Taking stock.

  • Source: Scotland on Sunday
  • Date: 1 August, 1999
  • Author: Antonia Swinson

Last week there was much scoffing in the media about the Government?s annual report. Perhaps this arose from the juxtaposition of its publication with Tony Blair jetting off to Chiantishire. We don?t like our leaders to enjoy themselves. For me, ?2.99 price tag was a cheek. Presumably, the message is that we are buying-in to UK plc, so whoever heard of shareholders paying for an annual report? The content naturally sparkled. Retaining the state earnings related pensions was apparently a pledge delivered on. 'Kept' it said, in spite of Serps being abolished in the next parliament. It might as well have said 'Sorted,' so matey was the inclusive English.

Yet PR gimmick though it was, the idea of doing an annual report at this time of year is inspired. When the sun is managing to shine even in Scotland and you can slob about in shorts, now is the time to audit your own financial position, benchmarking it against last year and setting targets for next. This exercise has to be done at some point. March is when newspapers usually say we should assess our wealth and invest money to mop up our tax allowances. In reality most people I know are still paying off Christmas and, if we are self employed, January?s tax too, so these exhortations seem irrelevant. Other natural breaks are Christmas (too expensive) and Hogmanay (too sloshed), so summer is best for financial MOTs, before the kids go back to school and we have to dig out the balaclavas. Avoid your IFA when doing this, it is a very private exercise. "This feel-good boom is really just built on financial products flogged to people like me, a friend said last week" All my money just goes out each month, but am I making progress?? That?s the really expensive question.

We are a nation of green-eyed monsters, and too often we look over our shoulders while assessing our own personal wealth. Last week, the Joseph Rowntree Foundation Report Wealth In Britain: A Lifecycle Perspective showed that the average British family is now worth ?50,000. Top of the heap of course are the retired at ?164, 000 who have paid for both homes and pensions, while bottom of the heap as you might expect are the young single (?1500) and the single parents (?4,000). Reading such reports invariably produces strong emotions of smugness and envy, whereas your own financial progress is only accurate and effective when benchmarked against your wealth as it stood the previous year.

Kick off by listing your property?s value (honestly) minus mortgage, value of pensions, investments and saleable assets (avoid all Antiques Roadshow salivating). Then count total year?s debt before tackling ? Income. This we tend to lump into wealth, regardless of real spending, particularly if we have pay rises or promotion. But income is a quicksand of self-deception. Instead, benchmark outgoings. Direct debits on utilities etc. are easy-peasy . It?s those anonymous cashline withdrawals and what they are secretly spent on, which is the nub of our monthly financial profile. Most of the time of course we don?t want to know. It looks too debauched/self indulgent to say wine ?70 pm, chocolate ?20, clothes ?100, cosmetics ?50. It always starts a row too because he never understands your spending needs nor you his. But persevere, even if you find your income turns out to be just a generous donation into the pot ? the rest made up with plastic and overdrafts.

Another survey last week for Abbey National ? what a time of year this is for surveys ? showed that the average working family is richer than ever but time-poor and is currently spending ?5k+ pa in services to save time including a cleaner, two carry-outs a week, ironing, and hired help for DIY, gardening etc. I thought this figure rather conservative given the other needs ? clothes, shoes, post-work alcohol, office meals out etc. Interestingly, 30% of the 1000 adults interviewed by NOP said they did not have time to manage day to day finances. Another indication that working full-time costs you money.

Whatever unpalatable truths are revealed, it has to be better to know the truth, because there always has to be a reconciliation somewhere down the line. Overspending now by just ?200 a month, even if part of this involves saving virtuously in tax free vehicles, could well turn out to be that remortgage in 2004. Ignore the temptation too to spend just because house values have risen, for unless you wish to cash in and move to a Highland croft, it doesn?t mean much. Real wealth comes from feeling in control, knowing the reality of our financial position however challenging and placing it along our own time line. We also must divorce our own reality from the parallel universe of those perhaps 30,000 senior professionals in London and Edinburgh, who at the moment are earning life-changing money. Most of us are not spending our evenings on-line playing U.S.style with our portfolios, so we cannot afford to believe all the rosy financial headlines ? the economic cycle has not been abolished no matter what the new paradigm punters might say ? any more than we can afford to believe all the Government tells in its annual report.

Monday, 11 December, 2017
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