One of the things that struck me about the death of Queen Elizabeth II is how much a sense of purpose is a great driving force. We saw it with the late Queen, who successfully appointed Liz Truss as Prime Minister just two days before she died. I can imagine Her Majesty’s thought process along the lines of “I don’t have time for this sick thing, I have things to do”.
Various doctors on TV and radio say it’s common for people near death to hang on for a particular reason – a special event like a wedding, for example, or the resolution of an unfinished business.
My grandfather on my father’s side died while my mother was waiting for me. It would have been unrealistic for him to last until I was born, but he left this world knowing that my father was happy and starting his own family. Leaving the next generation in a good place is a huge tick against your current life’s work and then presumably you can afford to leave in peace.
Which brings me to our new monarch, King Charles III. Every time I heard the news around the state funeral, he was traveling around the UK doing this and coming back in time to do it. It is his sense of purpose in his new role that seems to be pushing him and other senior royals through such a difficult time for them personally.
It’s amazing what you can accomplish when you have a sense of purpose. Crowds managed to queue for up to 25 hours to see the queen lying down, undeterred by lack of sleep and the cold, sometimes wet weather. I don’t have the stamina for it, but I wanted to pay my respects anyway and went alone to drop off a floral tribute in Green Park while the kids were at school. The crowds and queues in London would be too much for me if we went as a family over the weekend.
That morning, I got everyone out of the house 10 minutes early, having already cleaned the house and walked the dog. This is unheard of. I usually do everything by the skin of my teeth as I take care of everything from missing shoes to one of the kids remembering that they need a last minute packed lunch.
So what does all this have to do with financial planning? Well, even before the unprecedented announcement that our late Queen’s health was a cause for concern, I thought a sense of purpose was a powerful motivator over money – whether it was to work at beyond the traditional retirement age, save money or pass on wealth to future generations.
I remember my mother’s side of the family pressuring my grandmother, who was well over 70 at the time, to stop working. His answer: “Why do you think I want to be put in the pasture?” She had been financially independent since the age of 14, and work was tied to her sense of purpose and identity. The only reason she finally retired was to care for my grandfather during his illness – again, driven by purpose.
Savings among the older members of my family tend to be for the proverbial rainy day. It reminds me of other things you do because they are good for you in the long run, like eating green vegetables.
It’s a good idea to have some money set aside for the unexpected, because you never know what life has in store for you. But I noticed that my young parents did things differently – they saved for specific things, whether it was new windows for their house, vacations or retirement. Their money has a clear purpose from the start and I think it is easier for them to stick to their financial plans than if their financial destination was unknown.
Of course, the retirement that older generations could expect was different from that of younger age groups. They had defined benefit plans and may also have done well financially thanks to house prices and stock markets.
They haven’t had to think about funding retirement and juggling home ownership like younger people, so putting money aside for rainy days without digging deep into what it might be like. was no problem. They also weren’t brought up in a time when it’s so tempting and easy to spend money digitally, which is a pressure they might not understand.
But now that we’re grappling with the cost of living crisis and the economic environment is deteriorating, saving for unforeseen circumstances that may or may not occur will likely not be a priority for many households.
I’m not saying people shouldn’t put money aside “just in case”. But where money is scarce, having a specific goal for savings is more engaging because it’s tangible. It also makes it easier to compare your choices with other things you could do with your money, which I think gives you confidence.
This is one of the things I found interesting when I first heard about lifestyle financial planning – how the focus shifts away from the money itself, away from how much you have or don’t have – to the things people want to do with the money they have or could have. I had always looked at money as the starting point, so it was refreshing to start from the position of possibilities.
As a child, I had saved in a building society account with no idea what I was saving for and that’s when I first got the idea to save for a rainy day. My mom told me that’s what I did, because I had no intention of spending it on anything. But it just felt so boring and kinda sad.
Maybe I was just a product of the times – after all, it was the “greedy, materialistic” 1980s – but my real motivation to save was to see the numbers go up. I had opened my first account with £70, when my Muppets piggy bank was full, and felt I had achieved something special when it hit £100.
That extra zero was exciting and made us want to keep investing, but at the time it didn’t really matter. The goal evolved later – I started saving for a security deposit and that’s what pushed me to save more than I had been saving.
Until I spoke to retired councilor Harry Katz, a Money Marketing reader and commentator, I wasn’t sure there was always a purpose to saving and accumulating wealth. I was speaking from the point of view that there is no point in saving and investing if you do not know what you are going to do with it. Without any thought about the endgame, writing a series of zeros on a piece of paper has no meaning beyond itself.
But I had overlooked the potential of doing something about it at a later date, like I had done with my savings, or even deferring that later date to the next generation as a worthwhile goal. Someone once told me that money gives you options in life and honestly, I can’t think of a more motivating factor to save or invest than that. The idea of saving for a rainy day starts to sound more appealing when you think it gives you more choices in life.
Harry mentioned the old expression that money doesn’t bring happiness – but it can make life more comfortable for you and others. Again, it’s about having more options, because the amount of money people have determines the kind of lifestyle they and their loved ones can expect.
“People want to achieve a certain level of security,” Harry told me. But in his experience, clients always thought that to do this they needed more money than they had. I found this interesting because it explains why very wealthy people might still want to increase their wealth, even though everyone would say they have more than enough for their needs.
My conversation with Harry was broad, but largely around the topic of financial security. We talked about the need to have money in the first place to achieve financial security, because low-income people struggling to cope with high inflation and the energy crisis cannot afford to create the wealth.
We discussed the importance of clearing debt before making investments and how easy it is to get into debt by buying now, paying later. “Our economy is built on people encouraging other people to spend money they don’t have,” Harry told me. “We need to export and attract investors to this country – that’s what’s important.”
Harry also said he wouldn’t be surprised if more people gave up auto-enrollment because of the financial pressures they are under, saying it would be a terrible shame because something is better than nothing in retirement. I agree – we need to do everything we can to make sure people don’t have to do this to make ends meet.
To come full circle, our late queen was high in visibility. It’s been reported that she’s talked about being seen to be believed and I’ve heard that’s why she always wore bright colors for the past few years. She understood the power of visual images and I think more needs to be done in financial services.
Advisors always tell me how great cash flow modeling is because it shows clients what their finances look like now and what they could look like in the future if they did this or that. To see this image is to believe it. You can talk to people about the need to increase retirement contributions rather than retire or protect their income, but seeing those needs in a visual format is more likely to make a lasting impression.
I like Harry’s suggestion for people who want to save money to put up a spreadsheet so they can clearly see what they’re spending money on – it’s something Harry does -same. While things like packing lunch at home to bring to work and jogging in the park instead of paying for a gym membership don’t create millionaires, small savings add up and you probably wouldn’t appreciate it unless you see all this information in one place, like on a spreadsheet.
It’s probably too much hard work for some people, but I can imagine that once you get into it and notice the difference small changes make to the overall picture, that sense of purpose would kick in and would make it much easier to comply with. Keeping the end goal in sight makes everything worthwhile.