“I have been detailing my set monthly outlay in a spreadsheet this morning to enable me to complete your form with some clarity. The hardest part is then putting averages for general spend which varies month on month depending on activities with family etc. or unusual outings.
It’s an exercise I should have done before, no doubt you hear that a lot!”
The above is from an email I received this week from a lovely new client; she thanked me for my time and spoke about our Expenditure Form I had given her to fill out; her last comment rings very true.
As part of our services here at Blackdown Financial, when onboarding a new client, we set them the task of looking at their monthly expenditure and summarising how much they spend on different categories. It starts off simply with your consistent bills, like rent or mortgage payments, then water, electricity and gas bills and others of the like, but where people tend to find difficulty is their ‘here and there’ spending.
This spending can consist of the little purchases that you don’t think much of in the moment but can soon rack up: an impromptu lunch out with a friend, a little present for your child, a weekly sweet treat as a pick me up, the list can go on.
Most people cannot easily summarise their spending into a monthly figure as their month always changes but also, we tend to find that some do not realise how much they are spending until it’s totalled up into one accumulative figure.
This figure can unlock insight into habits, and is sometimes eye-opening for the client, that saving goal they’ve been trying to reach for the last few years, has been spent on daily coffee and pastry trips or buying a new wardrobe of clothes each season. Whilst for some it may be upsetting seeing this expenditure laid out plainly in front of them, to see your dream holiday fund spent on past ‘meaningless’ items, all clients leave the meeting feeling more in control and knowledgeable about their spending habits and their accounts.
Now this isn’t to vilify spending money or having fun, as we all need those moments shared between friends over a good meal or to see the joy when a loved one opens a present they weren’t expecting. This is also (and some would say sadly) a capitalist society; we do typically need to spend money to have fun or make memories.
But there is also the other side of this scenario, we do see clients religiously save for their future – consistently putting away a good chunk of their income each month, sacrificing those joyful experiences or sweet treats to ensure they have enough when they retire. The question we ask them at this point is what is ‘enough’? When will they be happy with the number in their savings or isas?
Sometimes people have an answer to this mystery figure but sometimes they don’t, they become so engrained in the saving habit that it feels wrong to leave that style of life but also once they reach that figure, they find something new to save for out of fear of running out of money.
The reason why this expenditure spreadsheet is so interesting and vital to our clients is because it allows us to do a deep dive together. As part of our Lifestyle Financial Planning (LFP) service, we are proud to act as Financial Coaches where we can be there to offer a guiding hand and insight. Allowing the client to evaluate what means more to them, to reflect on their habits and decide if they would like to continue living their current lifestyle or whether they’d like to divert funds into something else. They can ask us any questions they may have, and we can be there on hand to help plan for their future.
If you’d like to learn more about our LFP services, then please contact us on 01823 321616 or email: enquiries@blackdownfinancial.co.uk
Warm wishes,
Simon
Simon Cutler DipFA, MIFS, Certs CII (MP&ER)
This article represents the opinion of W&T Ltd trading as Blackdown Financial only and is intended as information only. The content of this article should not be construed as advice or recommendation.