22 July 2021
One of the most common questions that clients ask us is: “will I run out of money?”
Many entrepreneurs and company owners work long hours in their business for years. You perhaps consider this a labour of love or your passport to a long and comfortable retirement. You might just do it because it helps you and your family afford the lifestyle you want to live.
Many business owners get caught up in the relentless pursuit of growing their business and adding value. You might justify years of 60- or 70-hour weeks by saying that it’s all going to be worth it when you come to sell the business.
But what if you’re exhausted and stressed by the time that happens? What if your children have long grown up and left home? And what if you’ve run yourself into the ground so your health won’t let you do the things you want?
As writer Mark Twain once said: “Twenty years from now you will be more disappointed by the things you didn’t do than by the ones you did.”
If this sounds like you, there is a better way – and this is by focusing on “enough”.
A cautionary tale
Carl, a 55-year-old entrepreneur, owned a successful engineering business. He worked long hours and barely took a day off, trying to grow sales and add value.
One day, a buyer offered Carl £1.5 million for his business. On the advice of his accountant, he turned down the offer. The accountant believed it was much lower than the £2.5 to £3 million Carl could achieve in 5 to 10 years’ time.
So, Carl continued being a servant to his business for another decade, working 70-hour weeks without a break.
Meanwhile, Clare – also a 55-year-old entrepreneur – owned a similar successful business. She also worked long hours, spending little time with her family.
One day, Clare was also offered £1.5 million for her business. Instead of consulting her accountant, she spoke to her financial planner. Her planner used sophisticated cashflow modelling software to determine exactly how much Clare needed to live the lifestyle that she wanted for the rest of her life.
After modelling a range of scenarios, it was clear that £1.5 million would be enough for Clare to do all the things she wanted to do without the fear of running out of money.
So, she sold the business and spent the next 10 years ticking items off her bucket list.
How focusing on “enough” can help you live the life you want
Back in the days of old-school financial advice, it was quite likely that your adviser’s sole focus was on the performance of your investments.
Your reviews were probably all about which funds your money was invested in and how stock markets were performing. The focus was on growth, and about accumulating “more”.
But what is the point of simply growing your wealth? What is it for?
This is where, as financial planners, we take a different approach.
By establishing what it is you want to do with your life, we can help you to arrange your finances in a way that support these goals. Your money is a means, not an end in itself. This is where the concept of “enough” is so important.
Once you’ve told us what you’d love to do with your life – travel the world, learn new hobbies, spend time with family, help your children and grandchildren financially – we can work out how much that is likely to cost.
We then look at all your wealth, from pensions and ISAs to property. We can also factor in variables such as inflation, investment growth, market volatility and so on.
You can then see, in black and white, whether you’re on course to have “enough”.
As you might imagine, seeing that you have accumulated enough assets to live the life you want without the fear of running out of money can be transformative. Just like Clare in the example above, it could enable you to retire early, and spend the rest of your days doing things that fulfil you.
If you’re not quite there yet, you have a clear target to work towards.
Without going through this process, you’re like Carl. You’ll simply continue to work hard and potentially waste years you could have spent doing all those things you ever wanted.
Get in touch
Many people already have “enough” – they just don’t realise it.
We can help you determine whether you’re likely to run out of money and put a plan in place to help you live the life you want. To find out more, please get in touch. Email email@example.com or call 0161 8080200.
The value of your investments (and any income from them) can go down as well as up and you may not get back the full amount you invested.