Confessions From a Financial Planner

As a financial planner, I handle money on a daily basis so I know all of the secrets it can hold. Find out five money confessions from me below.

1 - I haven’t paid into my pension for the last 2 years

A big NO NO - terrible financial behaviour! Don’t you understand the power of compounding, I hear you say. Yes I do, but the fact of the matter is I haven’t been in the financial position to do so. From starting up a business and money being tight, to having other expenditures to deal with such as home improvements.

Basically, it hasn’t been one of my financial priorities and it’s okay if there are occasions when it isn’t yours. Not an approach I would recommend in the long term and I am about to restart, but don’t beat yourself up if you do have to have a break.

2 - I don’t have a Critical Illness Insurance Policy

I have lots of life cover but not a Critical Illness Policy, which ideally I would also have in place. However, I do have an Income Protection Policy which is arguably more important for someone of my age as I don’t have to worry about my income if I can’t work long term due to an accident or sickness.

I had a limited budget for what I wanted to spend so I have prioritised other life cover and income protection. I will continually look to upgrade my income protection amount as my earnings increase and will likely add to the critical illness cover in the future. Yet I am comfortable with the cover in place for me which means we would be secure financially should something happen to me. The cover I have in place would mean my financial plan isn’t derailed by forces outside of my control which is the most important thing.

3 - I don’t track my expenses each month

To be honest I can’t be bothered to. I have a bank account set up for my fixed expenses that don’t change and then I have a set amount to spend each week on everything else. I find this much easier for me to manage and to have a top-down approach. I know if I have to transfer more each month then I need to review my spending plan.

Don’t worry if you haven’t got a comprehensive budget in place on a spreadsheet, which to be honest you don’t need. You can set up a simple structure to help you know what you are spending without counting every penny. It also means you don’t have to worry every time you grab a coffee.

4 - I have credit card debt

Another financial no-no in the world of perfect financial decisions, but I do have credit card debt at a decent amount. This is partly from setting up my own business and doing work on the house which I couldn’t get on the mortgage.

Here is the interesting angle - if this debt was on my mortgage and not on credit cards I wouldn’t be worried about it all nor would anyone judge me. Yet we are conditioned to think of credit cards as bad and a mortgage as good. If the credit card debt is helping me grow my business and future earnings I am comfortable with reframing it as an investment in me. There is a plan to pay it off, but this is just one part of my financial strategy. Just make sure you aren’t racking up the debt frivolously and on a high-interest rate that’s a recipe for disaster.

5 - I have also paid for my holiday this year on a credit card

And I am not repaying it straight away either. I feel like I have gone rogue but we didn’t have the cash and are in desperate need of a holiday. Our mental well-being is being prioritised over our financial well-being here.

It is on a low interest and it isn’t going to financially ruin us, plus our overall financial position is improving. I wouldn’t make a habit of doing it but spending time with the family is a value of mine when it comes to spending money. So as a one-off I am happy to be a rule breaker.

So there you have it. Five things that I am doing or have done that the financial planning world will tell you is bad (and to be fair, they’re right). Yet we live in the real world. We are busy and we all make financial decisions every day, some of which are good and some of which are bad. We don’t need to be perfect and if we make more good financial decisions than bad, we will be okay.