Is professional financial planning for me?

novice1

New Member
Messages
2
Hi,

I am a 36 year old single man. I earn about 120K per year + bonus in shares, savings of 50k (deposit for a house). Pension pot of 90k. Car loan of about 9k paying 500 per month. I don't live paycheck to paycheck but I don't think I am making good financial decisions. My lifestyle has inflated as my pay went up and I think I waste a lot of money on lifestyle things like eating out, etc.

I am wondering if financial planning is right for me; my expectation is it's only for very wealthy people and all they really tell me to do is put more in a pension (which is the plan once I buy a house) and cop on spending money on eating out.
 

RetirementPlan

Registered User
Messages
334
You could try sharing more details here, using the template at the top of the forum and getting a range of opinions before you consider paying for a service. TBH, I've never heard of a financial planning service that is aimed getting you to stop profligate spending. It's more about getting the best of your investments.

One obvious issue for me would be why you have a car loan at something like 8% interest when you're earning probably <1% interest on your savings. You'll save money if you clear the car loan from your savings.
 

Gordon Gekko

Registered User
Messages
5,895
You’re making decent money, so there has to be room for some profligate spending.

Having the car loan doesn’t make a whole lot of sense, unless it’s a 0% PCP.

I put together a spreadsheet covering income and outgoings in reasonably granular detail. Then within that I have an expense item for ‘Revolut’ which I don’t break down any further. That’s an amount that I’m happy to not have granular detail on and covers coffees, shoes, meals out, beers, etc. The main thing is that it’s okay in the context of the main spreadsheet.
 

MrEarl

Registered User
Messages
2,359
within that I have an expense item for ‘Revolut’ which I don’t break down any further. That’s an amount that I’m happy to not have granular detail on and covers coffees, shoes, meals out, beers, etc....
What, you can use Revolut for other things, besides paying for beer? ;) :D


Getting back to the original posters question - yes, they definitely need to give some more information - but I'm absoutely amazed that they aren't making pension contributions, given the income level and significant amount of tax that they must be paying.

Likewise, I would have expected savings to be higher, assuming the person has been earning this level of income for a few years.

Savings could easily be increased, with a standing order taking monthly payments out the day after the salary comes in - leaving a smaller amount for day to day lifestyle costs.

Unless the car loan is at 0%, if should be cleared immediately (unless there's a big penalty for early repayment).

Deepening on the original poster's profession, they might qualify for an exception, and be able to borrow a bit more when they ultimately do apply for a mortgage, it's worth exploring with the homeloan providers, or an independent mortgage broker, if buying a home is a priority.
 
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Clamball

Registered User
Messages
333
Well novice you are not in any debt whic is a real positive. I think you are right about lifestyle creep, as your income goes up you tend to spend more, but that is pretty normal. I would say you have no clear financial goals, and that makes you feel aimless. You probably woke up and said I need to buy a home but felt a failure because you did not have the cash ready to go or something like that.

So I would say get out the pen & paper or the excel and consider your goals, long term, medium term & short term.

Long term - I want to retire with a pension of 50 % of my salary. Or I want to quit work at 50 and I figure I can live on €10K a year

Medium term - I want to buy a house in 2 years time. Or I want a bigger car when my current loan is paid off

Short term - I want to buy my parents a nice gift for Christmas or I want to go skiing in January.

It does not matter what they are because they will be personal to you, and of course you are allowed to change them if you find your circumstances change.

Once you have goals, and a good feel for what you currently spend your money on then you can start to figure out how much to put against each goal from your take home pay. And be realistic about what you can or want to afford. So say you take home €5K, you pay €1K in rent, €1K in bills & €1K in spending which leaves you with €2K to play with, do you decide to put €500 into you short term goal pot, €1500 into the house fund. And park a pension until you get a key to the house? Do you decide you really want to tick the house off the list and prioritise €2K a month to saving for it and give up your short and long term goals for a while. Or do you definitely want to start a pension now and are willing to wait a few more years for the house. How you decide to prioritise your goals is up to you but you can see how you need to decide and the impact one has on the other.

There are folk who are willing to make drastic changes to their current spending pattern to achieve a goal faster, there are others who want to maintain a specific level of spending and are willing to achieve their goals at a pace that suits them.

Once you have your goals sorted and know what your spending your money on currently a financial advisor can help you plan on how to achieve them but the advice they give you will probably be close enough to what you can figure out yourself. They will probably be able to project better what your pension pot would be like if you decide to start at different ages or with varying amounts of money. But they won’t be able to tell you what type of house or car would best suit you as these decisions are so personal. The hard part is figuring out your own goals.
 

Steven Barrett

Registered User
Messages
4,226
Hi,

I am a 36 year old single man. I earn about 120K per year + bonus in shares, savings of 50k (deposit for a house). Pension pot of 90k. Car loan of about 9k paying 500 per month. I don't live paycheck to paycheck but I don't think I am making good financial decisions. My lifestyle has inflated as my pay went up and I think I waste a lot of money on lifestyle things like eating out, etc.

I am wondering if financial planning is right for me; my expectation is it's only for very wealthy people and all they really tell me to do is put more in a pension (which is the plan once I buy a house) and cop on spending money on eating out.
Why use a personal trainer when all they'll tell you to do is lift more weights and stop eating unhealthy food.

Sometimes you need someone else to tell you what you are doing wrong and what you are doing right. And they may be able to correct a few things that you could do better or more efficiently. Other people are perfectly good at doing all this themselves and don't need help.
 

novice1

New Member
Messages
2
Thanks for the advice all.

I suppose I understand that I am spending too much, I don't need a planner just to tell me to stop. I think I need someone to help me to define what my goals are, what are my options, what should I be considering; as I am a little overwhelmed trying to figured it all out. I had the impression that financial planners are really just for rich people with loads of wealth.

A few people made the point that I should pay off my car loan. I am currently renting an apartment for 1800 per month and was planning to use my savings as a deposit for a house which would have saved me more than the interest on the remaining 2 years on my loan over a few months. However, while looking for a place to buy, I have found a new job so have to wait 6 months to be permanent.

Another person mentioned why I am not paying into a pension, I am paying in 5% + 5% from company. My plan was to increase that to 20% when I bought the house. I have circa 90k in the pension at the moment and Irish Life just wrote to me asking what I want to do with the funds now I have moved employment. I have no idea what is best for that; I was hoping a planner would advise on stuff like that.
 
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