42. DIY a Financial Plan

What is a financial plan? And do you need one?

Julie & Catherine are going to walk you through the 3 steps to building your own financial plan. You can make it as complicated as you want, or you can keep it to one page.

To us, the plan is a like road trip across Europe. We may not have a fixed destination, but we have lots of things we want to see along the way.

1. What is important to you
2. Start to shape your goals
3. Plug in the numbers

Along the way we’ve made up some golden rules. The 1st one is that the plan is not about perfection. Don’t get hung up on precise details.
Rule number 2 is remember this is about guessing, so it will not turn out exactly as you planned at the beginning. And that’s ok, because most of us change as we go through life. 
Rule number 3, money is not your only commodity. You have time and talent!

4.23 Rule 3 explained
7.49 what is a financial plan
11.40 questions to help you with step 1
14.42 how the goals emerge from step 1
25.48 recap of the questions to ask yourself
27.43 Moving from step 2 to step 3
35.26 The numbers
42.30 Calculate your net worth
46.52 Another golden rule

Grab a copy of our One Page Plan as a PDF or word doc.
The savings plan section of this Calculator can do all of the numbers you need for step 3

YOUR HOSTS:
Catherine Thomas-Humphreys is an Award Wining Financial Coach, Qualified Financial Adviser and Family Will Writer.

Catherine believes money is a force for good and when in the hands of good people can be used to do great things.  She loves working with purpose-led parents who are ready to change  their money habits & beliefs to achieve  financial success for themselves and their family.

She founded #TheFinfluencer   as a safe space to coach and empower parents to influence, make, save, spend and grow money, consciously, ethically and positively.  

Financial coaching - The Finfluencer
Catherine’s bitesize money wisdom - Instagram

Julie Flynn is an experienced independent financial adviser and financial coach. Justice and equality drive Julie. Which is why she’s spent years studying and researching how stress affects our financial decision making.

She uses her years of experience and research to support women experiencing or planning significant change in their lives. 

Julie is best known for her work with women who have lost their partner and coaching financial services business who want to implement fair and transparent charges.

Financial coaching - Ebb & Flow
Financial advice - Bree Wealth & Tax
Julie’s inexpert social media antics - Instagram

Transcript

WMC 42 DIY Financial Plan

Catherine: [00:00:00] Welcome to the women and money cafe, the weekly money podcast for women by women exploring the practical and emotional side of money. The cafe isn't just a podcast. It's a community for women to feel financially empowered. And have fun along the way, come and join us in our Facebook group too, with your hosts, Julie Flynn and myself, Catherine Thomas Humphreys, Julie is an independent financial advisor and certified financial coach.

She works with women where life is taken an unexpected turn to help them manage their money with confidence and envision and new future. And I am the founder of the influencer qualified financial advisor, coach and family finance expert. I help parents to financially empower their family and create positive relationships with money themselves.

And those they love. [00:01:00]

Julie: Hey, what is the financial plan? Okay. You think it can be as big and complicated as you like. But it can also just be one page. All right. In this episode, Catherine and I are going to walk you through the three steps to build your own financial plan. Okay. So we'll put together. So step one is, this is actually the hard bit.

Step one is about figuring out what matters to you. What's important. Okay. Once you've, completed this step, step two is because you've done that. You'll start to have an idea of what goals you want to set yourself. And then step three is about plugging in the numbers. Okay? So that they're the three steps we're going to walk you through.

 We're also putting together a project to help you make this more concrete. Now, if you'd like to know more about that, I'll get involved with it. Then just drop us a message to hello@womenandmoney.cafe.

Catherine: And welcome [00:02:00] back to the cafe sofa, Julie and I are talking you guys through how to create your own financial plan. So grab a cup of tea, grab a pen and a paper. And in the show notes, you'll find that we've created you a one page financial plan and in the course of the next 33 minutes or so, we will help you understand how to shape and create your own financial plan with some golden rules and some laws from Julie and some other contributions that aren't to do with the money.

So good morning, Julie, how are you? 

Julie: I'm very well, Catherine. Thank you very much. How are you 

Catherine: today? I'm good. I'm good. I'm excited about this one. So I think we're both literally on the same page, the same one-page financial plan. What is financial planning, but more importantly, the usefulness of actually having one.

So it would be really great to, to see, and maybe to hear feedback from you guys as to what you discovered whilst doing your financial plan. I thought [00:03:00] maybe you would start with a few of your big pointers, perhaps some of those golden rules or laws that you apply when you're doing a financial plan.

And we will take it from there. 

Julie: Okay. Julie's golden rules for financial planning. Don't worry. There aren't many of them and I have, I have made them up. Okay. Okay. So rule number one, it's not about perfection. All right. So because the second we do this, it's out date and it's wrong. So I, I personally don't get really hung up on getting it exactly right.

And I encourage my clients to do the same. And that is you can agonize over decisions about trying to get it precise. But the thing is, things change all the time. So it's a process and it's about guessing any other financial advisors will call it forecasting. I call it guessing 

Catherine: yeah. Isn't forecasting guessing, but with some sort [00:04:00] of education wrapped around it, so, 

Julie: well, yeah, there's the 25 years’ experience on the qualifications.

I've got that make my guesses better than your average person’s guesses, but they're still guesses 

Catherine: so that's two rules. I heard there, the guessing that it is just guessing. And it's. Not perfection. Was there a third one? 

Julie: There is, there is. The other thing is, is law number three, there is money is not the only commodity neglect the others at your peril.

Catherine: So when you say the others, which ones? 

Julie: Okay. So the two other commodities, I think that we often overlook when we're trying to organize our finances, build ourselves plan. And that is time and talent, and it goes back to a conversation you will have. And just before we hit the record button, we were saying in life, you go through life and there are all these trade-offs.

You're constantly making trade-offs every day. [00:05:00] And if you go chasing the money, we need to understand this. You're trading off something there, and you're probably trading off your time. And it's asking yourself every now and again, what is more valuable to me right now? Is it the time or is it the money.

And I think financial advisors really guilty, just like we just focus on the money, the money, the money because oddly enough, that's what we do for a living. But like, I'll introduce the idea you need to think about how you want to spend your time as much as how you spend your money.

The other one is talent then, and this is one that, you know, with a financial advisor hat on. If you've got a client sitting in front of you, you're trying to figure out how to help them achieve their goals and aspirations and dreams. We will typically focus on what we can see right in front of us. So that's the person, what they do, what assets they've got, but we, they won't think about what their talent is and what their capacity is to create more wealth or more time based on, you [00:06:00] know, what skills they have.

So think about what your talent is and how you can utilize that. And, and don't spend your time quite so freely. 

Catherine: it's funny. Just hearing you say that, that the words that we use with money are very similar to the words we use with time. Aren't they, the investing time or money saving it, spending it, so you can see that those two naturally do coexist and there is that trade off, the talent. I thought it was really insightful. It's not something that I've considered, in terms of when creating a financial plan, perhaps when I'm coaching, because you are, you're working with someone forward facing for where they want to go and what they want to do. And part of that is them using their talent for their development.

But to hear it in that context, I think's really interesting. The one I would add to that, would be that the financial planning needs. Now, that's not in this sense, the same as time. You need to spend [00:07:00]time on that, but money needs space, your plans, and dreams, and that also needs space. But I think we'll, we'll pick that up in how to do that as we go through, his exercise.

Can I just, before we do though, have a little conversation with you about the difference between financial planning and a financial plan. 

Julie: All right. I will see you, you a question and I will raise you a question because I was about to say to you, should we rewind for a second because shall we talk about what the flip a financial plan is?

Yeah. And what you have 

Catherine: one. Yeah, so. And then because we'll know what one is and why you have one. We can talk about what the difference is between a plan and planning. Because I think that's one supports the other and vice versa. So a financial plan and possibly if you were to ask anyone what they thought it was it's you use description of a sat nav analogy. [00:08:00]

so there's a destination. And I think you and I are going to talk about what destinations possibly look like. And the roots. So in a financial planning plan term, those are often the actual numbers on the paper that generate, the likelihood of arriving at that destination and planning that route. So I think if you were to ask anyone what a financial plan is, they'd be thinking it's my income, my outgoings, my assets, and it's very focused on the actual numbers.

You and I are on the same page in that we think the numbers are far further down the line. What do you, would you like to exaggerate? That's the wrong word? but we know that's 

Julie: what I'll do. 

Catherine: what is the word I'm looking at? us more expand. We'd like to expand on that, Julie, 

Julie: I think what you said there is really interesting because I've asked a few people this [00:09:00]question, what they think of financial plan is.

I keep getting the same answers coming back to me. Like it's all about the numbers and then what have you and all the data I, you know, that comes last, that comes last. And like, if you come to someone like me, yes, I can generate a 40-page financial plan for you. If that's what you really want. Personally. I try to present it in one page, but that's the thing.

Financial plan can be as detailed or as high level as you want. But the numbers come last, it’s about thinking about where you are and where you want to be. so the kind of on the sat nav thing here, right? Okay. So we've got a destination, we've got a starting point and it's, how do you want the journey to be between here and where you're trying to get to?

So it's all the life event. I'm going to use the word now that Catherine and I both get a little bit funny about, um, no doubt will come onto that that's goals. but how, how do you want the journey to be how's the journey going to be for you? Is it [00:10:00] going to be scenic? Is it going to be Motorways and just, and it's, once you figure out what's important to you, what you're trying to achieve, then we start looking at what assets have we got to plug into the, the roadmap to get you to where you want to be.

Yeah. 

Catherine: And then you've got time working in two dimensions there. One is the time from starting to where you want to be. And then. will you be using time along that journey as one of those assets? And I think that neatly ties in then to where financial planning, isn't a financial plan because as we both alluded to there, that the numbers come last.

So if the numbers come last, what's coming before the numbers. When we are financial planning. 

Julie: Are you asking me? I am. I'm going to give you a really technical answer. What comes first? yeah, a shit load of questions. 

Catherine: love that technical [00:11:00] answer yes, I might have come for a softer answer. Might I, the, the kind of open questions, the, the dreaming, the, the planning, in order to get to that.

And I think this actually ties a little bit in with what sometimes gets called goals. And I don't believe that it is goals that we are setting in those questions. Aren't what are your goals? What is your post code? What is your destination? That question I, I don't think leads you to, to the right.

Potentially the right destination or the destination in the, the way that you would like to have it. So questions. So for those that grab their cup of tea and their pen and their one page financial. Julie and I will start with a couple of the questions that we would begin with if we were if you were a client with us.

So Julie, do you want to kickstart, and then I will elaborate, not exaggerate [00:12:00]

Julie: okay. So here you go. Here's question number one for you. Okay. By the time you've gone through the questions, you're going to think I've got the numbers, but that's really easy. it's the questions are that they're challenge, and you have to really think, and these are things that maybe nobody's asked you before.

You've never had to think about before. Okay. So, my first question, I think it's a good one. Is why is money important to you? 

Catherine: Yeah. And that's where the space comes in because when we've not. We're not being asked an open closed question of what's in your bank account and we're not even being asked. What is your goal?

It's what, what, what's the meaning? What does that mean to you? So it's not necessarily something that you can come up with an immediate answer. So just begin to get curious and write down some of those thoughts that are coming up when to Julie's question and that's going to be something you're going to carry on doing.

It's [00:13:00] not something you will have necessarily finished by the end of this podcast. I like to suggest Julie, that we suspend our belief when we're asking these questions, because. When we are believing and knowing, and thinking, and feeling what we do today about money that is not the same set of feelings, thoughts, and actions that we will be having when we are on the journey or when we're on that destination.

And sometimes, so let's, let's start with that. The question we don't like, which is what are your goals, which is, what gets in the way before we answer that are all the things, we think we believe. So why we can't achieve that. Why there isn't enough money for that, why that will never happen, why it hasn't happened before?

So I think to just for a moment park, all of those beliefs park, all of those thoughts and those feelings, [00:14:00] totally suspend belief, and actually begin to think what money means to you. And on that, I would then probably expand into. What do you want that to look like that destination? If you were to paint it or draw it or create it, what does it look and feel like for you?

Julie's gone blank. Oh, you're really asking me. No, I was kind of saying that would be the next step for me is totally suspend belief because yeah, if you asked me something, I will come up with a whole lot of reasons in the back of my mind of why that's not possible, but by taking away the impossible, you can then create anything.

Can. 

Julie: Yeah. And I think the purpose of these questions is, it’s trying to figure out what the drivers are for you and what you value. And that's why I think we're fair to say. We both think it's a bit bobbins to, that's a Northern phrase. That's polite to ask somebody, right? What are your goals? [00:15:00]Because invariably, we get the same answer back and I've referred to this in previous podcasts.

You know, though, I want to retire at age 60 something with 2000 per month. That's not a goal. Right. But it is under its understanding about how you want to live your life. And what's important to, and then letting that, you know, once you start to feel a little bit more certain about that, the goals kind of sprout out of that.

But if you don't do that first, you end up with the generic goal, which is the 2000 pound a month age 60, which is meaningless to you. It doesn't mean anything to you. 

Catherine: So if. I was your client, or if someone who was listening, if they'd come up with a similar starting answer, and that really is just a starting answer, someone to explore on us, I want to retire at 60, with 2000 pound a month.

What would you then ask us next to get us to start thinking broader, bigger, differently? [00:16:00]

Julie: Yeah, I would probably go with, if so, if you just said to me that that was your goal, then I'm maybe going to come back to you with something like, okay, I've just hit the fast forward one. And we know we all know at the point where you can have 2000 pound on, and you don't have to do what you're doing anymore.

Mm-hmm what should we do next? 

Catherine: Yeah. And this is again, why space is so important for this first part, isn't it? And I think it's, do you find that people find this hard because we are just living for today and that. we need time to, to kind of really let that sink in and to resonate and to start to imagine a different thing.

Julie: I don't know if there's so much that we love for the day. I think it's too often. We don't get the opportunity to think like this and nobody asks us these kinds of questions. So I don’t know if, to an extent we live life [00:17:00] the way the brochure said. So the brochure says you're going to retire at age 65, and you're going to be walking along the beach, hand in hand with some other bring to your person.

And the brochure says that you are going to live your working life. Like this, and success will look like this. And what we're asking people to do is throw the brochure away. Yeah. And write your own version. 

Catherine: Yeah. Yeah. And I thought that I was finding it hard for a different reason. So I struggled in the past at kind of imagining.

Let's take retirement because it it's an easy example and it's one that's come up is I, I couldn't get to a point where I could imagine where I wasn't working, or I could imagine what I would be doing instead. Um, and therefore, whilst I was contributing into my pension, I was kind of doing it meaninglessly I was putting an amount in, because I was, I should contribute to my pension, but without kind of connecting my today action with a purpose, um, and that bigger picture.

Um, [00:18:00] but then by suspending belief or fast forwarding and imagining, you know, what, what does that look feel like? What are we doing instead? It's becoming something you're gradually creating, um, over and over again. So I now have a much clearer idea and I, I don't want to retire. I want to have some form of.

Flexi, I want to still be having a purpose. So I think to me, retirement meant a lack of purpose. So, um, I'd be interested, Julie, if you were the client and I said, fast forward to that date, what are you doing? What are you doing? 

Julie: I have no desire to retire. I love what I do. But as you were talking there, I was thinking about, I can remember myself going through this process at the start and yeah, I had all this generic [00:19:00]goals that everybody else had.

Right. and the first sort of realization is I need to get married together, start saving for the future. So I applied all my money into pensions investments. And then when I took a step back from the generic goal thing, I started thinking about why is money important to me? So the words that are coming up as security.

So then when I drilled down on that a little bit of further. Okay. So it's all very well, me ploughing all this money into pensions investments. because that's by me, future security, I had completely ignored present day security. And so I thought, okay, the goals are not online with what's important to me because I've, I've missed some of it.

And so understanding why money's important to me, it led to that goal of saving more for the future. But then by drilling deep, without rate, well, now I need to build up CA a lot of cash savings as well, because [00:20:00] that's going to make me feel really secure because the pensions and investments were given me security in the future, but it wasn't given me security today.

And so then I set myself a goal, right? Well, I want this much in cash, and I want it by then. Right? What do I need to do to make that happen? And this is why we do the thinking first and the goal second and the numbers last. 

Catherine: Yeah. And I could hear it as soon as you said, once you realized the security for now as well, then you took an action.

So it's hard to take an action when we don't know why the action, what it is, what it's for, what its purpose is. Um, I asked my children what money meant to them, and they all came back with quite a similar answer. And this may be generational in that perhaps I've inadvertently fed it through, but the, the words that are coming through from them are things like choice, um, freedom.

Certainly for my eldest son choice is really important to him. He doesn't, he sees that as a way of [00:21:00] maintaining. Independence that he's not going to be dictated to. He's a little bit like me. He doesn't like to be told what to do. So choices, and money does bring choices when we don't have money.

The reality is they are fewer choices or our choices are shaped by, trying to get to a position where money is, is there and available., so, and maybe that's what my retirement is, is that I don't necessarily, I want the choice, the choice to work on the day I want to work or the choice to, to go off and swim or the choice to spend time with my family.

Julie: Yeah, but just think about that once you, once she got to that point there where you realized choices, freedom, security, whatever it is, is the drive force for you. And then you look at how you want to map out your finances in that context. Mm-hmm so, you know, that, that let's say choices is the thing that's important to you.

So [00:22:00] if we hadn't done that bit first and you're all off trying to make lots of money, save lots of money into your pension and whatever the heck. But by doing that for the next 40 years, you've given yourself no choice. No 

Catherine: so you just, 

Julie: so is that being aware at the start? Right. I want choices. I value that.

So if I commit to that career, that means I'm trading off something. So it's just then asking yourself, right. Well, is that how I want to do it? And it just, it just makes you look at things. Definitely. I think it’s; it's really freeing. 

Catherine: Yeah. Yes. I it's liberating creates, I'm going to give an example if you don't mind, Julie, of some, someone who I consider sensible with money and quite goal orientated, but never went through a financial planning or.

 this process that we're talking about, and it's actually my dad, so [00:23:00] he's always worked. He retired as a nurse, built his savings, built his investments. And as you know, he's now not very well, but the part that was missing from, from that, maybe this is, was, well, what's it for, what am I going to do with it?

What's that future and today look like, and tomorrow, and all those kinds of points in between. So the sensible money habits were there, and they were brilliant. The budgeting, the saving, the spending, all good stuff, inverted commerce. But I think had he had. A financial planner, rather than maybe an advisor, then it would've brought into those questions.

It's what do you want to do with this? What, what do you see yourself doing tomorrow? What does that look like? What does that feel like? And how can we use your ha your good habits and the money that you have to facilitate and support that for you? [00:24:00] Mm-hmm . And I think I certainly, as an advisor saw a number of older clients coming in having done that really good habits, but nobody had ever sat with them and talked through why.

Julie: Mm. Yeah, no, I think it, it's not uncommon. And so that's why I think that's first start the process of asking yourself these questions is really important. So if you take the example, so let's say you sit there and have a good think about, and let's say, you've come up with one of the biggest driving force for you is freedom or whatever it happens to be for you.

Right. The next step is to ask yourself, okay, so why is that important to me? Mm-hmm what does that give me? What would it mean not to have it 

Catherine: that. Swapping over the, the ideas as well. So sometimes why is it important to me is, is harder to ask than why isn't it. So [00:25:00] looking at it from both angles, how would it be if I didn't have that?

How would it be if I did, what's the, the pros of that, and what's the cons of that, because we'll get a different answer. So I think sometimes the first answer that comes up to us, maybe the easier example is here is when we have what we consider a bad money habit, neither of us believe that any habits are bad.

So I, I did invert comment that, it's there and we are doing an action and we're doing it because it's doing something for us. Taking that space and to look at it from a different perspective, um, is a really good, set of questions to ask. So what are the positives and what are the negatives, if you are still with us, hopefully halfway through your cup of tea.

 I'm just going to recap then on a couple of questions that you could ask yourself because Julie and I just wandered off in tangents will I do anyway? So Julie's suggesting start with these, the, [00:26:00]the question of what does money mean to me? Why is money important to me, to suspend belief, to start to fast forward to where that destination might be and imagine what you're looking, feeling, thinking, and doing, , and try and pick out what your driving force is, what your purpose.

and then start getting curious and playing with those questions, of what would it feel like to not have that? What would you, any other good questions for our listeners, Julie, to get them going on this one themselves? 

Julie: I suppose one of the things you could do is I can't remember them all off the top of my head.

Okay. But you can go and Google. Kinder's three questions. Let's not go down the kinder rabbit hole right now, Catherine. But if you want to go on Google kinder three questions, they will call up and they will stretch your brain. but the [00:27:00] good, the good questions. 

Catherine: Yeah. Yeah. And I think you're fine. Number one's very similar to a lot of what we've started with today, but when you 

Julie: get to number three, it's a little bit more challenging.

Catherine: we're not going to challenge you quite that much during this single episode because it's, it's not a singular event. So this is something that you're going to keep on thinking about and keep on developing. So let's say now that we've got to the point where we've, we've asked some great questions, we.

Beginning to have a sense of what's valuable to us what our money is for, where we're wanting to go and what we want that life to look like. What's next for, financial planning. Okay. 

Julie: So I think after you've gone through that first, some using air quotes goals might be starting to make themselves apparent to you.

So for example, with me, it was a realization that, [00:28:00] I need more money in cash in the bank because that's going to help me feel more secure. And I said, okay, well, that's a little goal. I can do that. And that's over a short timeframe, so that that's going to go on the plan. I have my bigger goal of like, I want long term financial security.

So that goes in the plan. I'm going to start guessing. About some dates and I'm going to start guessing about the amounts that I might need, and I'm going to put some concrete actions in place. So likes of this, the emergency fund, I'm going to save X pounds per month into that. And for the future, I'm investing x £ per month as well.

So little girls will start to pop out. They'll make themselves known rather than you going into the shop and picking one off the shelf, which says you up 2000 pound a month, page 60. so is, is that right? Am I, am 

Catherine: I on the page? Yeah. On the [00:29:00] page. Yeah, the page. Yeah. I like the idea of goals making themselves known.

So rather than what's, my goal is make the space to let the goal make itself known. The mini goals. I, I call them milestones. Maybe they're different. Maybe they're the same thing that, Things that will need to be hit or encountered along that scenic sat nav route in order to reach that destination.

It's like 

Julie: landmarks. Okay. Going off on a tangent folks. okay. So I used to do a lot of traveling between Liverpool up to Glasgow. Are used to, I was on doing that road all the time and anybody that's driven up the m 74, if you're heading north and the M 74, and you look great at some point and you see this big hill and there's a whole load of trees that are in the shape of a man thing.

I'm going to say it. I'm going to say it penis. Right. So there's shapes that look like that. And you look at that and you're like, oh, that means I'm only 25 minutes from Glasgow. Right. [00:30:00] And any journey that you take, you'll see different landmarks as you're going along. That's how you like, oh, I'm on the right track.

Yeah. and it's a little motivator. It's very like, oh, I'm 25 minutes from Glasgow. 

Catherine: that's trees aside, a really good benefit of actual the, the financial plan is that you do get those, landmarks or milestones, that confidence that you are on the right track. And if you've not seen it, that's a kind of trigger that, oh, hang on.

Maybe I'm not on track. So there's something to review so , I'm sorry, I'm just being extremely childish at Julie's tree landmark, but that was partly because we had a pre-conversation, which I'm not going to share with you, in and around the topic of the ducks that I keep. So come back to financial planning.

So, hopefully you're still on the document. Can I share something that I [00:31:00] did just to see what your thoughts on how this could be useful or not useful? For, so we talked about retirement as a potential destination. I set myself a goal and it was a goal about 10 years ago to double my income.

But that's what the goal was, but I didn't start there. I didn't start with, I want to double my income prior to that I had done everything. You've just, we've just talked about, which is understand what the purpose of that would was for, for me and my family and what I might do with it, how I might feel if I had it.

As I went through that, I encountered a number of limiting beliefs, which is why I always say suspend belief, which is that I didn't deserve that money. I couldn't make that much money. Those kind of blocks roadblocks along the way, so for me having that purpose of why, what that money would do for the [00:32:00] family and for our lives and how that would enrich us and how that would then help move on toward the other things.

 So that goal actually emerged from the process that we you've just talked about. We've just gone through, I set time. Which was one year. And then from that timebound goal were the many actions I needed to take. So in order to get to that, I needed to do B, C X, Y, Z. Um, so I did that. I achieved that.

I was really proud of myself. So then the next year I thought I'm going to do that again. And it went wrong. So it went wrong because by this point, I'd moved away from what the purpose was and the beliefs and those limiting beliefs came back up to bite me. And self-sabotage that you don't deserve this.

You can't have this. So I think part of this, there is a point to my story. Part of this is if you are becoming aware of those [00:33:00] beliefs, the little voices, he images, the emotions that. Resistance. So if you are become aware of that resistance, write that down. Because that will keep coming up along the way, unless that is also worked through

while we have a lot of fun running the cafe, the reason we do it is to reach as many women as possible to empower them around money. So if you know a woman that would benefit from feeling financially empowered, you can help us to help them by sharing this episode with them.

I guess, going back to our journey analogy, they're the things that are going to go wrong. Aren't they they're the, the flat times they're all shot. Yeah. Is it diversion? Both works diversions., so it's by knowing and expecting them and maybe preparing for you'll need to do something at that point increases your success of overcoming those, obstacles and object.

 We [00:34:00] had a slightly different analogy.because we talked about this before that it's not actually a postcode, with our financial planning. Do you want to share what we think it is? Yeah. So 

Julie: it's, this is my fault. I use this analogy that financial planner is a bit like using a sat nav. So getting the car, you don't tell the start now off justbecause you figured out where you want to go.

But the thing is it's this idea that your life is not just a single destination. It's not so Catherine and I comparing financial planning to actually going on a road trip around Europe. So we have no idea what the final destination is. We've just got lots of things that we want to experience is and things that we want to see along the way.

And we're just going to figure it out as we go along, because that's what the plan is. It will involve, it will be wrong. You'll change your mind. You'll get stuff wrong, 

Catherine: but it's okay. Yeah. And going back to what you said earlier, every single time you revisit it, you'll trade something off. So what the decision that you make today based on the guesses today, based on your answers and exploration [00:35:00] in two days, three weeks, three years, something will have changed and you're going to make a different decision or, or trade one off versus the other.

And that's okay. And I think that's. Key to know is that this isn't a static document and if we don't follow it, then we failed. Because we haven't, this is right back to law. Number one of Julie's, this isn't perfection. This is to enable progress. 

Julie: So, okay. I think we're nearly ready to move on to the practical stuff, but before we do that, if that's okay.

Catherine, can I just give people some tips on how to quantify the number, goal thing? Yeah. Okay. Because it's dead easy for me to sit here and go, right. Okay. I want an emergency fund X. I need to save that per month. And you, you, you sit in there listening to this. You can figure that out as well. All right. And then we mentioned that one of the other goals was future financial security.

So I'm throwing money into the pension and the investment. And this is the bit that's [00:36:00] easy for me. Easy for Catherine. Little bit more challenging for you.because you're like how the flip am. I meant to know. how much I need to save for the future. Mm-hmm okay. So this is where you do guess. Okay. So if you work with one of us, we've got fancy, clever technology and software.

That'll do it for us. Okay. But there are some rough rules of thumb that you can use yourself. So we don't go to get into heated debate about the rule of four. Are we 4% rule? Nope. But we're going to throw it out there because it'll just help you get started. Okay. Yeah. So there's this idea that if you've got a lump of money, an investment and you withdraw 4% of that a year as income, you should not deplete the love lump sum.

So it's known as the safe withdrawal rate. Okay. Now there's research that says, this is right. And there's research that says it's wrong as you would expect, but it's a starting point for you. All right. So if you're like, well, [00:37:00] I would like 500 pound a month. So can I do that 6,000 a year at 4%? It 

Catherine: 4,000 pound a year.

Julie: yeah. Right. So you, Catherine's going to double check this, right. But let's say you're sitting there. You're thinking. Okay. I would like to be able to achieve my goals, dreams, whatever I would need income of 500 pound a month to do that. So 500 pound a month times 12 gives us 6,000 pound a year, assuming a safe withdrawal rate of 4%.

you would need a lump sum of Catherine. 

Catherine: I haven't got that far. Can't we just do this the other way around and say that if you've got a hundred thousand pound, that you can have 4,000 pound a year 

Julie: would that not have been, I'll do here. It's 150,000-pound folks. 

Catherine: okay. I went onto my compass instead of my calculator, but this is our fault because we're on Satnav and I'm heading north at the M 74, according to my, um, app yeah, 150,000-pound, 4% general [00:38:00] rule of thumb.

And it is a starting point. That's the guess. 

Julie: Yeah. Yeah. So when you, you know, when you're trying to figure out that what I want X and I want it, then you're what do I need to do? Just that just get you started. You need to target to work towards doesn't need to be perfect, because we're not doing perfect financial planning.

That would be a different podcast. 

Catherine: It would be it would be. And it, so having that goal, that not goal, target Target's a much better term. Then you, you work backwards from that. Well, in order to achieve the 150,000 pounds by age X, Just divide that by how many years there are between now and then, and that tells you what you need to be putting aside or growing it to, and share that between 12.

Now that number might be too big for today. So it might be that you have, that takes having to save, let's say 200 pound a month. I've just made that number up. And you know that maybe you're not in a [00:39:00] position to save 200 pound a month, but that doesn't matter. You save 50, you save 70, you, you do a little thing, you do a something, because along journey things are going to change.

Your income's going to change. You're going to build up the emergency savings. You're going to be confident to invest and then start to benefit potentially from the growth. So use these frameworks. They are there as, a loose fence that you are working within, but just because you can't hit that number, doesn't mean you don't do anything.

Doing something is better than doing perfect. 

Julie: Okay. I'm going to make a sweeping generalization and presenters back. 

Catherine: I love it. When you do that, 

Julie: everybody that has achieved their realizations, their goals and ambitions, and is living the life they want, they all got there by doing one small thing to start with.

Absolutely. And then they did another small thing and then they did another small thing 

Catherine: and they consistently did small things. That's 

Julie: how you get where you want to be. It's [00:40:00] not nobody walks in and can do it all at once. The, this is the biggest secret yeah, just the little things. 

Catherine: There's a, there's something magic that happens here as well.

Um, so it's not often, I think that we do magic in financial planning. So I am going to present this one a little bit gingerly when you decide to do something and it's a decision and you're taking that small, consistent action to it. Because you're thinking about it, you're looking for opportunities to achieve it.

So when you're not doing it, you miss those, it's a bit like, I don’t know, when you want to dog and everywhere you walk, everybody's got a puppy or you're going to get a new car and all you can see is red cars. Um, you've made a commitment and a decision to something that you are now thinking, and our brains like to prove us.

Right. Um, and this is where something magic happens that I do not understand, but other things line up with trying to achieve that. So it's, let's take that example of having to [00:41:00] save a hundred thousand pound over. I'm going to say 10 years, 10,000 pound a year feels impossible. But when you start that small action and you are aiming for that target, other things seem to align with it.

So you might think, well, I'll increase my income. Or someone gives you a gift or your Christmas money, you divert into it somehow, or other, other things align with that. Um, whether that is. Uh, psychology, whether that is a law of attraction, whether that is simply that we are ING it, improving it. I don't know.

It's a bit like 

Julie: confirmation bias, isn't it? 

Catherine: Yeah. Because if you aren't saving on or you're not taking the action, you're not thinking about it. So when you, you don't see the opportunity or you don't see the, the thing that's come your way, that you could have directed toward that. So there's a little bit of face stroke trust in that.

If it feels unbelievable today, maybe just believe that actually somewhere along the line, other things are going to [00:42:00] align with that to, to help you to get that. 

Julie: Okay. All right. Should we do some of the practical 

Catherine: steps now? The numbers, the numbers, numbers on the 

Julie: numbers. all so on your on-page plan. Okay. The next bit we're going to do so we've got the tops.

So things are important to you. And then we've started to germinate some goals that are your goals. They're not off the peg ones. So there, we need to start looking at the practicalities that the numbers we're going to plug into the plan to drive it. So the first thing I would like you to do is two columns.

All right. So the first column is going to be assets and the second column is going to be a liability. So in your assets, you're going to list things like if you own out a property, that's going to go in there. Any cash you've got in the bank, any pensions, any investments, any other property you've. okay.

And total it all up. Now, the next column, I want you to rate all your [00:43:00] liabilities. So if you've got a mortgage, if you've got any loans, any credit cards, any student loans and with your all people money, that's good in the liability, common and add all that up there. If you subtract the liabilities from the assets, what that gives you is your net worth.

Okay. I like part of me is like, that's an American thing. I don't really want to get into that but trust me. All right. This is a good number to know, because you know, the top of your plan, you've written August 2022, and there's going to be an August, 2023, one that's that. And 20, 24. And seeing that number change mm-hmm is it gives you a sense of progress and you can, you can feel yourself moving forward.

Yeah, because we all have so many segmented financial arrangements. It's difficult to look at it as a whole. And this, this number is just the thing that says I'm going in the right direction for 

Catherine: what I want. This is your tree landmark. [00:44:00] It is . So we are going to leave you guys to make a start on that. Um, I, I title my columns, what I own and what I owe.

Simply, you know what I'm like with words, assets, and liabilities. They're just like big, heavy words, liabilities. Um, I own this, I owe that. I take one letter change. It's very, take one 

Julie: from the other on the input. That's what it says. 

Catherine: Yeah. yeah. So, um, but I'm, I'm with you on the, the net worth number that you've got that progress, because especially if you've got things in your O column and it can feel like you are in debt, um, that you don't feel necessarily like you've got that progress, but when you see it taken away from what you own as that, that net worth, you can see that moving, um, that I think also motivates us to, to work on the two sides of that column [00:45:00] to, to increase that.

Julie: Yeah. And what I would say as well is if your network's coming out as a negative number, don't worry. Nope. Okay. Lots it's lots of people are circumstances that take that. That's their starting point. Yeah. So particularly there's some professions when you come out of university, and you've got so much debt and it takes you while to get into the earning capacity.

Don't worry if you're in a negative because getting to zero is going to be such a bloody brilliant achievement and then pushing on that'll feel easy after getting yourself to zero. 

Catherine: Yeah. And if you've done it once and you're at that negative, you've now done the hardest bit, because you've faced that, that tough number.

Um, and there's just loads more room to. so, um, after we'll leave you guys to, I think you might need a little bit of time, um, just in terms of grabbing those numbers just before we move on to the next one, um, you should get annual statements from your pensions. Um, if you've got [00:46:00] any good apps that you're using, um, that you can pull that from, um, up for a rough idea of your house value, um, you should get your mortgage statement, come through at least annually.

So have a look around, maybe create a little bit of a pile of weight, going to keep those numbers. Um, but they are all accessible. It might just take a little bit of time on the first go to, to get them. And as they come through the post, when they come through, see them as a positive. So the next time that statement comes through, pop it in that pile for when you review your, your net wealth.

Julie: All right. Fantastic. Okay. So we've had a look at all this stuff you've got. Okay. Next step. I think this is step number four. Okay. So I think we've, we're about to hit another golden rule, Catherine. Oh, another golden rule. Okay. So the next stage I've called it in my own, very unique level way, spending awareness, which is me [00:47:00] trying to avoid the budget.

 You need to be aware of your spending his golden rule spends less than you make, right? Yeah. If you can do that, you are, you are on course to be happy. . But yeah, you, you need to be aware of what you're spending and what you've got coming in. And this isn't, you know, this is nowhere near the, I spoke to as bad, the painful process that it used to be all.

You don't need to sit down and go through bank statements anymore. We've got apps that do this stuff by you that will pull the data out for you. Or as you know, we are Starling fans, Starling will do it for you. Yeah. But just, just be aware of how you are spending and just having that awareness will help you figure out, well, I might go back to step one.

Why is money important to me? What are my values and all that stuff. Mm-hmm then look at how you're spending money. Is there a disconnect there? 

Catherine: Yeah. A good question to [00:48:00] ask yourself there when you are spending, is, does that, does that take me nearer or further away from this destination? Would I rather spend, is spending it somewhere else?

Or spending it into my savings, going to help me get to that destination quicker. So you've almost got a test each time you go online or you're out and about just before you're hit by it. Now, does this take me closer or further away to my destination? 

Julie: I text that last 

Catherine: night. Well, we, you weren't on Amazon again.

Where I was on Amazon. I am going to; I'm going to reduce their profits by slowly weaning you off . 

Julie: So my Air Pod case is getting a bit shabby looking. I thought, oh, do I want a little skin for an Air Pod case? And I thought. leave it in the basket, leave it in the basket and see what happens. Come back to it in [00:49:00] 24 hours 

Catherine: cooling off.

And like, did you, have you decided, are we still in the 24 hours? Oh yeah. We're still in 24 hours. We're still in the 24 hours.

um, I, I did smile when you said spending awareness, because firstly, it made me think of a naughty driver's course, because it sounded like speeding awareness. Um, but awareness is really key. Um, and I think it is a more gentle term than budget or spending plan. Um, there are loads of apps that do that as Julie's told you.

Um, now normally we do share an app with you. So can I share a suggestion for this week's app? Go for it, Catherine. Okay. So this one isn't directly available to us as individuals. This is via your employer. So if you are a business, this is something you might want to look at for your employees. If you're an employee, this is something you might want to go and ask your employer to, to roll out.

Um, and it actually is an app that allows you to create your own financial plan [00:50:00] and allows you to connect via the open banking to your pensions, your ISAs, all of your other banking and saving, and automatically, for example, increase your workplace pensions or salary sacrifice. So it's a lovely little app and it is paid for by employers, for employees, uh, for financial wellbeing.

And it's called Margie M a J I, um, I think it fits nicely with. The way, Julie and I approach things that there are coaching journeys and a financial plan. So just something to consider, but that is my top app recommendation for this week's episode. 

Julie: Right. Fantastic. Katherine, thank 

Catherine: you for that. Yeah.

You're welcome. So we are on spending awareness. What's next. 

Julie: Okay. Next as it's your, what if game Catherine? Ah, so we are having a look at, we're trying to figure out what have we got golden rule. Let's try and spend less than we make, and then let's protect what we've got. So it's asking yourself what if I die?[00:51:00]

What if I can't work? So it's, what if I partner dies? What if my partner can't work? Whatever, it's the, what if game? Yeah. And then getting whatever amount of, I. To protect you that you can afford and feels sensible to you. Right. It's going to be different to everybody, but it's what feels right to you.

Exactly. 

Catherine: So what can't you afford not to protect? Might be another question. So, I did a poll recently on, on my social media and the one that came up for most people was the one that would hit the most is if the income stopped. So what if my income stopped? What if my partner's income stopped through?

And I think it's one. That is really well worth considering the impact of that. And can you afford to take that risk? Can you versus can you afford to cover that [00:52:00] risk? Um, so the, what if game is lovely, my youngest son refers to protection as the shield. So he's got this little idea that we are the person on this journey and that protection is your big superpower shield.

That's going to protect you from the stuff that tries to derail your plan, financial planning from a 12-year-old 

Julie: I like that. Okay. I'm going to do one there's controversial things now. Okay. All right. So if you're looking at your financial planning, you're like, okay, protection thinks she's talking about protection.

What does that mean? Right. She means life covering income protection and critical illness, all that kind of stuff. Okay. right. So if you're like, okay, I've got some gaps there. Okay. See, sorting this stuff out. Some of it is really simple. You don't need a financial advisor. okay. There are loads of websites out there.

Particularly life cover is a very simple thing to organize. So if you go on to the money saving expert website, okay, that'll give [00:53:00] you a list of brokers that you can go to direct and organize these things. All right. And the reason I say that is because sometimes come to see a financial advisor or a financial planner, whatever we're calling ourselves this week, it can be a bit daunting, right?

You don't need us for everything. Right. What I would say is if it's looking to protect your income, right, I'm going go out in a limb here and say, get, get financial advice to do it for you. That stuff's complicated. Alright. And we, we are going, we are going to make sure you end up with the right thing for you.

It would be quite easy for you to accidentally go and get yourself the wrong thing. That will not work. Okay. Like for a dead easy, go start out yourself. Alright. And a little bit more sexy. Probably come and get one of us to do it. We know what 

Catherine: we're doing. Yeah, but I think that's, um, really important to, to say is there's a lot of elements of money in finance that are very straightforward.

Um, often the, the emotions and the language are the things I've got the way to make it seem more [00:54:00] complex, but it is straightforward and everything that we've talked about so far spending plans, choosing your bank accounts, your savings, even beginning your investments and straightforward insurance.

Absolutely. Don't let that be an obstacle for you. You can do that. Um, and we've done enough podcasts covering some of these products and the rules and the things you need to know, go back and listen to them all. Um, you'll be an absolute expert in pensions license, IRS investments. So you can do this yourself.

Julie: Yeah, absolutely. Okay. So it wasn't that controversial? Not at all. Not at all. Excellent. Okay. You were protected what we've got mm-hmm to a point that is sensible and achievable for us. okay. So next thing is, if there's debt, let's talk about the debt. Let's have a plan for the debt. What your thoughts?

Gavin. 

Catherine: So when I hear the word debt, I immediately break it into [00:55:00] to two, because I think some debt is part of this. A mortgage would be a classic example. I'm going to live in a house in a place I like to live, um, in a home that I love for my children. And if in order to do that, I'm going to leverage some debt. Then to me, that's part of the plan, um, unsecured debt or the high interest debt.

Um, I personally no longer have. Um, so I think there is definitely a place to start in. Is that serving you? Is it costing you too much? Do we need a plan to pay some of this off sooner? Um, oh, I was going to say about investments then, but I'm going to pause on that. I'm going to pause on that. So yeah, I think the first thing is to, is identify what type of debt you have.

Is it one you're comfortable with it serving your journey or is it one that actually is getting in the way that you want rid of? And if so to the latter, then how are you going to approach breaking that down? And that is a, a mini goal in itself [00:56:00] emerging one of the goals along your financial plan. It's potentially to clear that down.

Um, and then it's a bit of a calculation kind of the opposite calculation to the savings calculation. Would you say Julie? 

Julie: Yeah. And I think the thing is, so the big red flags on debt where you make like, okay, when I take action, here is it's normally credit cards or pay payday loans, store cards, things like that.

Okay. So with a personal loan or with the mortgage, you've got a set term and an interest rate that's usually fixed. All right. It's the other ones where it just kind of waves around. So these are the ones you want to target. If you've got some outstanding balances, let's have a plan to get rid of them. So golden rule, number one, at least make the minimum payment direct debit.

But so that, that is done every month without fail. So you are not messing up your credit score. Now if that's all you can do right now. Then part of your plan should be to, to work towards getting that done. So even if it's just an extra five or a month, to start with. [00:57:00] And because remember it's just little steps, right?

Cause it's five in this month and then a couple ones might be a 10 and then we could maybe 50 pounds, but it's working towards getting rid of it. So it needs to be in the plan. 

Catherine: Yeah. And I think that's costly, there are a couple of ways of approaching it. Do you pay off the high interest once first?

Do you pay a little bit off everything, but like Julie says minimum payments on everything as a minimum, but that's not going to pay it off. That's just going to keep you treading water. Um, so, and it can be done and it's, I think it's that same emotional relief that when you try and imagine having savings it, when there's a big number and we are sitting here where we are today, it can feel overwhelming and over facing, but those little consistent steps that Julie mentioned it can be done.

It will be. And that's one of the milestones you're going to pass through on your financial planning journey. 

Julie: All right. So what have we done so far then? So we've looked at all the stuff we've [00:58:00]got. What do I own and what do I hope? What have I got coming in? What have I got going back out again, protecting what I've got looking, we're looking at the debt.

I guess the next thing is to look at savings. Don't, don't be like the very experienced financial advisor, like me that didn't have much in cash, because I was all about future security. you want some money in the bank folks? 

Catherine: There was a survey. There's always a survey, but Lloyd's revealed this week that it's a ridiculous large percentage of us have less than 500 pounds of savings.

So if that's you, you're not alone. I've been there and I think this is that same attitude. It can change and it will change, um, with, with the consistent steps. Now I'm just going to. Pull you back on Julie, because when I was talking about debt and I was starting to think about investing, and I think it's the same about savings.

If you've got debt that does not mean you cannot save, it does not mean you cannot invest. It just means you're going to have to make a trade off. [00:59:00] Looking at which one you're going to prioritize in what amount, but if you've heard the, the myth, um, that you cannot invest or save, if you've got debt, I would really challenge that because those cash savings that cash cushion is what will prevent a future debt.

When one of those, what ifs, um, comes your way. So I do think this is a two-pronged approach of paying down debt and building. We agree. Oh, good. 

Julie: we're like anti, Dave Ramsey. Aren't we? Yeah, got to be honest. So like being practical, let's say you're sitting there and you're going through this process, and you've realized, right.

Okay. I've got a hundred pound a month. I could allocate to some of these many goals. Mm-hmm so it might be this credit card balance that needs pay off. It may be that you wanted to build up some cash savings and it may be that you wanted to buy some extra protection. You're like, okay, well I put, do I put the whole hundred pound in something?

Okay. Catherine, I Catherine. And I [01:00:00] say, no, may not send the whole hundred pound in the debt. Are we. No, not di up between those three goals and a balance that feels right 

Catherine: to you. Yeah. And review that because as you, as you pay one of those little decks off, you're going to move a bit more over to savings. Um, or as a, a different, what if comes then you're going to review your protection.

So this is a kind of moveable feast. Um, and I think this is that the rule that we often talk about in investments, I it's diversifying, it's diversifying your own finances to be prepared for lots of different things. So yeah, if you've got a hundred pound, even if you've got 10 pounds, um, whatever it is, take a proportion and put it toward the different mini goals.

Julie: And I don't know if it's just, it's a mindset thing as well, because this is a personal thing. You can put the whole hundred pair what she did if you want. Okay. But from my experience of rocking with clients, and I think Catherine's going to be the same as well. that while you are just focusing on the debt, you are spending [01:01:00] longer in the mindset that I am a person that is in debt, and it's longer where you're not thinking I am a person that saves.

Hmm. Yeah. And so you become conditioned and it's taking you longer to get to the point where it conceptually that you could ever believe that you're someone that has savings. 

Catherine: That's a really interesting point. Um, and you're building a habit from that mindset of paying debt off. Doing it with this suggestion of approaching both, you're also building a habit of automatically consistently building savings.

Um, it's interesting. I was going back to our columns of what I own, why owe with a focus on that net wealth net worth, um, you, the net worth would be the same whichever outcome aside from investments you took, wouldn't it, because if you pay the a hundred off on debt, you reduce the O column and the, the net worth changes.

So that's still going to progress in, in the same way, but it's very personal, very personal. It's your a hundred [01:02:00] pound. It's your debt. It's your, your plan. Um, and it's your savings. So just sit back and maybe weigh up. Is it more important, um, to you to have the security of having a little bit more in cash, or is it more important to you to feel released and free from, from your debt?

Julie: Hmm. I think, I don't know if you've seen this as well, but I know certainly with some of the people that I've worked with is that when they've gone for the debt first and then the debt gets cleared, mm-hmm more debt 

Catherine: appears. Yeah. And I think it's because that has been the goal. I 

Julie: pay off debt and now the debt's been cleared.

Okay. I need to go get more debt so I can pay it off. 

Catherine: Exactly. So, I mean, that goes back to what you just said about mindset. Um, what I've said about those daily habits, that this is the habit we've got. And also what we said earlier about the, the brain will look for proof. It's looking for this thing that it does.

Um, so there is a lot of merit to splitting it into the two different habits. So I am a saver. I've [01:03:00]cleared my debt and I am a saver. Okay. 

Julie: So I think we're kind of onto the last, last leg now, which is all about the building. Well, so it's having savings and sort of starting to invest as well is sort of the final steps.

Catherine: Yeah. Yeah. Now. again, where do you, when do you start? Um, so I would say that even if you have debt, as long as it's not uncontrolled, and it's not particularly high interest, that's not a reason necessarily not to invest because I still would say save before you invest. Make sure you've got that cash cushion, but don't say if you're finding I've got debt, therefore I'm not ready to invest.

That's not necessarily, so it might be in your case, but it's not necessarily. So, so if it's controlled, if it's low interest, I still think that there's an argument to invest because we know going right back to the commodities involved in your financial plan, that time is a really key [01:04:00] commodity. And we know with investments that the longer you invest for the more likely you are to, to build that wealth.

So that would be my first point. Don't write it off just because there are, is still some debt. And I know that that is not what all financial plans the advisors would say. That is just. My opinion. 

Julie: I agree. 

Catherine: Oh, we're doing really well today. Them actually not, we 

Julie: done anything, you know, we were checking before we started.

Are we on the same plate on the same page, right? Yeah, we are. Thank God.because it's only one page. It's the one-page time 

Catherine: yeah. Yes. But yeah, they're on the same page on this, so yes. And I think this is also just to talk about what you said earlier that a small action is better than no action. Um, and this is something you can do yourself.

So if you have no investments, it doesn't mean that you, you can't do it. Uh, there are, there are ways and means we've done some episodes on investing itself, so do pop back and listen to those. Um, and we'll probably come back to it again, but just for today's financial plan and [01:05:00] investments, um, any guidance from you, Julie?

Well, I 

Julie: think so we're talking about building up cash savings. Okay. One of the things I would say is go back and listen to our episode on emergency funds. Okay. Because that's going to give you some really good tips on how to start building up your cash in the bank. So there's loads of things there about automating about main set, about round ups, all these cool little things, all those little, tiny, tiny things that get you to the point where you can afford a 10,000 pound car problem.

But we don't talk about that anymore. so, yeah, so gate cash sorted, and then the next bit is the savings and is the investment be, okay? This is not as complicated as people would have you believe mm-hmm okay. Because I see people agonizing a, I see financial advisors agonizing. Well, should we use the ISR should be used a pension.

Okay. Guess what I'm going to say? 

Catherine: Uh, both yes. [01:06:00] And instead of, or I think actually what you were going to say was that you want an ISA and 

Julie: a pension okay. So I think we're about to stumble upon another golden rule. Okay. Golden rule alert, auto enrolment workplace pension. Just make sure you're in it. Mm-hmm so all the reasons we've previously mentioned in the pension episodes is free money.

Get all your free money. So make sure that you are auto enrolled in your member of the workplace pension, where that's available. okay. And then with any extra cash you've got is right. Well, do I go down the pension? I do go down the ice route now where people start to get a little bit mm. Going down the rabbit hole is okay.

If you are a higher rate taxpayer, then yes. The pension is the more attractive option, right? From a calculations point of view, because you're going to get higher tax relief, but that money is then tied up and you can't get at it, and it'll get taxed on the way out. Okay. Whereas if you go down the IR, okay, [01:07:00] you've got a lot more flexibility and you can get it soon.

You can generate a tax-free income. So that's why we're saying and not all 

Catherine: have them both. Yes. Have them both. And I think this is it's another trade off, but this is where you come right back to the beginning. Questions of what what's this for? What's the purpose? Um, Where's the destination, because if your destination, you need to get there before you are 57, which is what it's effectively going to be in a couple of years, then the pension's not going to help you with that at that time with that particular achievement.

But it is definitely going to help with anything post that age. If you've got milestones along the way, where you need money sooner than your, your pension age, then it might, you're going to weigh up. I just see it like little scales. I'm doing this with my hands, like Libra, um, to which part's going to go to which part.

Um, so go right back to, to what you're doing this for. What's that tour of Europe, that those destinations you're going to have [01:08:00] along the way, and that's going to just help inform you, um, and help you make a decision based on how much goes to here and how much goes to here. Um, but yeah, I would definitely say.

And, um, and then, you know, if you've got a house you're buying or your children are buying along the way, then there's other choices with ISIS. So don’t look at it in isolation of the product. Look at it, this together with the purpose. 

Julie: Yeah, absolutely. And then depending on your age and eligibility, so I've mentioned pensions and iOS.

One of the other things you may want to look at is, is the lifetime ISR. Okay. If you, as old as me, you're not alone. One okay. If you are younger than me, you might be a load one. Okay. And then let's say you're sitting there. You're like, okay, this is great. You've told us a max out there. So max out the pension, I really hope you were going to tell us something else.

Cause I'm doing that already. Okay. If you are in the position where you've already done this. Okay. The next uncomplicated step. It's just a general investment account. [01:09:00] and if it looks like you're actually going to end up triggering cattle, gas tax. Okay. It's at this point you probably do need a financial advisor because everything I've mentioned so far, you can do yourself.

But once we've got to that stage, bring in one of ours in we'll actually pay for itself. Yeah. Because the things that we can do to save you tax will off whatever fee we charge you. So that's, that's when you get as in. Yeah, 

Catherine: but I think if you're at the beginning of that journey and you're just starting ISIS, potentially license pensions, then certainly there's enough information out there.

If you educate yourself enough, um, you're willing to learn for you to do that yourself. Um, anything complex comes along the way an inheritance or you've maxed out one of those, or you think that you might be having a trickier, complex issue then? Absolutely. And I think advisors were a little bit like accountants there aren't they [01:10:00] is, you will get back more than you pay in a fee.

So don't let the fee be an obstacle. I 

Julie: raised my eyebrows there, that financial advisors are like accountants. I'm like, no, we're not. We're like the V styles of financial 

Catherine: services. When I said like accountants in terms of saving the money. So, you know, if this was, um, that roadmap, we should really just do this as in my head now, like a board game, um, this little game of lifestyle thing, um, that's just going to be one of the, the mini road diversions along the way.

But you 

Julie: know, what I can see is, and the car that we're using is the mystery machine from Scooby do. Oh, 

Catherine: is it maybe the fees, like the toll road, you pay the fee, but you'll get there quicker. like the end of six, right? 

Julie: We're in danger going off on a proper tangent now. Okay. But I think we have covered all the key points now.

I just, there's just one more thing. Right. So Catherine and I have been talking haven't we C. 

Catherine: I always look suspicious when she [01:11:00] says this, because I know all the conversations that we have had. So it's like, well, which ones 

Julie: coming back should go anywhere. Couldn't that right now. So it won't be long before we hit our 50th episode of the women and money cafe.

And we, we arrange a couple of things, kind turn out the occasion to say thank you to everybody that's getting involved. But one of the other little projects we've got on the go is kind of helping you guys build your own financial plan. So we will bring more news to you as the idea germinates and evolves.

But if you would be interesting and finding out more on how to build your own financial plan with me and Catherine 

Catherine: drop as a message, you've got the yin and yang financial planners together in one room. Um, so yeah, please do drop us a message. I can, I just wind back one thing, because I think we've forgotten something.

Did. 

Julie: Is this going to be wills? 

Catherine: Yeah. Okay. so go. If we've got our protection, I really, when you're doing this plan, um, you, you have [01:12:00] to write the, will go back to the will’s episode, uh, go back to the family legacy episode. Don't let cost or the fact you don't want that conversation because there's nothing that can derail your financial plan for your family quicker than the not doing that piece of estate planning or will planning.

Um, so that's all I'm going to say on that. 

Julie: Okay. Well, if you're having your moment, I'm going to throw in power of autonomy. Go for it. just rate it down. People you need a will, and you need a power of attorney. Just trust me. You need these things. 

Catherine: Yeah. Yeah. So, but I think that just, hopefully you've got to the end of your, your one page, even if you've not got all the numbers, but maybe you've just got a little bit of an exciting idea, a seed planted for.

What your plans are, what your purpose is, what money means to you. What's that root and destination going to look like and then started to add your guesses, your best guesses and. [01:13:00] Become more concrete from there. Um, so hopefully you've got to that. Any issues, any questions, anything you didn't get drop Julie and iMessage.

The email as always is in the show notes. We'd love to hear from you drops a voice clip, drop us a note in Facebook or on Instagram, um, and stay tuned for the financial planning with Julie and I, as we reveal more over the coming weeks. Thank you very much, Julie. Oh, thank you, 

Julie: Catherine. It's been fun.

Catherine: Thank you for listening to the women in many cafes with Julie Flynn and myself, Katherine Thomas Humphries, while we have a lot of fun running the cafe. The reason we do this is to reach as many women as possible to empower them in and around money. So if you know a woman that would benefit from feeling financially empowered, you can help us to help them by sharing the show.

There's nothing we'll love more than hearing about the changes you've made. So please drop us a voice note and share. At hello at women and money [01:14:00] cafe. We'd love to hear from you. You've just been listening to our financial chat, but please know that none of this constitutes personal financial advice, please reach out to one of us or any of the other fantastic financial advice in the UK for this kind of specific help.