The children may be bemoaning the start of another school year but there is a lot to be gained from learning new things, whatever your age – no more so than when it comes to managing our personal finances.
At Serenity Financial Planning we open up clients to new ways of thinking about – and ultimately dealing with – their money on a daily basis, and we’re always pleased to hear some of breakthroughs that clients make when it comes to new ways of thinking about money.
Here are four examples of money myths which clients have decided just don’t hold true for them.
Pay off your debts first
This is a mantra handed down from many a money-savvy parent and while eradicating debts makes lots of sense, some clients discover that it is not necessarily ideal in all circumstances to put every spare penny from your monthly budget towards batting down your credit card bill.
“We found that while it was important to have a good repayment plan, it was also important to balance that out with small treats such as a day trip with the kids or a night out at the cinema as the repayments were going to take about five years. This way, we had a healthy balance between paying back our debts but also enjoying our life — after all, your children are only young once and you never know how long you have.” A C, Cornwall.
You need a lump sum to start investing
Every small bit of money has the potential to earn a decent return and if it gives you the feel good factor that you have put a certain amount aside each month for this purpose, all the better.
“We all go through stages of our lives where we have more to put in this particular pot than others and it’s always tempting to use money for other things. But I’ve found that by having a savings account available and adding to it regularly, no matter how little, I’ve been able to afford really special things, such as a special anniversary surprise for my husband, or I have had a handy back up just when I needed it most.” E W, London.
Pay off your mortgage as soon as you can
One of the biggest financial dreams of all is to be ‘mortgage-free.’ Many of us crave the idea of being able to walk around our homes and looking at every bit of it and saying ‘I own this… outright’. But while this might give you financial freedom and security, ask yourself this: if you were given enough money to pay it off in one hit, would you actually do it?
“I had this opportunity recently when I made a good profit on the sale on my previous home. But when it came to what to do with the money, I realised that the satisfaction of paying off my mortgage would free me up to do many things, but that actually, I could move nearer my extended family enjoy the dream trip I had always wanted to if I kept a small percentage of my mortgage. It’s a very personal choice, but in the end, I decided to use the opportunity to make my dreams a reality rather than pouring all my liquid assets into bricks and mortar and putting my plans on hold, perhaps indefinitely.” D G London
Premium Bonds are so 20th century
In an age where many standard easy-access savings accounts offer a simple way to put money aside, some clients still prefer to forego small interest payments in favour of Premium Bonds.
“Different savings schemes are good for different people, put I personally love the fact that instead of paying out interest, the interest money from premium bonds goes into a prize fund that is shared out to a select number of bonds every month. I get to invest and enjoy the possibility that I could win anything from a million to £25. I’m under no illusion – the chances of winning a million are less than the National Lottery but I get to enjoy the dream that I might win without losing my initial outlay, and I am still saving.” VC, Cornwall.
Please note everyone’s individual circumstances are different and you should contact a Serenity Life Planner for guidance and a personal recommendation as to what is most suitable for you.