by Sam Sloma
One of the key financial planning phrases for wealth creation is spend less than you earn.
Working with younger clients I get to see all different types of financial situations. Most of our clients are wealth builders and we’re helping them on this journey. I am also in that same position and it’s helpful to be able to share experiences with peers; it’s a network effect for us all.
Recently, we’ve asked our clients to securely send us 3-6 months’ worth of bank and credit card statements and any other spending accounts prior to their annual reviews. Why? Because telling people exactly what their spend has been, rather than them telling us what they think it’s been, is extremely helpful for the work we do.
Most people (myself included until I undertook this exercise) underestimate their expenditure. After we show our clients how they’re spending their money, break down their transactions, we open a conversation about how their expenditure impacts their goals. We have this conversation in a non-judgmental fashion.
As lifestyle financial planners we want to encourage spending and make sure that people don’t waste the time they have on this planet. It’s the type of spending that is the key. Spending on things that bring you value, memories, education, or re-invest in your future are all excellent ways to spend money. It’s the endless buying of more stuff which is an issue.
We have to be delicate in how we have these conversations, we have to allow people to enjoy the fruits of their labour. However, it’s our duty to impart on them that if you are never satisfied with what you have, you’ll never be satisfied, regardless of what you have. We’re here to help clients with a sense of perspective and to keep things real for them.
This is a key part of our role toward our clients. We are the accountability partner. We reinforce decision making, whether to buy that house, how to finance it, what to do when there is a change of circumstance or through this current difficult situation.
I would encourage firms to really drill into the detail of what clients give you. The ramifications of it are huge. We’ve found visualization can be incredibly useful. Once clients see their data in a digestible manner, they feel more control in the outcomes and the steps being taken to achieve their objectives.
Sam Sloma is a former professional football player the Managing Director of London-based Engage Financial Services. He is married to his high school sweetheart, with whom he has three daughters, and loves sushi, dogs, and football. Find out more about Engage Financial Services and Sam.
The views expressed in this article are that of this author and do not necessarily reflect the views and opinions of Voyant.
voyantblog.wordpress.com 