WE ALL have a number – but do you know what yours is? Put simply, your number is the amount of money you will need to ensure you can live the rest of your life in financial comfort, keep living the life you've got or to start living the life you want. It's not merely about survival, but about live life to the full.
The number is different for each of us – it could £500,00, £1 million, £5m, a lot more or a lot less – but whatever it is, you need to know it.
Your number is a completely different way to think about the rest of your life. Everyone should b
e thinking about their number and some do, but not everyone takes action and has a plan in place to achieve their number, while many people don't know what their number is and how to work it out.
Most people do not talk about their number, not to friends, colleagues or even relatives. Many do not even talk to a professional adviser about their financial planning concerns or aspirations. The sooner you think about your number the sooner you can put in place a plan to achieve it, or even how to spend it if appropriate. I've met plenty of people who wish they'd started discussing these subjects years ago.
Your number is in effect your financial planning, which financial planners in the UK have now been talking about for a few years. However, it has at times been difficult to get the full concept of financial planning across to individuals and even to other professional advisers. such as solicitors and accountants.
Financial planning can get confused in with specifics such as pensions planning, investment planning, protection planning, income/capital gains and inheritance tax planning. But the number concept cuts through all the confusing financial, regulatory and technical jargon and focuses on the core of the issue – the amount of money you will need for the rest of your life.
I won't claim that it's easy for you to work out your number, in the same way as I would not expect individuals with complex tax issues to try and work them out themselves or complex legal matters. These matters are better dealt with by your accountant and your solicitor and importantly they will offer you good value for money.
To work out your number you need to work with a professional financial planner who uses the latest financial planning software to work with you in establishing your goals and aspirations and to define the real lifestyle you want to enjoy throughout your life. In going down this route you will explore your detailed current and future cashflow management taking into account your current and future working aspirations, when do you want to retire, and what will retirement look like for you.
People who do this find it an exciting, empowering and fulfilling experience where they take control of their financial matters allowing them to feel "financially well organised" and have a plan in place for the future. As a result they know their number and importantly know how to achieve it or even how best to spend it.
Once you have established your number, it is important to keep it under review and meet your financial planner on an annual basis to ensure your plan stays on track. Your financial planner can also be your mentor and coach, inspiring you and guiding you to where you want to go.
Your number is relevant whether you're retired or still working; if you're worried about inheritance tax; concerned that you have too much risk; want to know if you are "there" yet; or currently "do it yourself".
With the uncertainties and concerns surrounding the current economic climate, there has probably never been a better time for you to start thinking about your number and, more importantly, to take action to establish what it is.
• Garry A Hale is director of HK Wealth Managers in Stirling.
