In the past several weeks there has been a lot of talk about “planning ahead” on this blog. I talked about planning ahead for big events to ensure you have enough money in the bank when the time comes to jet off on that sun holiday or buy that latest flagship phone. I talked about planning ahead for those unexpected events in life by setting up a “Rainy Day Fund” so you don’t end up stuck for cash when you need it the most. However, financial planning doesn’t stop there, oh no! The whole premise behind financial security is “Plan plan plan”. As that famous saying goes:
“Fail to prepare, prepare to fail”
This saying couldn’t be more true when it comes to Money Management. We all know the importance of planning financially short-term, but, what about long-term? Have you ever gave a serious thought towards your distant future plans? Well today’s blog is precisely about that, the importance of planning ahead long-term. Let’s dive in.
We are all guilty of spending hours online or at the shops looking for that “next big thing” that we are just so excited to purchase. We live in a world of media where we are bombarded with adverts that force us to buy, buy, buy and as a result think little of the bigger picture. Trust me we are all guilty off it, me included. I know a lot of you may be thinking, “What the hell is he talking about, the bigger picture”. Well the bigger picture that I am talking about is big financial hitters that life throws at us the older we get. For example lets take 3 things that promise to be financially burdening the older you get, car, kids, house. Those are 3 big finance hitters that most of us will experience at some point in our lives. (There are a lot more but lets for example stick with these 3). Most of you readers may already have a car. Great! How many of you think that running a car is a cheap expense? Anyone? As I thought, it is and expensive asset to have. Between insurance, tax, fuel, maintenance and depreciation, an average car can test anyone’s wallet. It is a convenience to have, but it is an expensive convenience. I own a very modest 2005 Opel Astra and it happily chews up my wallet on a weekly basis.
Now perhaps the next logical step in life is to buy a house. Great! Now let’s consider the basics when it come to this decision. You need to take out a loan. You go to the bank and the bank couldn’t be happier offering you a loan with big interest and of course a down payment on your loan. Wait, what? Yes, most banks will demand an upfront sum of money prior to approving your loan. Bummer, right? You were so excited to move in into your dream home but soon your hopes turn to nothing and you have to start saving and fast. Oops! Suddenly your wallet seems very tight. You have day to day things to take care off financially, that car to look after and oh yes, you have to save for your dream home and time is running out as you are not getting any younger and things are piling up on top of you.
Let’s say you managed to gather some money towards your bank loan and the bank approved your loan and you are all excited again bouncing from agent to agent looking for your dream home. Great! Now that’s out of the way, what’s next? Well we all are not getting any younger so soon you might consider to start a family in your beautiful new home and someone to make use of those spare seats in your fancy new car. Now let’s plan on preparing for a baby, we will need to consider things such as buying baby toys, nappies, day care fees, pram, cot, etc. Wow! Now things are getting very tight financially. Right? Now you have to worry about starting a family, running a car AND pay off that big mortgage. Scary right? It will soon feel that all the great things in life such as holidays, weekend trips, new phone, etc will have to wait and wait a long time at that.
Now those three things are just the things that I thought off at the top of my head. I am sure there many many more expenses that we will have to endure we are at an age where we have to take life seriously and care off all those things that is always (in our heads) far away in the distant future. You see, our future very quickly becomes are present and if we are not prepared for it we are going to suffer. We need to act now so our future years will be just as enjoyable as our present years. This is why it is wise to set some money aside whenever possible for those “distant future” events. Whether it is towards a new car, retirement, mortgage or family etc. We need to start saving surplus money now. It does not matter what age you are, in your teens, 20s, 30s etc. it doesn’t matter. Everyone in the same boat, everyone comes face to face with reality of life at some stage and we need to be as prepared as possible for it. Start now and don’t stop!
Thanks for reading and I hope I have motivated some of you to plan for your financial security long-term. It will stand to you in the long term. Stay determines, stay focused and don’t forget to enjoy yourself too. Again, I welcome any feedback, comments, ideas or if you just want to say hi, please use the comments section below and join the discussion.
Hope you all enjoyed this blog and chat to you guys on the next one.