10 counter-intuitive financial lessons I’ve learned that you ought to consider

If you are a regular reader of my articles, you’ll know that there are some simple rules I believe everyone should adhere to. These include:

• Pay yourself first each month
• Have a financial plan and review it regularly
• Save more money than you’re entirely comfortable with.

But I do appreciate that how you manage your personal finances will come down to your own preferences and personality.

However, I would like to think that as someone who advises people about their financial planning as a living, some of the lessons I have learned about how to manage your attitude to money could stand you in good stead.

Especially as the majority of the 10 I have set out here may run contrary to what you might have previously assumed or been told.

1. Investment performance matters, but you shouldn’t obsess about it

I will frequently make reference to your investment portfolio being integral to your future wealth, and how it increases in value is clearly important.

But, not to the extent that you should concern yourself too much with the performance you are seeing on some of your investments.

The wonder of compounding through dividends and growth on growth will go a long way to helping you increase your wealth and secure your long-term financial security.

But regularly checking percentage returns will cause you unnecessary stress and could lead you to make mistakes.

2. Spending and saving are both important

As you read above, one of my rules is that I will often challenge you to save an amount each month that you may feel is too much.

However, it’s important not to overlook the benefit of spending at the same time as you save.

Buying new stuff is enjoyable. It can improve your quality of life and make it easier. Likewise, big holidays can give you memories to last a lifetime and help you recharge your batteries.

So, while you save for the future, don’t forget to enjoy the present.

3. Your goalposts can move, as long as it’s you moving them

In a previous article, I wrote about the dangers of continually moving your goalposts and how doing so can be damaging to both your mental health and financial wellbeing.

However, I would caveat that by saying that it can be rewarding to set yourself targets, and once you have hit them, setting new ones.

The key point is to ensure it doesn’t become a continual process that leaves you constantly frustrated.

4. Be prepared to pay more for quality, but only up to a point

It can be too easy to waste money by buying expensive items for the sake of it, or simply to impress other people.

If you enjoy something, paying more for quality is a good investment. For example, if you love driving, rather than simply seeing a car as a means to get from A to B, then I’d suggest buying a quality car is a good purchase.

However, whatever the item, it’s important to find your level and be honest with yourself. So, if you can’t tell the difference between a £20 and £50 bottle of wine, why pay the higher price?

5. Spending money to save time is a positive thing to do

It can be very easy to create stress for yourself by trying to adhere to constant deadlines and endeavouring to do too much in too little time.

You may convince yourself that it’s better to save money and do things yourself rather than paying someone to do it for you.

However, I would argue that outsourcing some jobs makes sense as it can improve your wellbeing and give you more time to do things that are really important to you.

6. Saving money can reduce your stress levels in 2 ways

Financial worries are a common cause of stress. But to balance that, saving money can be one of the best ways to reduce your stress levels, and it can do so in two different ways.

Firstly, it gives you tangible proof that you’re growing your wealth and securing your future.

Additionally, having an emergency fund in place can be a great stress reliever as you have the reassuring knowledge that you have money available to help you manage any unforeseen events.

7. Debt can be a positive thing if you use it wisely

Experts will constantly preach the perils of debt. But used wisely, borrowing money can be a good thing.

Often, it’s a case of appreciating the difference between “good” debt, which is secured against assets such as a house or car, and “bad” debt, which usually involves a credit card.

Even then, expensive debt can have its place, as long as it’s strictly controlled and paid down promptly.

If you’re being careful, clever use of debt can provide you with valuable financial flexibility.

8. Material possessions can make you happy…

It’s commonly assumed that acquiring experiences can make you happier than the simple accumulation of “stuff”.

However, spending money on expensive experiences may not always be practical or affordable, especially if you have other financial priorities.

To my mind, there’s nothing intrinsically wrong with spending on luxury items,  with the proviso that you’re doing it for the right reasons.

9. …but experiences will last you forever

At the end of 2024, I wrote an article about “memory dividends” and how the money you spend on accumulating experiences can often be just as important as saving for your retirement itself.

Clearly, you should prioritise your long-term financial needs. But, having a wealth of positive memories that you can return to and enjoy again and again can justify the financial outlay required to provide them.

10. The older you get, the more advice you need

In many circumstances, as you spend time doing something, the amount of advice you need will reduce.

However, when it comes to your money and your financial future, the opposite applies.

The longer you save and the more wealth you accumulate, the more important advice becomes.

This is because mistakes can become more costly. Furthermore, you only get one chance at retirement, so it’s important to get expert help to ensure you get it right.

Get in touch

If you would like to talk about any of the issues I’ve raised here, please get in touch.

You can call me on 07769 156 250.

Please note

This blog is for general information only and does not constitute advice. The information is aimed at retail clients only.

The value of your investments (and any income from them) can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.

Investments should be considered over the longer term and should fit in with your overall attitude to risk and financial circumstances.