One Moment to Change Your Finances

​​​One little decision can transform your life forever, whether it’s choosing to start a family, or buying an annuity to give you an income in retirement.

Here at NorthStar we think a lot about the ‘advice moments’ – the times when people are most likely to need professional advice. Not surprisingly, these are the pivotal points in your life when you stand to gain (or lose) the most, by the choices that you make.

The nation’s most significant life events

According to a recent survey, people in the UK said the top five most important events in their lives have been:

• Starting a family
• Getting married
• Getting a new job
• Buying a first home
• Retiring

The nation’s top advice moments

The same survey showed that the most common life events for which people seek advice are:

• Buying a first home
• Buying a subsequent home
• Starting a pension
• Investing in a buy- to-let property
• Starting a business

At any significant moment in life, it is important to think about the financial implications.  How can you make your money work as hard as possible?  What can you do to ensure your family’s financial security in years to come?  How best to set up your pension to prepare for retirement?

So what have we learned?

From our experience, there are a number of lessons from theses major life events and advice moments that are valuable. Now seems like a good time to remind ourselves of what we’ve found:

1. Children can cost as much as houses

We’ve consistently found that starting a family has the biggest impact on people’s lives. Yet most people seem to forget the massive financial hit that comes with it. The Centre for Economic and Business Research found that the average cost of raising just one child in the UK is comparable to the price of the average house. That’s just 18 years of childhood versus 25 years of mortgage – yet while more than half of the survey respondents sought financial advice on their mortgage, very few thought to do the same when having kids. Do we need to rethink our approach to parenting?

2. We are a nation of (foolish) romantics

After raising a family, getting married has the biggest impact on a person’s financial lifestyle. But again, on the scale of advice-seeking it barely registers. Courting couples obviously don’t want to sour the romance by consulting a financial adviser about their future together – yet on reflection, a little advice at the start might help to keep the romance alive for longer. Not only are weddings expensive, but marriage itself carries a number of financial and tax implications, where financial advice can help you to maximise the potential benefits.

3. Confidence is not the same as being good at something

When people said they hadn’t taken financial advice in a particular situation, they were asked what stopped them. The commonest answer was that they felt confident making their own decisions. But many, particularly among younger adults, responded that they ‘forgot’ to take financial advice – revealing an awareness that they should have. This ties in with a finding that up to a fifth of those who didn’t take advice ended up regretting it later. This suggests that confidence in one’s own financial knowledge can sometimes be misplaced – but the discovery often comes too late to do anything about it.

4. The younger generation is more generous (or is that selfish?)

It’s no surprise that travel and exotic holidays are high on people’s lists of what to do in retirement. But many younger people (18-34 year olds) would also like to help their children and grandchildren financially, when the time comes. This trend tails off among older people, however, so maybe those 18-34 year olds are just projecting their own wishes that someone would help them out. Still, if they put financial plans in place now, they might be in a position to make good on their promises.

5. Men do ask for directions… but are more likely to ignore them

The trend continues to be that slightly more men than women seek financial advice across a range of different circumstances. However, men also give notably different reasons for not seeking advice. Men who don’t choose advice generally say that it wouldn’t have made a difference to their final decision. Women are more likely to say it never occurred to them. So are women more ready to admit that they don’t have all the answers?

Wrapping up

Big decisions can only take a moment – but the consequences tend to last a long time. By considering the financial aspect of each big event and seeking professional advice, we’re not ‘ruining the moment’ – rather, we’re making sure that it’s a moment we’ll remember for the right reasons.

Please get in touch with us if you would like to chat about your finances or have any important life events on the horizon.

This article is adapted from one that first appeared on Unbiased.