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February 26, 2024

Why Working Out Is About Much More Than Going To The Gym.

Skybound Wealth's Paul Butler discusses the importance of adopting healthy habits when it comes to your finances

Whether we like it or not, it’s generally accepted that it's a good idea to play sport, go to the gym, or at the very least, have some healthy habits. Why? Well, the benefits are clear and well documented, like being more alert and positive, having more energy, longevity, etc, etc.
However, Senior Financial Adviser at Skybound Wealth, Paul Butler says he has found over many years of working with clients that these healthy habits often seem to be purely reserved for physical well-being.

The number of people I've spoken to over the years that can go into granular detail about their calorie, protein and carb content of their meals over the coming weeks and months but give me blank looks when I ask them about their bank balances, let alone anything like pensions or other investments. It's easy to check the mental 'I've got a pension' or ‘I've got some money in the bank so I’m fine’ box. But is it though, really?

Healthy habits when it comes to our finances can be lacking, downright unhealthy, or completely absent in some cases. Getting fit in my opinion shouldn’t just be physical - it's financial, too, and putting clients' finances onto a thorough fitness regime is not just about getting the right investment or portfolio, or share – it’s about instilling healthy habits and rituals around their money - which puts more money in their pockets for the really important stuff in their lives, and really understanding what those individual key points are. It's also the biggest stress reliever and proponent of overall wellbeing I can think of. Doing the basics – and doing them well is a great starting point for getting money fit.  

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I base my money 'workouts' on 5 Basic elements:
1. Audit

Where is your money going? What’s going out each month? Doing a deep dive always unearths things you may have completely forgotten about that are slowly draining your bank accounts. What about your existing investments and assets - What have you already got? Are they fit for purpose? Are they in the right places? Are they optimised? What debt do you have, and how much are you paying for it? The audit is an opportunity to get rid of what you definitely don't need – cancelling that subscription you’re not using, cutting up the expensive credit card or the pointless insurance - it immediately puts more money in your pocket. This is a get it all on paper exercise. Some falter at this stage, as they know they won’t like what they see. But getting fit always involves some sort of pain, right?  

2. Budget

This may sound a bit obvious, but knowing what's going out is step one. Knowing when is a huge stress reliever and reduces the chances of financial shocks. In times of old, my grandmother used to have a series of envelopes – and she made sure that there was enough in each one for when each bill became due. While we can have a more sophisticated approach these days, the principle is the same – so get your envelopes in order! A good start is to allocate 50% to ‘Needs’, 30% to ‘Wants’, and 20% to ‘Savings’. Don’t pin your hopes on the 20% being the answer though. Working with a professional will help you understand what you actually need to do, or at least work towards, while a solid routine will help you get there. However making sure there’s enough for when things are due, and keeping a check on your actual spends are some key healthy rituals to instil. Lastly, it’s the opportunity to ensure you're making a ‘profit’ each month and not overspending.

3. Planning

Completing steps one and two thoroughly can be a major achievement. Many either kid themselves that they’re in control, or they’ve done it half-heartedly – some even fail to get this far. What steps one and two should give you is the headspace to start asking the bigger questions; Why am I doing what I’m doing? Where am I headed? What are the key points in life that will have a financial impact and when are they coming? How many pay days are left until each one? This step is about setting, or reaffirming, objectives and goals, and really understanding what they mean to you. How you would feel if you didn't achieve them, versus how would you feel if you did? If you're in the fortunate position that you have built sizeable assets, have you ensured that they're going to stay that way so that loved ones can continue to enjoy them, or are you OK with your government being a major benefactor? Understanding ‘whys’, and stress testing around these can really give focus and purpose to everything you do.  

4. Automate

Far from being automated, items such as retirement planning, kids’ education, paying off debt, are all down to you. Especially as an Expat. Ensure it’s not a negotiation! Saving for your next property, retirement, university fees, emergency cash? Great, set the budget and automate it. The monthly mortgage payment on your house is not up for negotiation. So why should your future planning be? Pay yourself and future you first. Always.

5. Review

All good plans need reviewing. Circumstances change, locations change, earnings change- hopefully it’s generally for the better, although there might be some challenges along the way. Equally, with any fitness program it's key to make those small increments that get you closer to your goals. The same workout week in week out would see initial improvements but would eventually plateau and perhaps even go backwards over time. So it’s key to keep taking those small steps forward. A regular review will ultimately go a long way to ensuring you stay on track, and kerb a potential ‘lifestyle creep’ as earnings increase.

Embracing these 5 basic steps instils and re-enforces those healthy habits around your money and finances, and it’s a great foundation whether you're just starting out, or you want to keep a hold of all you have worked so hard to build. Get your money six pack on. Future you will love you for it.

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A Dubai resident of 10+ years, Paul Butler is a senior financial adviser at Skybound Wealth who has 30 years’ experience both in the UK and Middle East providing independent, holistic financial planning and advice to enable clients to build a coherent, joined up financial plan that makes sense and empowers clients to achieve the future they desire, while having some fun along the way.

Find out more about Paul - linkedin.com/in/paul-butler-acsi-427bb115

To discuss how Paul Butler can help you improve the health of your investments, request a complimentary consultation now, click the button below

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Written By
Paul Butler
Private Wealth Manager
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