No regrets (or, why we should make room for jam today and jam tomorrow)

I’m in a reflective kind of mood…

In part, it’s the season for this kind of thing. Putting up the Christmas decorations and getting ready to see in a New Year seems the perfect time to look over the one just past.

For me, there’s also an added personal perspective. Next summer marks 10 years of this business. Over this last decade, I’ve felt truly privileged to get to know my new and old clients more deeply and help them prosper through some good times – and some pretty tough periods too.

But enough about me.

The thing about looking back, whether it’s just a few months or several years, is that alongside toasting your successes, there are always opportunities to learn.

This is about two of them:

“I wish I’d saved more”

Regret number one is for those who, getting closer to retirement, wish they’d put more money aside.

According to research from the Pension Attention campaign, more than a third of UK adults said they should have paid more attention to the savings advice they got from parents or grandparents. Of those, nearly 40% admitted they hadn’t saved as much money as they thought they would.

When we’re young and know everything, it’s very difficult to heed advice, even when we know it’s good for us (and that’s just as true for those of us who should really know better, as I discussed here).

I wonder what it is about us humans that makes us so prone to doing things that seem right in the short term to the detriment of overall benefits. Anyone who smokes thinking they’re helping relieve stress (including some medical professionals) is ignoring the very well-known harmful long-term impact on their health. Or for a less extreme example, who hasn’t thrown their savings plan out of the window in favour of some buy-now retail therapy? It's one of the big reasons New Year’s resolutions fail. We set meaningful ambitions, but get distracted and tempted along the way, and lose sight of our future self.

As a financial planner, you’d rightly expect me to give chapter and verse about this regret and how to avoid it, emphasising the benefits of compound interest when saving early. But something we consistently talk to our clients about is actually how to avoid regret number two. That is, the things you didn’t do when you had the chance.

A lesson from Lewis Carroll

There’s a line from Alice Through the Looking Glass that sums this one up nicely:

“The rule is, jam tomorrow and jam yesterday – but never jam today.”

When Alice meets the Red Queen, she’s offered a job. The reward is twopence a week and jam every other day. But those days are yesterday and tomorrow. Never today. The snag for Alice (or it would be if she’d wanted the job in the first place) is the jam is always out of reach. It’s either something she could have had (jam yesterday) or that comes later (jam tomorrow.)

Jam tomorrow has become synonymous with unfulfilled promises and will be familiar if you’ve ever worked for a big organisation or listened to a politician at election time.

As much as saving towards your financial goals is vitally important. We need to make sure we give space to enjoy jam today.

It’s never all or nothing

People often think about their finances as very black and white. It’s either scrimping and saving to get to your end goal, or spending freely to enjoy living in the moment.

But it should really be a bit of both.

And, while this might sound funny coming from a financial planner, it’s not all about money. That’s just something that helps us get to where we want.

In general, we’re living longer. Many more people can expect to live well into their 80s or 90s. But with that there’s a big focus on healthy ageing. It’s being able to sit on the floor and play with your grandkids, or running on the beach with the dog (without having to sit down afterwards). Keeping fit now will help make sure you can do those things comfortably. But abstain too much and life can become boring. You risk missing out on any enjoyment along the way. What’s wrong with a personal trainer at 7am and then lunch with a friend?

You have one life. Enjoy it

To be blunt. We don’t know what’s around the corner. But knowing how to get the most out of living for now while thinking of the future always needs careful consideration. It’s a cautious balance between regret one “I wish I’d saved more,” and regret two “I wish I’d enjoyed it more.”

So, if you’re saving to live comfortably into your 90s, what do you need to do to get there? That’s not just in terms of the money you save, but the choices you make in order to put that money aside. At the same time, how much will savouring something now impact your financial goals?

This is where financial planning comes in. It puts you in control of the situation. An adviser has all the figures and numbers there to tell you how to do it. But, we’re designing the plan for a human, not a spreadsheet.

With a balanced investment portfolio that’s focused on the long term, realistic objectives – financial or otherwise – to aim towards, then you’re hopefully well set for the future. And you can relax and enjoy today. As you look back over your choices over the last year, and indeed the last several years of saving and working, that’s indeed something to celebrate.

To me that seems a perfect note to end on. Well done for staying the course. But don’t forget you’re here to enjoy it too.