Road to Wealth #5: Wealth and Wellbeing: Finding the Balance
💸 In our hectic culture of hustling and overworking, it can feel like striking a balance between earning enough, feeling happy with our wealth - AND feeling rested and physically fit - are things that are incompatible if not impossible.
In this episode, we speak to Helena Wardle - Founder of Money Means as well as Partner and Chartered Financial Planner at Smith and Wardle - about finding that golden balance between money and our well-being, how to avoid lifestyle creep and still feel fulfilled, the best ways to avoid retail therapy and more.
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THE CONNECTION BETWEEN WEALTH AND WELLBEING
“It’s the same way as when we are looking to go somewhere, it’s good to understand the direction you’re heading at. You want to have some sense of direction so you understand how long it will take you to get there and what you might need to do to achieve that journey. Financial planning is very similar to that. ”
When we think about what keeps us healthy, we normally think about the food we eat, the exercise we do and the time we spend with people. However, so much of that is linked to money. When we don't look after our money, we cause ourselves worry and stress in a way that really undermines those other important elements that we value. We need to shift around how we think about money in our lives in a way that can incorporate more those elements of like how we eat well, how we exercise, how we take time out, how we relax. Those are important things that we know we need as people.
Money has got the same sort of influence - if we are able to look after our finances, we have more time to spend on the things that actually really matters to us.
The fact that we always try and balance things, howevee, is part of the problem. Our wealth is a part of life admin that we have to take care of and that we have to be mindful of. It gives us opportunities. It gives us security. It helps us take care of the people that we love, and it's a massive force in our lives. Essenially, it is an important thing to be mindful of and be aware of. The biggest mistake we see people make is sticking their heads in the sand. That's when it really causes problems for people.
There is no reason to feel shame around money because ultimately we have to accept that it is a complex thing.
The best starting point is accepting that we all know how to drive cars or most of us know how to drive cars, but we don't have to know how to build one. We need to approach money in the same way. What is the level of information you need to make a good decision? And it's not always understanding everything. For example, if you want to invest, there are investments that pull it all together and spread your money.
There's an enormous amount of things that people do that are really smart money moves, but we still beat ourselves up too much about it.
Essentially, money and investing doesn't have to be as complicated as it as it's made to feel. It's an emotionally complex topic that has really got too much information. So it's okay to know that it is hard, but like anything hard, you need to start small and if you start small, you'll build your confidence.
HOW MUCH MONEY DO YOU REALLY NEED?
It can be broken down in a different way because yes, having a sense of understanding of what you need is important, but the reality is nobody would know exactly how much they need.
There have been studies on people at the end of their life and they look at what's important to them, and they don't talk about what's in their bank accounts. They talk about the time they spend with people, the things they did, the experiences that life gave them. If we break it down to tha, the most important thing is that people need to be mindful of what is important to them and what is unique. Is it knowing that you're secure and safe, that you can cope with things that are thrown your way?
Is it knowing that you have money to take opportunities to come your way? Whether it's going on a massive, amazing trip or maybe it's starting your own business? If you've got that security behind you, it's personal to every single individual and in all elements of your money, you will find something that you need to compromise on.
Ultimately, it's also linked to our time. How do you want to spend your time? What are the things that you think are important? For some people, it's not retiring early because some people love their work so much they can never think of giving it up.
That's why it's an incredibly complicated thing to answer. It's personal and what helps is being asked good questions, because good questions will always make someone focus. The minute you have something that you are aiming for that's very unique and personal to you, you're far more committed to it.
It's the same way as when we are looking to go somewhere, it's good to understand the direction you're heading at. You want to have some sense of direction so you understand how long it will take you to get there and what you might need to do to achieve that journey. Financial planning is very similar to that.
It helps you see what's your financial gaps and what you can do to mitigate them. The reality is very simple: if you are short of what you want to do, you either save for longer, you save more, you take more risks, or you lower your expectations.
If someone is saving for their future for 10 years’ time into something that's below inflation, then they're going to have to save more to achieve that objective. What cashflow forecasting does for people is really help manage that expectation of what could that look like and paint the picture so you have a clear idea of what you're heading towards.
IS MONEY AS IMPORTANT AS WE THINK IT IS?
To some extent, not having enough money will always make you unhappy because if you can't cope with your basic living costs and needs, then that's a really difficult position to be in.
We are almost frivolous in how we talk about this at times, but in terms of the short-term hit of spending money on something that doesn't matter to you, it's often empty and is always masking something that you may be doing to get a short term hit.
There's a level of awareness that needs to be had around that. For example, comparison is dangerous. It's incredibly individual and we are too quick to comparemour situation to others.
Sometimes, we are not respectful enough of our friends and colleagues and the pressure we place on people to stay for another drink if they've tried to watch what they're spending. We do need to respect that people know best for their situation and they can make choices based on that.
If you have the opportunity to go out and do something that you enjoy and spend time with your friends, if you have the opportunity to have an experience and fund it, then yes, of course, that does help people live a good life and live a life that they're happy with. But, there's so much research around the fact that over a certain level of wealth, it makes very little difference.
The things that we genuinely appreciate and enjoy don't always cost the most. That's where what matters to you individually and connecting with that means most.
We talk about the way to manage money in a really negative way. It's budgeting, it's looking backward or trying to see what happened in the past which can sometimes cause shame or make people feel like it's all impossible.
It’s much better for people to understand and be mindful of what they're spending on. And it does mean you need to look at it. Eg. how create a spending plan, what are you prepared to spend a month on certain elements? And if you are overspending, you're going to need to compromise and understand your options.
It does come down to really looking at personally what is important to you. What do you have to pay for? We don't have a choice at some fixed costs that everyone has to spend. You can move the dial a little bit here and there, but it's not really going shift that much. Shopping around for things will matter, but in the grand scheme of things, it's not going to really work. What's going to help you achieve that principle of living within your means where you can really move the dial on things like that is to be mindful of your spending.
It's so much easier to spend nowadays because everything's on a card, you don't even see the amounts. You just tap your phone. This is why we need to be extra alert with our spening and review our bank account, incomings and outgoings regularly. One thing that works is trying to break it down into small steps.
TACKLING IMPULSE SPENDING AND MANAGING BURNOUT
The minute you feel guilt or shame about something, it says something to you. If you're looking at your spending and you feel bad about it, then it's worth working on. There's a level of self-awareness that's needed around that. If it's a really serious problem, you should work with a really good financial coach. Not people that will explain money to you or are not More like qualified people like Simone Gnessen, Martha Lawton, and Emma from Money Whisperer. They're proper coaches, and they can really help you identify why you're getting stuck in that habit and how you can work through it.
Also, sometimes people as their income grows, their spending grows too because we kind of feel like we deserve it or that we can afford to spend more. But if it becomes problematic, it's definitely something that's worth working on because it will cost you so much in the long run.
It’s also about being kind to yourself because it is difficult, and sometimes it’s down to cultural conditioning.
There will always be compromises when you make changes. When things are uncomfortable, you always get the best out of it because that discomfort tells you something, it tells you it's important, it tells you it's something you should address. Try to look at the numbers and what it will mean to you. Try and play out the scenarios.
When we say look at the numbers, people think of massive spreadsheets. It doesn’t have to be that way. There are ample calculators online that can help you map out the logistics of whatever change you’re looking to make.
We, as humans, did create the concept of money after all. We have to remind ourselves of that. The fact that it does actually have such an emotional attachment to so much in our lives says a lot. Not only do we have a complicated topic that's got loads of nuances and loads of complexities to it, we also have a topic that's massively emotional. Accept that and understand that it's normal and that it’s okay to work through things in your own time. Small steps will make a massive difference. The compounding impact of the differences you make today, you'll notice in time.
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HELENA WARDLE
Helena is a Chartered Financial Planner helping clients in Hitchin and surrounding areas to achieve their financial and lifestyle goals. Together with her business partner, Jonathan Smith, she runs Smith and Wardle Financial Planning. They specialise in creating financial plans and providing financial advice to anyone wanting to plan their future.
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