preparing a financial plan is aimed squarely at addressing our uncertain future.

That is not to say that a financial plan guarantees our financial future. In order to be successful, a financial plan has to be carefully implemented with patience and diligence. But as a “road map for your financial future”, a financial plan is a great start.
If you plan well for tomorrow then you should not have to worry today.

A financial plan is a relatively simple but potentially powerful document. A plan addresses the following:

  1. How much money do I need today?
  2. If I don’t have enough money today, what can I do about it?
  3. How much money will I need in the future?
  4. How do I invest my savings to have sufficient money in the future?
  5. What sort of investments are right for me?
  6. How do I maximise my returns whilst minimising risk?
  7. What personal risks do I face and how should I protect myself against them?

That’s it. The core of a full financial plan is usually only 15 pages long. But it contains the key elements of achieving peace of mind.
I was talking to a friend the other day who has two sons aged 20 and 25 years old. He visited Sydney recently and mentioned that he had been out to dinner with his 20 year old. I suddenly realised that scenario could be me in 10 years time.

I have three boys aged 12, 11 and 9 and in a decade my eldest son could easily be studying in another city. It made me realise that I need to make the most of life now - while my children are still young. That’s not to say that life will be diminished in any way when my eldest son is 20; but I do have a lot of living to do before then.

I think there is a place for planning for retirement and making sure you have sufficient resources for when you are not able to work anymore. But once you have a plan in place that is sufficient to provide for retirement, then you need get focussed on enjoying today.

Most financial planners focus on maximising how much a client allocates to their investment portfolio. But to me an investment portfolio is simply a means to an end. The ends are twofold:

  1. funding your future and
  2. being able to identify how much you can afford to spend today.

I once read a comment by successful recruitment entrepreneur, Andrew Banks, who said “I don’t need more money to enjoy my life”. He and Geoff Morgan founded a recruitment company in the mid 1980s and after selling the business to a large American company in the 1990s he is now worth $60 million. Andrew has achieved “financial freedom”.

What do you think Andrew is doing now? No, he is not part of the idle rich set. He and Geoff Morgan have set up a new recruitment agency called Talent2. He is clearly not running the new business to make money – he already has enough. He set up the business because that is what he enjoys doing most.

The objective of developing a financial plan is so that you can do what you most enjoy today rather than deferring enjoyment to some far off day in the future.

Time out to pursue your dreams

Every month or so an article on Work / Life balance appears in the Sydney Morning Herald. The latest article, published 30 April mentioned the example of James Castrission who was one of the kayakers who paddled his kayak 3,318 kilometres from Forster, New South Wales to New Zealand.

The trip involved 62 days at sea, facing monster waves and near starvation towards the end of the journey.

James was lucky enough to be employed as a management consultant by a progressive employer, Deloitte. Not only did Deloitte allow James to take a year off to pursue his dream, they assisted in allowing him to work flexible hours whilst he was preparing for the trip. As an example, he “island hopped” from the Victorian coast to Tasmania as a test trip prior to the epic trans-continental paddle.

James is actually a good example of someone who is young and poor (see A above). Some may say young, poor and stupid. Perhaps that is a bit harsh – the fact that he and his partner made it to NZ and set a new record is testament to their planning, courage and ability.

When James arrived in NZ he indicated to news crews that he wasn’t sure how he was going to get back to Australia because his credit cards were maxed out and he didn’t have the cash to afford an air ticket. He’s poor but is he having fun? You bet!

James isn’t worried about his future because he knows he is educated, motivated and effectively has the world at his feet. He can afford to pursue his dreams. Indeed pursing his dreams is likely to lead to financial success.

There’s a saying that there are three types of people in the world:

  1. People who make things happen
  2. People who watch things happen
  3. People who don’t know what happened.

James is an example of someone who has made things happen. He is example of someone who has been able achieve that elusive balance between building a career and pursing his dreams.


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