What stops you from having the most fulfilling life?

I’m still buzzing from the Financial Life Planning conference, which took place in London at the end of January. The minute I walked into the conference room it felt like a family gathering. There was a sense of familiarity, warmth and openness there, and I felt a sense of belonging that’s not usual in the world of financial services! I was also excited about having a chance to participate in a panel discussion covering how I’ve integrated Life Planning into my work to meet the needs of the mass-market.

Life Planning is a new approach to financial advice, developed by the US-based Kinder Institute. It offers a radically different perspective, with a focus on the client as a person rather than financial products. The process involves working together through a series of exercises and questions to get to the heart of what is really most profoundly important in someone’s life, and only then assessing what financial architecture is needed to make it happen. So money is put in its rightful place – as the means, where the end is a fulfilling life, rather than treating money as the end in itself.

I came away from the conference full of ideas, and inspired by the many stories that had been shared about the impact of Life Planning on client’s lives. It made me think about my own story and the process I went through in discovering who I was and what I had to offer.

Back in 1999 I was living in London and working as an Independent Financial Advisor. Superficially I had it all: earning well, lovely flat, great friends, yet something was missing for me and I felt like I was just going through the motions rather than living a fulfilling life. I set out on a journey of personal development to try to understand what that void was. I went on a lot of courses, and took a year out to step off the treadmill and fulfill a life-long dream of travelling the world.

One course involved six days of silent retreat mixed with mountain climbing and abseiling and other challenging stuff like fire walking. All geared to helping participants design their future by identifying their own definition of success. What evolved for me, amongst other things, was a clear vision that I wanted to use my financial knowledge and skills to help people have the courage to live their dreams and the power to heal their wounds.

I came back from the course and slowly the Wise Monkey concept took shape. The financial advisor world was never quite me – my meetings took longer as I’d be listening and intuitively supporting my clients, always with a box of tissues on my desk! Shaping my vision was like putting a jigsaw together and one of the final pieces was the word ‘coach’. What I wanted to do didn’t exist so I had to create it, developing the language, tools and processes to fit the way I work with clients. I then trained in areas that would best support my clients – including coaching and NLP.

I became interested in Life Planning through the work of the founder, George Kinder. His interpretation of people’s journey with money really resonated with what I was doing – there was a synergy there so we met to explore how we could work together. I took part in one of his workshops and seeing the power of the questions and exercises, I decided to undertake the training myself.

Last year I completed the training, including a six-month mentorship programme, and I’m now one of 37 Registered Life Planners® (RLPs®) in the UK. I love feeling part of a team with the common aim of helping people live fulfilling lives, and the depth of trust and friendship that develops with clients through sharing their hopes, dreams, fears and pain. For me the life planning process is one new tool in my tool kit, and a very powerful one. I use the techniques in my own way, integrating them into my financial coaching practice. Because I take a flexible approach, I’m able to be open to new developments in the field and use them to respond to the needs of my clients, so my work is constantly evolving.

Click here for more information on Financial Life Planning.

Smoothing your financial ride through the new year

Suddenly it’s December again and Christmas is coming hurtling towards us in a blur of sparkly lights and parties and last minute shopping, making excessive demands on our budgets. That’s how it often feels – to have come suddenly at us, even though December follows November each and every year.

One of my clients, Anna, is taking Advanced Driving lessons and her instructor had said that the most common word in accident reports was ‘suddenly’: ‘suddenly the van came hurtling round the corner’; ‘the car ahead braked suddenly’. Anna was learning that Advanced driving skills are all about anticipation – looking well ahead, adjusting your behaviour to ensure a smooth ride. Things rarely happen ‘suddenly’ if you’re anticipating well. She realised that she was making the same mistakes with her finances as she was with her driving: not looking far enough ahead and not seeing things coming until they were too close. And this resulted in a bumpy financial ride – often lurching, sometimes swerving and occasionally crashing.

So while you’re filling in your shiny new diary for 2012, it’s worth taking the time to think about the costs that are coming in the year ahead – smoothing out your expenditure will ensure a safer and far more comfortable ride through the year. Download our simple chart called ‘Your Sheconomics Occasional Spending Plan’ from the downloads page of our Sheconomics.com website (scroll down towards the end) and fill in all the occasional spends that you can see coming through the year: birthdays, holidays, car costs, Christmas etc.

In our experience people get into money trouble because they haven’t anticipated these occasional costs. You can plan more than you think you can and anticipate what is coming to avoid ‘sudden’ financial shocks. Think through the different spheres of your life -  any computer equipment? House repairs or maintenance? Home or garden improvements? Replacement of electrical goods? Some will be personal to you – mooring costs, for example, if you live on a boat!

When you have filled in the chart, the aim is to spread the costs as evenly as possible through the year. Explore the options to pay costs such as insurances monthly if you can to avoid an annual lump sum causing a pot hole in your purse. Car insurance may be more costly to pay monthly but if it helps smooth your cash flow it could make sense for you. Once you’ve anticipated your costs you can set aside a monthly equivalent, it will help you on a much more relaxed journey through the new year.

Where’s a safe haven for your money?

The world’s stock markets continue to take up too many column inches, and it’s difficult not to worry about how your investments will weather the financial storm. So where do you stash your cash when there’s such turmoil the world over?

Investing in stocks and shares is still a sensible option if you’re happy to put away your money for the long term – in financial speak, that means at least 5 years, preferably longer. One approach to reduce the risk is to drip your money in over a period of months, rather than investing a lump sum and hoping for the best. If you’re worried about the recent turmoil in stock markets, watch this episode of Meaningful Money, with Pete Matthews offering sound advice.

But what if you don’t want to tie up your money for that long? Or you’re looking for less risk? Savings accounts are one way to go, but with interest rates well below the rate of inflation – currently hitting it’s highest level in 20 years at 5.6% – what other options are there? Here’s a look at some of the ones you might have heard about:

Fixed Interest Savings Accounts If you’re prepared to tie up your cash savings for a fixed term like three, four or five years, you’re likely to get better returns than from ordinary instant-access savings accounts. The Money Advice Service offers some guidelines about getting the most from your savings accounts.

Social Lending This is a peer-to-peer arrangement, so you’ll be lending to individuals rather than to conventional institutions such as banks. The aim is to get a better rate than you would with a bank, but with that comes extra risk. The companies that manage this type of lending are not currently regulated by the Financial Services Authority (FSA) and your capital isn’t protected by the Financial Services Compensation Scheme, as it would be with an authorised firm. But there are methods used to control and minimise the risk to lenders. So you’ll need to weigh up the chance of a higher rate of interest with the increased risk and lower protection. Popular social lending sites include Zopa, RateSetter and Quakle. The Consumers Association, Which?, has a good review of some of the main social lending sites.

Inflation-proofed savings Until recently, National Savings Certificates provided a guaranteed, tax-free interest above inflation. They were in great demand, but sadly the door closed to new business early last month. Since then we’ve seen a few banks/building societies offering something similar, including the Post Office. Unlike National Savings Certificates, these accounts aren’t backed by the government and the interest earned above inflation is taxable. But provided you hold no more than £85,000 in any one banking institution, your savings are protected by the Financial Services Compensation Scheme. And, they provide you with a fixed rate of interest above inflation. The accounts currently available tie up your money for a fixed term. A good review of the current selection of savings accounts linked to inflation can be found on SavvyWoman, Sarah Pennell’s, website.

Regular savings accounts If you can commit to save a fixed amount for a fixed term – usually 12 months – you can often get better rates than from ordinary high-interest savings accounts. Currently, there’s an account on the market that’s offering as much as 8% a year, compared to say 3% in a high-interest account. Savings may be limited to £250 per month, though, and you might not be able to access to your money for the whole fixed term. Moneysupermarket is one of a number of comparison sites, which help you weigh up different regular savings accounts currently on the market.

If you’ve got a lump sum of cash to deposit, you could make use of a regular savings account. Run one alongside a high interest savings account, making a monthly transfer from the high interest account to regular savings account, which should increase your overall return.

Structured products have increased in popularity since the credit crunch. They’re usually promoted as a safe way of investing money where you benefit from the upside of the stock market without risking the downside. Typically, your money is tied up for five or six years. At maturity, you get a proportion of the stock market return over that term, and your money back if the stock market has fallen. But be careful, and take time to read the small print. The ‘capital guarantee’ (the getting your money back bit) usually applies only if the market hasn’t fallen below a certain level. This means that if markets fall dramatically, you could lose a big chunk of your original investment. The product may also be backed by different organisations and if the sponsor goes bust, you could lose all your money. Moneyweek’s video warns about their risks.

State pension age concession still unfair to women

Women’s finances have been in the news recently.

As we know the state pension age is being gradually increasing and the retirement age brought forward faster than originally planned (as we reported in our Sheconomics  Feburary blog). Back in October 2010, the government announced that it would bring forward the date that the State Pension Age would become 66 for men and women. This caused widespread concern that it would unfairly impact on women already in their late 50s who would have to work up to two years longer than they had planned for.

The latest news is that the Government have responded by postponing these changes for 6 months (to October 2010, instead of April 2010) so that the maximum delay will be 18 months instead of two years.

While this is some concession, 18 months is still a long time to wait, with little time between now and state retirement age to plan how to make up for that financial loss.

If you feel that the state pension age rise is unfair and would like to do something about it, Saga are asking for signatures on their petition to lobby the government on these proposed changes to the state pension age.

Click here for an online calculator to help you work out when you’re likely to reach state pension age under current rules.

Could George Osborne scrap higher rate tax relief on pensions?

Yesterday’s Telegraph reported that George Osborne is in talks to discuss scrapping higher rate tax relief on pension contributions.

This means that if you’re in the higher rate tax bracket (currently earning above £43,875) you would only receive back 20p for every £1 invested in a pension and not 40p if you’re a 40% taxpayer or 50p if you’re a 50% taxpayer (with pre-tax earnings above £150,000).

In April this year, the government reduced the amount you can save into a pension each year from £255,000 to £50,000. Scrapping higher rate tax relief would apparently save the government a further £7bn a year, helping towards funding the deficit, or boosting the state pension by up to 50%.

So, do we take this seriously? It’s certainly not the first time this option has been considered. If so, and you would be affected by this, you may want to consider paying more into your pension now before the rules change. Obviously only if you can afford to do so and you’re happy tying up the money for your retirement.

Meanwhile, the government is being urged to rethink its plans to increase the state pension age for women to 66 and a debate is taking place today on the pensions bill.

The time scale for raising women’s state pension age in line with men’s has already accelerated – it’s now due to rise to 65 by 2018 (2 years earlier than originally planned) – and women born between March 6th and April 5th 1954 will be the worst affected. But now they’re planning to raise women’s state retirement age to 66 just 2 years later, from 2020. This doesn’t allow women anywhere near enough time to plan for a later retirement age. As you can imagine,  there have been major uproars about this and this is what is being debated today. We’ll find out later today if the vote gets passed by the House of Commons.

You can read the Telegraph’s full report on this here.

Ease your summer spending

Like a pine cone, does your purse automatically open up in dry sunny weather?

Whether you’ve got a holiday looming, or summer spending is starting to eat into your budget, here are some tips to make your money go further:

Going on holiday

A summer holiday can be a great excuse to spend. Once you’re there (or in a duty-free shop on the way there!) it often doesn’t seem like ‘real’ money you’re spending; that is until your credit card bill rolls in. And, if you’re going abroad, the weakness of the pound means that every £1 you spend abroad may be about 25% less than it was worth 3 years ago. Avoid the stress of spending more than you bargained for with the following tips:

• Research online the best deal to buy your currency. Exchange rates at airport and ferry terminals are usually the most expensive and don’t be fooled by high-street ‘no commission’ deals. Before using a debit or credit card aboard, check the fees. Banks often slap on a foreign exchange fee of around 2.75% plus a 2% ATM fee and credit cards usually charge 3% on both purchases and cash withdrawals. Prepaid currency cards can be a good way of safely carrying foreign currency and are also a great way to help you stick to a holiday spending plan.
• If you’re going on holiday with a friend or friends have a joint ‘kitty’ and take it in turns to hold it for the day. Having to account to someone else for what you spend, and plan together what funds you’ll need, can be a good way to curb unnecessary spending.
• Avoid incurring ridiculously high mobile phone charges, if you use your phone while abroad, by turning off the data roaming facility within the settings of your phone. That way you won’t make the same costly mistake I made of downloading data without realising it. Only browse the internet or download data when using the phone’s Wi-Fi connection. If you need internet access without Wi-Fi while you’re away, arrange a flat or capped rate data package in advance with your phone provider, or buy a local SIM card.

 Entertaining friends

One of the great joys of summer is entertaining but, with rising prices, even a simple barbie can rack up the expense. Here’s how to cut the cost:

• Go seasonal – be inspired by what’s on offer in your local greengrocer or market. If there’s a glut of strawberries, for example, buy a load of punnets, then check the internet for recipe inspiration.
• Find out what day your greengrocer goes to the wholesaler and shop last thing the day before. You’ll often find bunches of flowers as well as fruit and veg going cheap or sometimes even being given away. Alternatively do your shopping at end of play on a Saturday when many shopkeepers slash the prices of fresh produce.
• Check out best supermarket deals on food and alcohol using www.mysupermarket.co.uk.
• If you’re inviting friends over, ask everyone to bring a dish. Allocate one guest a starter, one a main course, one a pudding and so on.
• Don’t turn up your nose at cheap supermarkets. Provided you choose carefully, Aldi, Lidl and the rest are great for bargains and can help keep your food bill in check.
• Pick your own – investigate pick your own farms for berries and other fresh produce. Provided you don’t eat too many as you pick, doing it yourself can slash prices.
• Reduce food waste. Check out www.lovefoodhatewaste.com for ideas.

Keeping the kids out of trouble during school holidays

Days out, summer activities and treats can soon blow the budget if you have children. And childcare costs while you’re working can significantly add to your summer spending budget. The following tips will help ensure that you’re still solvent come September:

• You may be eligible to receive the childcare element of Working Tax Credit to help with the cost of registered or approved childcare during summer holidays. Check HMRC’s guide to Working Tax Credit to find out more.
• Activity camps for kids don’t have to break the bank. Barracudas’s Activity Day Camp currently costs around £35 a day per child. Also check out local papers/magazines and online communities for ideas of local events and activities.
• Rail companies often have special offers in the summer months. Take advantage of these and use a discount card such as a Network Railcard.
• For inspiring ideas of free events and free entry attractions, have a look at www.dofreestuff.com , www.familydayoutuk.co.uk. For free Summer festivals in London, check out www.viewlondon.co.uk.
• With petrol prices so high, riding a bike can save you a fortune. What’s more it’s a fun activity for everyone and helps get you and the kids into an exercise habit.
• Prepare refreshments at home. Even buying a round of ice cream for the whole family is an expensive treat. It’s far cheaper to make your own. If you enrol the children too it’s something else for them to do. On the nutritional front, if you make your own sandwiches or ice cream, you also know exactly what they’re eating.

Summer sales

Slashed prices can blow good intentions. Buying during the sales can be a good move, but only if it’s planned, needed and affordable. Before reaching for your purse check the following:

• Ask yourself these 8 questions before you make your way to the checkout.
• Give yourself a breather. Ask the shop assistant to save the item for an hour, then go and have a coffee before deciding whether to go back and buy it.
• Can you afford it? If not, consider how you’re going to pay for it. In Sheconomics we talk about ‘good debts’ (things like mortgages and goods that will accrue in value) and ‘bad debts’ (things like high interest rate store cards). Take a rain check to assess whether the item you want is the former or the latter. And then add the cost of the debt to the price tag.
• Sales can induce a ‘last chance to buy’ mentality. Remember that there’s always a sale on somewhere. Keeping this in mind is often enough to help you walk on by.

New money advice service launched

The free money advice service originally set up by the government – Consumer Financial Education Body (Cfeb) – has rebranded away from its catchy title (!) to something that now says what it does on the tin.

The Money Advice Service provides some face-to-face services, a free helpline (0300 500 5000), plus a website (www.moneyadviceservice.org.uk) packed full of information.

We look forward to the launch of their online financial health check service, planned for later this year, which will help people plan and prioritise their financial future.

New savings scheme for kids

Child trust funds (CTFs) were scrapped in the first round of government cuts but a new initiative has been announced by the government to encourage long-term savings for kids – Junior ISAs. With ISAs (Individual savings Accounts), you can invest a certain amount tax-free each tax year in either cash and/or stocks and shares. But, currently you have to be at least 16 to invest in Cash ISAs, and 18 for stocks and shares ISAs.

From 1 November 2011, the government plans to launch Junior ISAs which will allow up to £3,000 each tax year to be invested in the name of a child, and the funds will attract the same tax benefits as conventional ISAs. Life CTFs, the money can’t be accessed until the child is 18. Unlike CTFs, though, you don’t benefit from government contributions.

It’ll be a good way of starting to build up savings for a child. Annual savings made of £3,000 a year, could result in a fund of something like £70,000 to £80,000 by the time they’re18.

Although they may not be tax-payers for a little while yet, having ISA savings means that it’ll remain tax-free when they start to earn and pay tax. It also means that a parent or step-parent can save money on behalf of their child without being hit by a less-well known tax rule – that if the money you give your child earns more than £100 interest a year, this interest will be taxed as if it were your own.

Don’t forget, if you’re one of the lucky ones, who’s got a CTF, you can still continue to top it up by up to £1,200 a year until the child is 18. So you’ll be able to make tax-free savings of up to £4,200 a year.

Want to be wealthier? Put your mind to it…

Yesterday I was one of four speakers at an exciting seminar held at London South Bank University.

Yvonne Witter, Southwark Business Woman of the Year 2009 and Director of Ampod Business Consulting and Training, organised and chaired the ‘Develop Your Wealth Creation Mindset Seminar’ for students and budding entrepreneurs.

I’m a firm believer that your money ‘mindset’ – your beliefs and attitudes – play an important role in how you are with money… how you earn it, spend it, invest it and save it.

Do any of these sound familiar? ‘I won’t bother applying for that job – they’d never pay someone like me a salary like that’. ‘There’s not much point in saving, you may as well enjoy your money now’. ‘You have to work hard for money’. ‘Having money may change me into someone people won’t like.’

Yvonne’s line-up of speakers gave loads of variety to the evening, and raised awareness of the many different facets of wealth creation. The audience was very receptive and engaged, and I loved delivering my money messages to a younger audience who were so engaged and open to new ideas and approaches. I applaud Yvonne for making this a free event and therefore accessible to those on a low income.

I used my session to explain the Seven Laws of Sheconomics, from the book I co-wrote with Professor Karen Pine. And I was pleased to see my talk inspired one member of the audience to get blogging about Sheconomics the very next day.

If you want to challenge your money mindset, don’t forget to check out the wide range of free resources we’ve made available on the Sheconomics website.

ISA Countdown

The countdown to the end of the tax year has started – 5 April marks the cut-off  date for investing in an individual saving account (ISA) for the 2010-2011 tax year.

Your individual ISA allowance for tax-free saving is up to £10,200, of which £5,100 can be held in cash. Any investment over this amount  must be made up of stocks and shares.

If you’ve been on the hunt for a Cash ISA, you’ll know that there are plenty of providers offering products. But how do you choose the best one? Do you operate a ‘better the devil you know’ policy, opting to invest more in a current ISA? While that may be the most tempting option, it’s unlikely to offer you the best rate  - it’s always best to check out ISAs from other banks or building societies.

But be careful! A recent undercover Which? investigation highlighted the poor quality advice being given by Cash ISA providers. The consumer watchdog made eight calls to each of the top 13 providers, to ask four basic questions about the rules for ISA cash transfers. Correct answers to all four questions were given in only 3 out of 104 calls. That’s a lousy 3% of the calls. How shocking is that?! This podcast from Which? gives more information about its ISA investigation.

We’ve looked at generic, impartial, advice currently available to help you answer your ISA questions and choose the product most suited to your needs. Our favourites sources of information are from consumer magazine Which? and Cfeb , the Consumer Financial Education Body.

Our top tips

• Take time to research ISAs before buying one. Both Which? and Cfeb provide good comparison tools.
• For help choosing a Cash ISA, have a look at: Which? & Cfeb.
• Consider whether to invest in a stocks & shares ISA.
• For help choosing a stocks and shares ISA, have a look at: Which? & Cfeb.
• If you’re planning to add to an existing Cash ISA, don’t necessarily pay into existing one – seek the best rate with the right level of flexibility and watch out for introductory rates.
• Be careful to follow the rules if you want to transfer an existing Cash ISA into one offering a better rate, otherwise you could lose all of your tax-free benefits. Make sure you use a transfer form from the new provider. Don’t ever simply withdraw your money and reinvest it with the new provider.
• A Cash ISA transfer shouldn’t take longer than 15 days to complete – if it does the new provider should start paying interest.
• Since 2008 you’ve been able to transfer an existing Cash ISA to a stocks and shares ISA. The benefit of this is the potential for a greater overall return since stock market gains can be more lucrative than interest earned on a cash investment. But be aware that investment in stocks and shares also has the potential for greater losses.

The end of the tax year usually brings advice from finance experts also to maximise your pension contributions, including contributions for non-working spouses or even children. This usually means a scrabble to meet the 5 April deadline, otherwise you lose your annual pension investment allowance. But the good news is that from 6 April 2011 the rules are changing. This now means that you won’t lose out if you miss the deadline because from 6 April 2011 you can roll over unused contributions for up to three tax years.