Episode 75 – The Financial Wellbeing Audit

Join the guys as they explore the the five pillars of financial wellbeing so you can ask the important questions and review your finances via a financial wellbeing audit. Along with Bage’s Behavioural Biases and some classic #tightasstommo tips. Have a listen to find out if you are on the right path.

Welcomes and Introductions

What is todays podcast all about – Bringing together what the guys have been talking about in various episodes of this podcast for listeners to maybe go through a Financial Wellbeing Audit, a little tester to see if you are doing the most with your money to maximise wellbeing?

Bage’s Biases

Every episode, Behavioral Finance expert, Neil Bage is going to be giving us his money behavioral tip. Exploring and thinking a little bit about the behavioral traits we have towards money can inform us, so we can make better money decisions going forward.
– Link to Episode 36 – Understanding our attitude to risk
– Link to Episode 21 – Financial capability
–  Link to Bitesize Behaviour Podcast

This episode – Availability Bias


Featuring neighbours gardens, moving house and fuzzy webcams! (thank you to Emily Pool)

Todays topic – The Financial Wellbeing Audit

What is the Initiative for Financial Wellbeing audit?

Ovation’s experience with the IFW Audit

The Five Pillars of Financial Wellbeing:

  • A Clear Path to Identifiable Objectives
  • Control of Daily Finances
  • Having Financial Options
  • The Ability to Cope with Financial Shock
  • Clarity and Security for Those we Leave Behind

A Clear Path to Identifiable Objectives

The difference between intrinsic and extrinsic motivations

The difference between goals and motivations

Do you have purpose and meaning in your life?

Using a cash-flow forecast to find that clear path

DIY versus a professional

The Ability to Cope with Financial Shocks

Have you got emergency cash set aside?

Have you got sufficient insurances in place?

Knowing that should something terrible happen, you will not have to worry about your finances.

Key question – do I worry about how we would cope financially if something unexpected happens?

Control of Daily Finances


Core understanding of how much is coming in and how much is going out.

Does not mean free from debt – the difference between secured and unsecured debt

Self-limiting beliefs

Financial Coaches – looking at the emotional side and our relationship with money

– Link to BeIQ | Beam App

Clarity and Security for Those we Leave Behind

Everyone with children should have a will

Look to get Power of Attorney in place

Key question – If something were to happen to me, would those I care about have anything to worry about?

Shareholders agreement for businesses

Conclusions from the guys –

If you would like to purchase a copy of The Financial Wellbeing Book please click on this link to visit Penny Brohn UK shop

If you would like to get in touch with Ovation, click here to visit the website email enquiries@ovationfinance.co.uk or call on 0117 942 4333

Do you have any financial wellbeing questions you would like us to answer? Or do you have a #tightasstommo money saving tip you would like to share with our listeners?

If so, let us know by going to Twitter @Finwellbeing or email – contact@financialwell-being.co.uk

Transcribe of the Podcast Script:

(scroll to the bottom to listen to the episode)

David 0:12
Hello everybody, and after a few technical issues at our end I’m glad to say that we are now in a position to bring you Episode 75 of the Financial Wellbeing Podcast.

Chris 0:24
What was the technical issue David?

David 0:26
Well it was to do with a microphone that have been incorrectly fitted by somebody that quite frankly should not be doing this sort of work. It was me! I bought myself a new headset and a new microphone, because I felt that the richness and gravitas of my voice was not coming across properly with a slightly tinny what I had before. So I bought myself this new headset with a new microphone, we were try to get it to work, as you well know, because we just spent 15 minutes trying to do it. And it turned out that the connection was slightly loose on my microphone and that’s why nobody could hear me. I fixed it now though, and I hope that you’re all absolutely loving the beautiful tones of my melodious voice. Right, there’s a conversation stopper. Okay. Having said all of that, we are here to talk about all matters, financial wellbeing and with me are two people who’ve been doing it for as long as I have. Well, one of us hasn’t quite actually, but that certainly one person that has, Chris Budd, Chris tell us about yourself.

Chris 1:30
Thank you David, I think I’m right in saying that it’s five years since we started doing this podcast it’s not?

David 1:36
It is, we met in my house actually for the very first one, and then we had to give up on that because my dog insisted on snoring. My dog, bless her is getting on a bit now. Yes, she still snores, but she’s fortunately snoring in another room.

Chris 1:56
So, I wrote the Financial Wellbeing Book, founded an institute for the Initiative for Financial Wellbeing. But the main thing I want to be plugging, is that new book of mine, The Vanishing Point, you’ve got a new novel out.

David 2:07
Oh you have indeed. Yes. How’s that going?

Chris 2:10
Well I’ve had three reviews, and they’ve been very positive. It’s very early days, it’s, you know, David because you have your book recently but you’ve got your audio book out

David 2:20
Exactly as far as just come out and an audio version which I recorded myself and as we were comparing notes the other day, you know, trying to get your novel out there is not always easy but though it’s, it’s fun. Well I’m glad I’ve got yours on my to-read list, Chris, it may well take me a while to get there but I’m certainly I’m looking forward to reading that.

Chris 2:38
Just a quick question when you did the audio reading for your audiobook did you use those headphones and was it plugged in properly?

David 2:45
No actually went to a professional studio where they knew what they were doing. Right, okay. Anyway, that’s enough of us, and our literary endevours. Who else we got with us today, Tom Morris.

Producer Tommo 2:55
Hi everyone. Can you remember Richard in Judy’s book club?

David 2:59
I can indeed, yes.

Producer Tommo 3:00
yeah, I just had a little . . . Well I didn’t watch it, so I’m assuming this is exactly what it was like, just two people waffling on about book. But as someone who doesn’t particularly read much. I switched off for a second there. I’m joking. Congratulations both of you, writing, writing a novel is no mean feat. Yeah, anyway. Yes, Director and Chartered Financial Planner over at Ovation Finance, where we try and apply all his theory around financial wellbeing and I think we’re going to dive into some of that today. But also involved with the setting up of the Initiative for Financial wellbeing, which is going great guns, so if you are in the financial services profession or industry however you want to call it, go and take a look. Initiative for Financialwellbeing.org.uk We’d love to see you there and talk more about this particular topic.

David 3:52
Excellent. Well I think that Tommo has perhaps deliberately, perhaps inadvertently, given us a little insight into what we might be talking about today. Chris would you like to elucidate.

Chris 4:06
Nothing will give me greater pleasure. Today David we are going to bring together lots that we’ve been discussing, by giving listeners a Financial Wellbeing audit that they might wish to take themselves through.

David 4:16
Excellent, so we’re kind of doing a bit of homework really aren’t we, seeing if people have been paying attention over the last five years?

Chris 4:23
Yeah, there’s no exams anymore, are there, becasue of lockdown. So yeah let’s have our own little version of exams. It’s not an exam. It’s a it’s a pathway you might say, but a little tester just to see – are you doing the most with your money to maximise your wellbeing?

David 4:36
Excellent looking forward to that. But first up we have our regular feature Bage’s Biases. We’re an old friend of the podcast behavioural finance expert Neil Bage will give us his one minute introduction to a different behavioural bias that effects how we make decisions about money. This week, Neil tells us about Availability Bias

Neil Bage 4:59
Availability bias. The availability bias is where we rely too heavily on information and we can immediately think or see. It’s our tendency to judge stuff by how easy examples can either be retrieved from memory, or information that is laid out in front of us, as it is on the news, for example. The media plays a significant role in generating availability bias, even if we’ve never experienced something firsthand. The fact that the news shows us vivid images of events, positive and negative, means certain things are easier to recall, even if we don’t have personal experience of them. We can find many examples in the news reporting on plane accidents but we’d struggled to find a news report of someone suffering a heart attack, which is so much more likely than a plane accident. Or we could find examples in the news reporting on a person who was just had a massive lottery win, but you’ll never find an article about a person who worked hard, saved into their pension from the age of 25, and is living a very happy and financially stable retirement.

David 6:11
Fascinating stuff that so I think the message from that kiddies is don’t believe everything you read in the papers.

Chris 6:17
And certainly don’t make, make decisions and take action based on what you believe. And social media, obviously as well. Tommo what, what does availability bias mean in financial planning terms do you reckon?

Producer Tommo 6:28
I, I would say, when it comes to things that we know a lot about already, we tend to be quite focused on it. For example, people understand the idea of cash, and the idea of savings in a bank account. What they struggle with the idea and mainly down to a lack of education from an early age, is the world of investing and stock markets for example, and they see it as quite a scary place to be when actually stripped down is just an avenue to be able to invest in lots of great companies in the world in a very diversified way and hopefully your money should be growing better than it is in cash, which is great for the long term because inflation is a killer. So I would perhaps say it’s the, not understanding certain things and understanding a lot about other things, stops people potentially making decisions that would improve their financial situation.

Chris 7:27
I’ve got an example of that, actually, which we could go a real rabbit hole if we if we got into this so we won’t but Bitcoin cryptocurrencies. We see on the news that somebody, or on social media, somebody says I just brought a house because I sold my one Bitcoin, you know, and you’re gonna buy some bitcoin, which of course is possibly the very worst thing you could do, because that way everybody invests in the market and then get into investments at the top of peaks of cycle of investment so that’s just one little example for me.

David 7:57
Yeah, I was phoned up the other day actually by somebody tried to sell me Bitcoin, it was a very brief conversation and on one sideded one.

Chris 8:04
One bitcoin is 46,000 pounds at the moment.

Producer Tommo 8:07

David 8:08
I mean, my son who’s kind of follows this stuff quite closely because he’s a self confessed bit of a nerd, I mean he does point out that had you gone to Bitcoin when they first came out, that your Bitcoin would be worth an absolute fortune now. But as you say, what you don’t want to be doing is going into the top of the market so even I, in my financial naivety, know that!

Producer Tommo 8:29
Do you know, I might make a point here, and I might be proven completely wrong. And it might go to the moon as they say. But isn’t it meant to be a currency, and with it being so volatile, it goes up and down in value so much, isn’t that defeating the exact point of its existence? And also you’ll see lots of cryptocurrencies pop up that don’t have a lot of basis behind them. Folks, that’s not investing. That’s speculating.

Chris 9:01

Producer Tommo 9:01
It’s gambling. It is gambling, and you know what, if you’ve got a portion of your money that you, that scratches an itch for you. Fine. But don’t think that that replaces a well thought out boring, diversified investment portfolio that you put in each month, see it grow for the long term. That’s going to give you your financial freedom in the future, is by doing that, rather than punting on what some form of cryptocurrency is going to do because quite frankly, it doesn’t produce an income. Its value is only worth what somebody else says it’s worth. And I can’t help a fear, fear it feels like Tulipmania back in the old Dutch example in the 1600s. But anyway I can be proven completely wrong, it could go to the moon, it could be worth a million pounds a Bitcoin, but just beware.

Chris 9:57
That folks is why Tom Morris is a Chartered Financial Planner.

David 10:00
Exactly. If I was, if I was to encapsulate the almost five years of Tom Morris’s contributions to this podcast I would say that’s right up there with the best advice.

Chris 10:12
Maybe we should do that Tommo’s, Tommo’s highlights. A highlights reel of Tommo, like American shows they sometimes after about five series have a clips show. Maybe we should have a Tommo clips to show?

Producer Tommo 10:25
That sounds awful for the listeners, so let’s not.

David 10:28
I think we just jumped the shark there everyone.

Producer Tommo 10:31
Yeah I think so. Would you mind if I if I make a little plug for Neil, we were introducing some of his biases and then talking around, talking around the subject, but he does actually have his own podcast out now. And I thought it’s worthwhile pointing the direction where he goes into a little bit more detail on this, and it’s called Bitesize Behaviour Podcast. So I think you can find it all in all your relevant podcast apps, whatever you want to call it

David 10:59
Brilliant, perhaps we could put that in the show notes as well. Alright that okay that’s great so let’s move on now to the next of our regular features before we start doing our homework, which is of course #tightasstommo as you know, where Tom Morris our master of meanness comes up with another brilliant tip about how we could save a little bit of money but before we come on to the supremo himself, Chris, if you’ve got one this week?

Chris 11:06
I do, yes, we have a chap who comes around for half a day a month to do a bit of gardening for us. Matt. And I was talking to him and I said look, I’ve got this podcast recording and I wouldn’t mind a tip, have a think. So he had a little think, he came back and he said, I’ve got a good one for you. He said, look, save money on gardening, cecause if you like looking at a nice garden but don’t want to spend any time or money on it, just take down your fencing, put you’re sitting at the edge of your gun, and then, enjoy the lovely view provided by the neighbor’s garden.

David 11:55
He’s doing himself out of a job.

Chris 11:56
Well I thought about myself there. He’s shot himself in the foot a bit.

David 12:01
I’ve got one, which is, I’m actually in the process of moving house. Well, not actually the process now of moving house but I bought another house that are going to be moving. Just moving half a mile up the road, so I’ve been ringing around starting to get quotes from removal companies, and they’re just starting to come in now and as ever, there’s a divergence of amounts. But it occurred to me that given that we’re not going very far. Rather than get a removal, I could just get my mates in the village to all sort of muck in. So Chris, you’ve got quite a big car. So I was thinking maybe you could just put aside, probably won’t get it done in a day might take a week, perhaps to just shuffle up and down between my old house and my new house is just around the corner from your house, with a few boxes of stuff without me. All right?

Chris 12:48
Yeah not a problem, in fact we can we can work on this because you’re very popular. Everybody likes David Lloyd. Let’s get everybody to form a great big long line between your house and the new house, and we’ll just like, like the old fire buckets when you know putting out the fire, we just pass a box all the way up the road.

David 13:04
Even better, Chris, I think you’ve solved my problem now and save me a couple of grand in the process.

Chris 13:09
And saved me a week of work as well.

David 13:11
No, you’re gonna be in the chain. Your a part of it Chris. Right okay, so that’s our slight silliness. Tommo, what have you got for us?

Producer Tommo 13:20
This one was shared with me. It’s not one that I’m going to use. I don’t think. This was shared with me buy, with a fellow fellow financial planner. Somebody is actually involved with the IFW. Emily Pool. And she said, Hi, Tom. I have a tight as tip for you. My makeup is running a little bit low. And so I thought I would smear the camera lens on my laptop for a filter effect works a dream. Yeah. It’s not something us gents usually have to worry too much about. But yeah, there you go a bit of a silly, silly tip for you today. For you Men who do wear makeup. And for you ladies you do as well.

David 14:02
Maybe that’s why my microphone didn’t work earlier maybe I was smearing makeup on it? Okay, let’s move on now to the main thrust of today’s debate Chris, why don’t you introduce our subject for today.

Chris 14:16
Thank you David. So regular listeners will remember that beginning of 2020 We started a new institute called the Initiative for Financial Wellbeing, or IFW for short. It’s for financial advisors to learn about research on happiness and how to apply it, as well as to meet other like-minded financial advice professionals. So one area, we’ve developed with the IFW is an audit, to help firms who want to market themselves as being experts in financial wellbeing.

David 14:42
Now it’s interesting that you say market themselves as opposed to actually practising financial wellbeing.

Chris 14:48
Yeah unfortunately there are some firms have been doing this purely for marketing purposes. There are some small firms but also some very large well known advice firms who have put the word financial wellbeing, into their marketing but don’t actually make the wellbeing of the client as a focus of their advice. They might not meet the client regularly for example or they only talk to a client about their investments or financial products.

David 15:09
Well that’s marketing for you.

Chris 15:11
Quite. So as a result, the IFW has developed this financial wellbeing audit to check on whether financial advice firms really do provide advice that aligns with known theory of financial wellbeing. In doing this, though, we also then give them a pathway for how they might develop their advice processes. So if you see a firm using the phrase financial wellbeing in their marketing, and they are proudly displaying the IFW logo. It means they have submitted evidence to the IFW two prove they really do focus on financial wellbeing of their clients.

David 15:41
Okay so what sort of things do you look at in this audit?

Chris 15:46
Well I thought we might go through some of the areas so that we can create a kind of personal financial wellbeing audit that listeners can go through themselves. They can do this on their own finances to see if they’re doing all they can to maximise their own financial wellbeing.

David 15:58
Yeah, presumably, any financial advisors that are distinct could consider the audit for their own firm?

Chris 16:04
Absolutely and what would be really perfect, would it not, would be to have somebody from a firm that has passed the audit to join us in this discussion?

David 16:12
Now where could we possibly find one of those?

Producer Tommo 16:18
Over here, over here!

David 16:22
A Smurf had suddenly, Tommo, has Ovation passed the audit by any chance?

Producer Tommo 16:29
Glad you asked. Yes we have, we have, we went through it a few months back. Now, I’ll be quite honest about our experiences, you can imagine we were steeped in this whole financial wellbeing, stuff through the podcast with myself and Chris, and we do an awful lot of this before this all kicked off. Bit i’ll tell you what, it was a rather challenging audit to go through, he really had to get your evidence together and really pull it together and there was a couple of areas that we put it for submission and we got some really positive feedback. You know what, there’s a few areas you can tighten up on here and there and it was purely evidence in the conversations we were having with clients to actually see it repeated back to themselves, you know, good example was, we’ll touched on it later on, this idea of clients motivations, and what makes them happy. You know, are we linking what their budget is telling them to these clear motivations we’re having these conversations but actually we really need to be shouting to clients about, you know what, this part you’re spending should be linked to this part of your life because it’s really important to us, yet some great stuff came from it. But yeah, it got us thinking about our processes and tightened up a few of them actually so yeah really positive experience.

David 17:51
So Chris, what’s the audit based on I’m guessing you’re going to be using the five pillars of financial wellbeing is that right.

Chris 18:11
Yeah, absolutely, it’s, the five pillars form the basis of all that we do with financial wellbeing within the Financial Wellbeing Book and also in the IFW so maybe you could remind everybody what they are.

Producer Tommo 18:22
I can, indeed,

Chris 18:24
Off the top of your head, don’t read them.

Producer Tommo 18:27
I’ve been living and breathing this. I try and do it in a particular order. So, there is, firstly, a clear path to identifiable objectives. Control daily finances. Having financial options. The ability to cope with financial shocks and clarity, and security for those we leave behind.

Chris 18:52
Really, it’s almost as if you didn’t need to read that from anything at all.

Producer Tommo 18:56
No, off the top of my head, didn’t need any, any help there at all.

Chris 19:02
I did a talk once and you know how – so there’s five points that are really important and by the time you get to the third, youve forgotten the last two. Did that in a talk at quite a big event one time, had to get my notes out out, rather embarrassing. Anyway, let’s look at the first of those then – A clear path to identifiable objectives. And let’s double click on that word objectives.

David 19:22
Right now just to demonstrate how much I’ve been listening over the past five years, I’m going to predict, with I think you’ll find, an uncanny accuracy that you’re going to talk about intrinsic motivations.

Chris 19:34
We are indeed. Episode 42 of the podcast with Professor Tim Kassar if anybody wants to go back and listen to the, when this topic first came up.

Producer Tommo 19:44
Let’s just remind everyone what that means and some of the things that were discussed in some classes. Two types of motivations or reasons for doing things. Extrinsic and intrinsic. Extrinsic means you do them for some sort of external result or reward, whether that be financial or status, or maybe punishment. That sounds rather dark! Intrinsic motivations on the other hand, don’t have a particular reason, you just do it because you want to. We might call this doing something meaningful. Something that gives us purpose.

Chris 20:22
And research shows that achieving an eextrinsic motivation does not add to our well eing. But achieving intrinsic motivation does increase our wellbeing. So if listeners are thinking about their own financial plans, ask yourself whether it creates a clear path to achieving an intrinsic motivation. Some of these could be specific goals, because you can have an intrinsic goal, but some do need to be a longer term motivations and purpose.

David 20:49
I’m sure I’ve asked you this question before Chris, but can you give me an example of the difference between goals and motivations?

Producer Tommo 20:57
I might jump in here just because I’ve seen this example pop up a lot of clients. So most people when you ask them what they want to do in retirement would say, I’d like to travel more. But this is intrinsic rather than extrinsic, as there is no output as such. However, it’s a goal, not a motivation. The difference being a goal is finite, it has an end, whereas a motivation doesn’t.

Chris 21:23
Let me give you another example of motivation, could be learning an instrument. If you learn to play the piano, in order to get a job at your local bar paying customers. That’s an extrinsic motivation. If you learn the piano because of the sheer joy of music, that’s an intrinsic motivation.

David 21:40
Right, so they don’t need to be deep, life changing issues then?

Chris 21:44
No, not at all. I’ve been reading this graphic novel series about the life of Buddha. And I just realised that might just be the most pretentious sentence you have heard for a while!

David 21:53
Well, I have to say there have been a few contenders over the years, that was right up there.

Chris 22:04
Well I’m gonna carry on regardless. There is this line, where the young Buddha asked his disciples the following question. “Are you doing something in your life that is important to you, important to someone else, or important to everyone?” It doesn’t mean everything you do needs to be important, but a meaningful life is gonna be one that has at least one of those in it I would suggest.

David 22:27
So the first check on the financial wellbeing audit checklist is, is whether you have meaning and purpose in your life, I’m sure we could all agree on that. Well, what next.

Producer Tommo 22:37
So we’ve got something to aim for. We’ve established some identifiable objectives motivations, goals, what needs to be intrinsic. Then we need to make sure there’s a clear path towards them. For us as financial planners this really means using something call a cash-flow forecast. This is simply a case of understanding everything that you’ve built up to now, you know your savings, your pensions, house, mortgage left understanding what that meaningful life will cost, or does cost already. And then plotting it out over many years, to see whether you run out of money or not. Whether you can achieve these things or not. You know some things that come up are, can I reduce the hours I’m working to do something that does provide a bit more meaning in my life? Can I stop? It’s all these questions get answered via this cash-flow forecast it really starts to prove whether there is a path towards these objectives.

David 23:42
And is this something people could do themselves?

Producer Tommo 23:45
Arguably yes, depending on how simple people’s situations are. Sometimes it’s a glorified spreadshee. Arguably for many people it’s a bit more complex than that. You’ve got things like tax rules to comprehend. You’ve got to make sure you’ve got sensible investment growth rates. Do you understand that pensions, the details that you’re putting in? And I think sometimes having a professional on your side to just make sure that what you are forecasting isn’t packed full of incorrect assumptions I think is really important.

David 24:19
Yeah, it’s worth pointing out though as well that if you feel that’s not for you that the Financial Wellbeing Book does provide a template for it does that, if you want to do it yourself.

Producer Tommo 24:27
It does indeed, but but I would seriously caveat that just make sure that the assumptions you’re putting in are correct, because it only takes a small difference for it to make a huge difference over a 30 year time horizon. Just that, you’re guessing a 1% more growth rate will make a huge difference to the overall results of this cash-flow.

David 24:48
Yeah, and from a client or customer’s point of view, I can certainly back that one up having gone through that process with you in the last few months. We looked at various options about how things might develop the various scenarios and it’s very interesting how things play out differently or could play out differently in the future, depending on the information that you put in. So yes, on balance, I think that’s very good advice. Do all financial advisors, offer a cash flow forecast?

Producer Tommo 25:14
How do I politely put this, the good ones do. Yes.

Chris 25:19
Can I just chip in with that. I was talking with my other hat on, you guys know I do a lot of advice to businesses on succession planning and the employee ownership trust, and I was talking to one owner recently and I asked him that question I always ask them which is – how much do you need to sell your business for, not how much is it worth how much do you need. And he said well I don’t actually know. I said, well, do have a financial advisor? He said yes. I said, did he do a cash-flow forecast for you. No. Well, I don’t really think they have a financial adviser that to be perfectly blunt, because if you’re not helping people to make big decisions like that, then what is the point of view financial advice. Anyway, just climb off soapboxe for a second.

Producer Tommo 25:58
Just to give a bit of an idea of what people would likely experience if, if they had a financial advisor, planner, using this cash-flow for forecasting technique is they will use sophisticated software that helps with a lot of that technicality that I talked about previously to make sure that you know what you’re seeing as a visual, it’s very visual, which is easier for a lot of people to understand and see and rather than numbers on a spreadsheet, but also a bit more trustworthy then perhaps a DIY spreadsheet that’s, that’s how I will finish that particular point.

Chris 26:32
Amen to that. So that we will crack on. Next on the list of the five pillars, we’ve got the ability to cope with financial shocks.

David 26:39
Now I could speak with a bit of personal experience on that so a year ago, March 2020, we suddenly went into lockdown, I had five sources of self employed income which dried up overnight, and had I not have had some money put aside to deal with those financial shocks, I would have been in significant trouble.

Producer Tommo 26:59
So almost as though you’ve got a financial planner making sure you’ve got those things in place. Open goal that one wasn’t it! This is so true, having some money sitting in, set aside in cash. Cash ISA’s or maybe Premium Bonds, you never know you might be that one who gets that million pound win. Something that covers three to six months of expenditure somewhere around that mark, just so that you can dip into it, quickly, you want instant access cash here, that can just help out so should the brown stuff hit the fan, which, quite a few people experienced back in March 2020. So that’s one area we can look at, but also it’s worth checking whether you have sufficient insurances in place. On things that matter the most. And what I mean, are you know if you’ve got, loved ones who would struggle if your income wasn’t there. Life insurances, if you were dead, for example, or if you were unwell and unable to work, so things like critical illness and income protection are important things to have just to have in the background so you can make sure that you’ll be okay.

Chris 28:08
So the important word in that pillar is the word ability, it’s the ability to cope. It’s knowing that should something terrible happen your finances will not be something that you have to worry about that leaves you free to get on with your life.

David 28:22
Yeah, I’ve certainly found the whole process of engagement that means that I don’t worry about money like I used to, I worry about a whole load of other things, but not about money,

Chris 28:31
Great line for George Michael I’ve always loved “money doesn’t make you happy, it just gives you different problems.” The question to ask yourself here is do I worry about how we would cope if something unexpected happens? And if the answer to that is yes, in this audit that it might be that this pillar of financial wellbeing needs a bit more thought.

Producer Tommo 28:50
What’s next we have control of daily finances. Now for many people who talk about financial well being. This is the big one. In fact, for many it’s the only one really they talk about, but as you see, five of these pillars, not one. Another word for this might be financial resilience. It’s budgeting, knowing how much is coming in, and knowing how much is going out. So you can see quite a core pillar that needs to be worked out and understood.

Chris 29:16
I think we should get one with that the way that it doesn’t mean being free of debt. Debt can be a good thing, for example it enables us to own houses. So the key question to ask yourself on this one is whether you have used your income, in a way that brings your wellbeing.

Producer Tommo 29:31
Can I just jump in here, just to clarify, debt. There’s a difference between your secured debt, which is your mortgages, and your unsecured debt which is your high, high interest rate paying credit card. So I think you’ve meant, things like mortgages and yeah absolutely with that comment, Chris Yeah?

Chris 29:47
Thank you. Let’s go straight on to the fourth of the five pillars, if that’s all right. Just having financial options in life. Now there are two ways of looking at this, we might ask ourselves whether we have accumulated sufficient wealth to do the things we want to do. But another way of looking at it could be by identifying those intrinsic motivations, and then coming to realise that maybe we don’t need as much money as we thought we’d need.

Producer Tommo 30:12
Another angle, if I may. I keep chiming in, sorry. One of these is those self limiting beliefs, are we comparing what we think will make us happy with others who are wealthy than us. So we are comparing comparing ourselves, you know keeping up with the Joneses, that sort of thing. Just by identifying what brings meaning to our lives may give us more financial options, because we’re not trying to compare ourselves to somebody else.

David 30:41
Yeah, but how do we identify our own self limiting beliefs, it sounds like the sort of thing that’s just built into us and therefore it’s not going to be easy for us to take a step out and look back in ourselves and identify.

Producer Tommo 30:53
That’s a good point, David, there is a growing community of what’s called financial coaches who actually really look at, look at the emotional side, and your relationship to money,

David 31:07
Sorry, i that is that different to a financial advisor?

Producer Tommo 31:10
Yes it can be now there are quite a few financial advisors and planners who will cover this, you know we talk about this sort of stuff with our clients to try and understand what money means to them. But really I think that there are the expertise here is with the financial coaches who are able to really unearth our relationship with money. Now helping us to uncover some of the biases we have those self limiting beliefs and we actually recently did a webinar with Lorraine McFall, who is brilliant, we did a webinar on this emotional connection with money for our clients. So I even believe you’ve probably got a copy via your newsletters you should definitely have a look, David.

Chris 32:02
Another possibility is that you could try an app that Neil Bage, and his BeIQ comes to the head, but only on iPhone and Android, but I think it’s also PC based as well, or soon will be. It’s a series of games that you play, which will help you to understand your own behavioural biases which might be leading to poor financial decisions. Yes, yes.

Producer Tommo 32:27
The question people should ask themselves, and I should just add with using this software with clients and it’s really, really fascinating some of the outcomes from it. So the question people should ask themselves here is, are my own money beliefs, and therefore my spending actually working against me, achieving my intrinsic motivations? You compare your spending to those intrinsic motivations, we talked about earlier, for example, are you buying things that don’t actually bring you wellbeing? A really good exercise for this and I do these workshops with employees, list everything that you spent over £100 on in the last 12 months. And ask yourself, is that still giving you wellbeing. If the answer is no, then we’ve got to really ask ourselves whether that’s what we should be spending our money on and it just helps free up more money, so that we can put it towards things that are gonna make us happy. It might even be that frees up money so that we can save enough to be able to do the things that make us happy, more in the future.

David 33:31
So that only leaves us with clarity and security for those that we leave behind and this sounds like something that should be very easy to achieve.

Producer Tommo 33:40
Absolutely. Everyone with children should have a Well, he certainly don’t want the courts deciding how to look after the children. You’d rather be the master of that one. But I’d also say, there’s something called a power of attorney, and should anything happen to you, somebody can make decisions on your, on your health and wealth. Certainly anybody over the age of 65 makes sense for them to have a power of attorney. Crikey, anybody should be looking at potentially having a power of attorney but certainly as you get older, you know, and your faculties could leave you very quickly, it’s important to have that in place.

Chris 34:15
I think that’s a little bit cruel to somebody who couldn’t put the microphone in.

David 34:22
Also will be able to 65 in three weeks time. Who are you two anyway!

Chris 34:29
The question for people to ask on this one is, if something were to happen to me, would those I care about have anything to worry about? And it’s really important to note, by the way this isn’t just for families, it’s also for businesses, any small business with more than one shareholder should have a shareholders agreement in place. It is so shocking the number that don’t have a shareholders agreement. And I have seen personally what can happen when a widow needs to negotiate with surviving shareholders, and I know a particular example which ended extremely nasty with lifelong friends and split friendships up. So yeah, little point there about shareholders agreement, if you own your own small business.

David 35:04
Right okay thanks for that Chris. So let’s summarise by repeating those five questions that people should ask themselves if they wanted to conduct their own financial audit. So firstly, are you doing something in your life that’s important to you, important to someone else, or important, everyone?

Producer Tommo 35:24
You can also ask if they have clarity over how they are going to achieve those things.

David 35:30
Yeah, so two do I worry about how we cope if something unexpected happened. Three, am I using my income in a way that brings me wellbeing? Four are my own money beliefs and habits working against me, achieving my intrinsic motivation? And five. If something were to happen to me, would those I care about having nothing to worry about?

Chris 36:00
I recon the person took some time to sit down and go through those, but it’s really six questions if you add Tommo’s point as well, that could really, really get some interesting answers to people’s spending habits and how that they, how they manage their wealth.

Producer Tommo 36:15
Can I just do a shameless plug, it’s nothing shameless. A lot of this is the foundation piece of the Financial Wellbeing Book, please go find it. The profits go to Penny Brohn cancer charity, you’ve probably all heard about it before, but you know it’s looking for work for it on all of this, so yeah. Shout out to that. Or, get in contact with Ovation and I’d be happy to have a chat with you!

Chris 36:39
Nice. Nicely done.

David 36:42
Very good, very good. So yeah so I think we’ve brought a lot of things together in this I said it was going to be a review, a bit of homework I hope you’ve all enjoyed this home. If some of it sounds a bit familiar and it’s refreshed your memory of things all well and good. Or if it’s your first introduction to this, I hope you’ve enjoyed that, and I hope you’ll join us next time when we come together to chat nonsense and also some sense with another one of our financial wellbeing, podcasts.

By | 2021-06-19T15:06:51+01:00 June 20th, 2021|Podcast|Comments Off on Episode 75 – The Financial Wellbeing Audit

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