OK having written this post I feel I ought to put an advisory at the top that it’s not my usual content of cakes, kittens and running. It’s more finance orientated, and influenced by yesterday’s spring Budget.
Back from the days when I used to work in the financial services industry, I’ve always kept a weather eye open for what is actually going on in the money markets.
I’m a strong believer in making sure one understands exactly what one’s commitments are and budgeting accordingly. A healthy dose of OCD can be beneficial in these circumstances. I’m also aware that I’m probably in the minority on both counts.
Let me make one thing clear when talking OCD. I don’t suffer it as a disorder (the D in OCD basically, but if I called it OC you wouldn’t have a clue what I was on about) in the way that true sufferers can have their lives wrecked by the condition. However I do things out of compulsion but I’m totally aware of it and in fact it gives me structure rather than a hard time. So I don’t want to trivialise OCD as it’s a serious condition.
It does result in lists though. Next to me I have a hand-written note of mobile phone usage, broken down by internet, text and calls and next to that is something similar with direct debits. There’s something comforting about having the data there; it means I can make decisions with it.
This occurrence has of course come about due to the budget announced yesterday and that normally has a result that I review all things financial to see if it still makes sense. So from going through the tax checker to see what impact the budget has on me, I then start looking at my income and outgoings.
It’s always good to compare income and outgoings. If the latter is more than the former, this is not a good situation and it amazes me that so many people either don’t know these rough figures for themselves or don’t care. Grab your last 3 bank statements and look at the numbers – 3 months gives you a bit of averaging just in case one month happens to contain a big payment/expense which makes it unusual. Hopefully there will be no surprises. But if there are, at least you know about them now.
Having looked at the outgoings, most of which come out as direct debits, I then look to make sure they all look sensible – do I know what they all are? Am I getting the best deal? Hence the breakdown of the mobile bills over the last 12 months.
If this is something you’re thinking of looking into, Martin Lewis’ excellent website is a good starting place to get information.
So pulling these themes together I am intrigued by the Chancellor’s decision regarding the liberation of pension pots and that he trusts people to make the right decisions. He clearly has more faith in the general population than I have!
I agree with the sentiments that the whole annuity market is now so risk averse and that in a low interest / low inflation environment, the value for money is poor and there is no choice in the matter. But we appear to have gone from a system which was a safety net in itself to one where you’re given a tightrope and left to walk unaided across a canyon.
Perhaps it’s the pessimist in me that sees this going horribly wrong for people who don’t grasp that once that pot of money has gone, there is no more. And I’m not talking about a small number of people of questionable intellect or sense. I’m concerned about the majority of people who’s pensions knowledge stretches only as far as knowing it’s important, yet actually they don’t really understand what it is they’re getting for their money and rely on what their colleagues and friends say in order to make what are ultimately key decisions to their future.