Sweet Dreams (just not about stock markets)

Starting out on your journey to long-term financial happiness (whatever that means to you) is dang hard.

The media certainly doesn’t help; in our industry we have a propensity to over-egg the bad news and under-play the good news.

The saying bad news sells newspapers is ne’er truer than in good ol’ financial services.

Let’s face it.

We are bombarded every almost every day with news headlines of rising interest rates, crippling mortgage payments and more government personal finance U-turns than a cul-de-sac 🤦

It certainly doesn’t inspire confidence to supercharge our financial life plans and GFSD (Get Financial S**t Done).

So what happens?

Human tendencies happen, that’s what!

Many continue to exist (happily) in a temporary state of in-decision and convince themselves ‘I’ll start tomorrow’.

Spoiler alert – tomorrow’s best intentions rarely materialise.

And trust me, I know … paying more into your pension fund or having a disaster game plan in place (more on this below) ranks pretty low on most people’s priority lists.

In fact I imagine it ranks somewhere between cleaning the skirting boards with a toothbrush and phoning Sky (other broadband providers are available) to haggle over your latest eye-watering, soul-crushing 30% price increase.

So … this leaves the financially astute among us feeling pretty smug when we start out on our financial journey and leave the financial illiterate behind.

The trouble however is these do-gooders often run before they can walk.

Does this sound like you?

For those that do manage to tune out the noise, the first step taken by many will be to start dabbling in the stock market.

Your friend Sarah’s cousin’s dog’s budgie has heard on the grapevine about the next ‘hot trend’ to throw your hard-earned money into (*cough – cryptocurrency*). 

And you diligently follow suit.

This month’s investment prediction: bird seed

I’ve seen it countless times.

‘Benjamin – i’ve got a share portfolio which i’m saving £500 per month into. Aren’t I so clever?!’

Whilst it’s great that you’ve made a start on your path to financial freedom, investing before you’ve got proper foundations in place is equivalent to running before you can walk 🏃🏻

We love acronyms in financial services (🥱) but this is the only one you need to remember.

I promise.

And it’s something we all love:

B.E.D 🛌

The simple rule to remember is: don’t start dabbling in the stock market if you haven’t put these 3 things to BED first:

🛌 1. Bad debts

Pay off any nasty, costly debts you have before you drown in interest charges.

If I had a penny for every time I’ve seen people investing in the stock market every month while at the same time sitting with hefty credit card debt then I could pay off said credit card debt twice over!

🛌 2. Emergency fund

Have a rainy day pot set aside to tide you over when 💩 hits the fan.

Normally 3-6 months of your typical household expenditure should be sufficient.

And keep it in easy access, liquid cash accounts.

Cash as an asset class is to be there for emergencies and short term living. It doesn’t have a place in your long term financial plan.

This isn’t an investment play, it’s merely a home for savings.

🛌 3. Disaster game plan

Make sure you and your family have a plan in place should the unthinkable ever happen.

I know these things aren’t pleasant to think about.

And dabbling in the stock market is a lot more fun and sexy.

But without a disaster game plan in place you’re building a stool with 2 legs…

It just doesn’t add up.

Have adequate cover in case of death or illness so that if any unpleasant shocks do strike then your long term plan won’t be affected.

Paying for insurance is the best waste of money you’ll ever spend.

If you’ve already plugged these gaps then you can justifiably feel smug.

You’re already way, way ahead of the curve.

Too many wannabe investors dive in at the deep end.

Too many run before they can walk.

When it comes to starting out, keep it simple.

Tune out the noise.

Tune out any budgies.

And head to BED.

Sweet dreams.

Benjamin

Benjamin Mitchell

Benjamin Mitchell

I’m a chartered financial planner that can help you plan for tomorrow and also live for today.

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