I know – you’re wondering if I have lost my marbles! Just what on earth do I mean about your bucket, and why does that even matter?
OK, let’s step back a bit…
Assuming you are not already retired, you have access to income and cash. We call that liquid assets. Or, in the world of lifestyle financial planning, we call it your bucket.
So, typically, inside your bucket would be:
- Money in the bank
- Investments – where you can sell these at any time to realise funds
- Rental income
- Dividends if you are a business owner, or have shares in a business
- Any other income – regular or ad hoc
If you picture a bucket, you can visualise it filling up with these liquid assets.
Of course, you know it isn’t quite that simple…
You need to also visualise a tap on the side of the bucket. That tap represents all of your overheads, and the trappings of the lifestyle you have chosen. So, your mortgage, your car, your holidays, your hobbies and so on.
Over the course of your life that bucket is going to change constantly. As you change job, move house, your family situation changes, and so on. That might translate to increased income, so more pouring into the bucket. Equally, it might mean higher expenses, so the tap is pouring faster!
Naturally, the important thing is to ensure your bucket never runs dry.
You don’t want to work hard and then not be able to enjoy the life you have chosen.
Moving forward you are likely to make further changes once you decide to retire. You may choose to downsize and buy a smaller house. So now, your pension has taken over from your salary and you have the money from the sale of your house to add to your bucket.
Equally, your lifestyle is likely to change as you have more time available to do things you want. That’s going to affect the flow of the tap.
Whilst the obvious focus is ensuring the bucket never runs dry, actually it’s just as important that it doesn’t overflow.
What does that mean?
You don’t want to get to the point in your life where you are no longer physically able to enjoy everything you may want to. You’re not as active, you don’t want to do as much. That means you don’t need as much money.
Ultimately, that means that you pass away leaving a significant amount of money. And, whilst you might wish to leave your loved ones well provided for, that shouldn’t be at the cost of enjoying life while you can. Nor leaving a huge amount to HMRC!
As a lifestyle financial planner, it is my job to ensure you get a return on your life right now. To do that, I need to keep an eye on your bucket, and help you to protect it.
What that translates to is maintaining a good balance. Sometimes you may need to be more prudent – in other words slow down your spending, or slow the tap.
At other times I will actively encourage you to spend more. And, this for me, is the most exciting aspect of what I do. Being able to demonstrate to clients that they can afford to go on that big holiday of a lifetime, buy a second home, splash out on a new car and so on.
As I constantly say, it is about turning your “one days” into reality.
The whole premise of the LifePlan offering is supporting you in living your best life, and continuing to do that throughout your life.
The saying is you only live once. In the words of Snoopy we say you only die once, you live every day… So let’s really live every day.
If you would like to learn more about how LifePlan could work for you, please contact me on 01344 875 310.