This content is for information and inspiration purposes only. It should not be taken as financial or investment advice. To receive personalised, regulated financial advice please consult us here at Elmfield Financial Planning in Padiham, Burnley, Lancashire.
Steve Jobs once said: “If you really look closely, most overnight successes took a long time.” This grates with our digital culture where we expect everything to happen now, or quickly. Yet the greatest monuments, companies and life stories have involved building over the long term – repeating efforts day after day. How can we bring this kind of discipline to our finances, and what kind of results can this produce?
Here at Elmfield, our financial planning team in Padiham, Burnley, Lancashire offers reflections on this important subject. We hope you find this content useful. If you’d like to speak to an independent financial adviser then you can reach us via:
T: 01282 772938
The power of thinking long term
Investing is a good example of how a long term approach to money can yield great results. Suppose you have £10,000 in cash which you invest into an equity portfolio, averaging 7% returns over the next 30 years. At this point, the pot could be worth £76,122.55. Imagine the things you could do with that money!
The issue we face, however, is the urge to engage in instant – rather than delayed – gratification. Yes, £76,000 would be very useful in 30 years, but it could be enjoyed now; spent on a long holiday or a nicer car. This represents how many people think about money. There is a rush to do things that give pleasure quickly, with little effort and which do not require patience.
However, consider that delaying gratification does not just need to be about enjoying something in the far future. In fact, the anticipation of waiting for a future reward which you look forward to can be very pleasurable in the here-and-now. There is also a sense of reward in mastering your desire for instant gratification, so that you control it (not the other way around).
When the reward does eventually come – e.g. a £76,000 investment pot which you have waited 30 years to access – it typically feels all the more pleasurable. You feel like you have earned it, and you likely have much more clarity and peace of mind about how you want to use the money (a much better mental place from which to spend money, rather than making a rash purchase).
Finding a healthy balance
Many people like to categorise themselves as a “spender” or a “saver” – the former stressing why we should enjoy the “now”, with the latter emphasising the importance of setting aside for the future. Yet the subject of wealth and money does not need to be so binary. In fact, there is a good case for striking a balance between the two. After all, it is important to enjoy life in the present moment by spending money (which you have set aside) on things like hobbies. Yet having a long term financial goal and a plan to move yourself towards it – e.g. by saving every month – is also wise. Having a “long term mindset” about money, therefore, does not mean you need to strip away all of your discretionary spending right now.
Paint a picture of your future
What do you see when you think about your future in 10, 20 or 30 years? If you look at your actions, values and character right now, how confidently can you say you will arrive where you want to eventually go?
Realistically, you are unlikely to achieve your ideal future with no effort or planning. Think about the different spheres of your life. Physically, how healthy do you want your body to be? Mentally and intellectually, what ideas do you want to learn and which skills do you want to master? With your relationships, how do you want these to look (e.g. marriage and children)? Financially, do you have a particular lifestyle you see yourself enjoying and what kind of wealth might that need to achieve? Asking yourself questions like this, perhaps once every month or two, is a good way to focus your attention on the future, paint a picture of what you want it to look like and identify what is needed to help get you there.
Finding inspiring role models
Who do you look up to? Perhaps it’s a great parent, a successful friend or an historical figure. In all likelihood, they are inspiring to you because they made sacrifices which resulted in notable achievements. Identifying good qualities in others and seeing the fruit of them can be a powerful way to motivate yourself to think about finances from a long term perspective. For most people, building wealth takes time. Whilst you should be careful not to compare yourself to others, it is only natural (and noble) to note others’ successes and ask yourself how you can emulate the qualities, values and behaviours that could help you move towards your goals.
Invitation
If you are interested in starting a conversation about your own financial plan or investments, then we’d love to hear from you. Please contact us to arrange a free, no-commitment consultation with a member of our team here at Elmfield Financial Planning in Padiham, Burnley, Lancashire.
Reach us via:
T: 01282 772938
