Value of Money

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“You don’t know the value of money”

Neil Stewart is a Financial Adviser holding the Diploma in Regulated Financial Planning. This article is not financial advice, it is for your general information and is not intended to address your particular requirements.

“The value of money is relative. A £100 birthday cheque can be undreamed of riches to a five-year-old child and is totally meaningless to a forty-five-year-old billionaire.”

David Bernoulli (Swiss Mathematician)

Whilst we certainly can’t relate to Dr Bernoulli’s example of a 45-year-old billionaire, we will be able to recognise how our view on the value of money has evolved as we’ve grown older.

My youthful exuberance

I remember when I got my first pay envelope for delivering the free weekly newspaper; inside was about £10. It was the 90s and I practically sprinted to the shops to buy a new computer game (Jonah Lomu Rugby).

Of course, even after adjusting for inflation this £10 pay packet wouldn’t excite me today with a family to support and a mortgage to pay.

As my 14-year-old self continued to go to the shops each week to buy more computer games my mother said to me “You don’t know the value of money!” suggesting that I didn’t need more computer games and I should save for something instead. She was right, and I did. (I bought new golf clubs six months later.)

What can we learn from the youth?

Whilst my mother was right, others using this phrase may not be. As children and young adults, a lot of us will have heard this phrase from an older relative; who could argue that the youth do know the value of money when they spend their wages on a new flash car, a holiday to Ibiza, or a few nights out?

But here’s the thing: maybe the spendthrift youth do actually know the value of money better than their elderly relatives think.

I think you can argue that 18–25-year-olds; young free and single, know the value of money better than the rest of us. This group often have zero responsibilities outside of their job. They have no spouse, no dependent children, and no mortgage to pay.

They spend their last penny enjoying themselves without a care in the world.

Not spending money on a holiday or a new car because “they’re too expensive” when you have the means, is the real “not knowing the value of money.”

Without getting into the debate on whether they should be saving for a house deposit, or their future, there is certainly something to be learnt from this group’s attitude to money.

Their Grannies, on the other hand, may be sat on cash (or investments) for a rainy day – whilst this is incredibly important, it doesn’t rain every day.

The solution

At Structured Financial Planning we provide our clients with bespoke financial plans for retirement. We use a state-of-the-art cash flow planning tool to show each client how much they can afford to withdraw from their investments over the course of their retirement, minimalising any fear of running out of money.

We want our clients to enjoy their retirement to the fullest and encourage them to spend their money whilst they are still able.

Probably not on the latest game for the Sega Mega Drive.

Contact Neil for advice on any aspect of your financial planning.

07762 045037