Michele Carby explains her 2020 Financial Vision Campaign dedicated to helping people get clarity and sharpness on their personal finances
Financial wellbeing, along with physical health is one of the cornerstones of a successful life. That’s why it has always been amazing to me why financial education is either very low, or non-existent on school curriculums throughout the world. I can’t understand how learning about how to manage money is any less important than mathematics, literature, physics, geography or history. Probably more important as it will fundamentally impact everyone’s life. Currently, most people finish their formal education with a broad depth of knowledge about all kinds of things but virtually no idea about the practical management of finance on which their and their family’s future depends.
In the world of optometry and ophthalmology, 20/20 is a visual acuity score denoting exceptional clarity and sharpness of vision. It is the minimum score required for pilots. This year I will be focusing on 2020 Financial Vision to ensure my clients, and people in general, have the same clarity and sharpness when it comes to their finances. That level of focus will put them in a better position to manage their money, which in turn will help them, achieve financial wellbeing from which many positive benefits will flow.
2020 financial vision rests on four elemental pillars:
‘Failing to plan is planning to fail,’ Abraham Lincoln is famously alleged to have declared, and it is certainly true when it comes to money — many times during my career I have helped people whose finances were a complete disaster. They had no real idea of their income or outgoings, didn’t understand even basic budgeting, experienced difficulties in paying mortgages and often loaded up with high-interest credit card debt. In many cases, the people concerned were professionals with well-paid jobs, but the lack of planning or focus on their personal financial management was causing problems. However, we established and implemented the basics of sound financial planning and their situations soon improved, debt reduced, and additional money became available.
Saving is the first step to obtaining financial independence. No one knows the future and savings provide a vital safety net should something unforeseen occur. Ideally, the habit of saving should start at an early age, which is why we give children piggy banks. In today’s consumer-driven society, people often prioritise spending over saving when it should be the other way around. Savings are essential to pay for things in the future that add real value to your life, a better home, your children’s education and a stress-free retirement to name just a few.
Once people get into the habit of saving, money starts to accumulate quickly. The low-interest environment of today means that keeping your savings in a bank account offers virtually opportunity for growth. Your money should be working for you, and the returns reinvested. Then you earn interest on the interest. This is known as compounding and Albert Einstein declared it the 8th wonder of the world because on which it builds wealth over the year.
You can invest your savings in many asset classes: stocks, bonds, commodities, property, and so on. These asset classes grow at different rates at different times, so diversity and balance across them are crucial. Investing is a specialist field and most people need help to ensure they have the right investments for their needs.
Life can throw you a curveball at any time. One moment you are cruising along, and the next calamity strikes. That’s why the insurance industry evolved – to help people safeguard against the financial impact of uncertainty. Insurance is an essential pillar of the 2020 financial vision. Without it, you leave yourself at the mercy of the vagaries of chance that can wipe out all of your hard work in putting the other pillars in place.
So that’s my 2020 Financial Vision campaign in a nutshell. Over the year, I will be expanding my commentary on each of the four pillars to help achieve the financial wellbeing, and in turn improve the quality of life.