KYM know your money

Do you Know how to handle Your own Money? Many people don’t. I’m not talking about the multimillionaires. They usually do, and anyway they will have plenty of people wanting to help them. A Financial Advisor can do very nicely for himself if he has a good list of portfolios under his guidance. But don’t rush to do the job. You have to be licensed and that requires qualifications. My experience, like most people’s, is that learning and managing your own money is difficult, slow and essential. You probably won’t believe that last word but I recommend that you do.

For 2021 I think there is no better advice than KYM. I don’t want you to become an expert, unless you’d really like to. Most people find money boring and the truth is that it is. At least until you don’t have enough. Then it is horrifyingly interesting, of course. Ever wondered why bankers are paid so much? Because money is boring and working with it is pretty boring too.

So what is it essential today for the individual – who is not professionally involved in finance – to know about their money? How much they’ve got may seem an obvious starting point, You’d be surprised how many people, especially those in the older age groups, can’t tell you the extent of their wealth. You need to know this in a way that tells you quickly how much of this is cash – or is invested but quickly and economically liquid – and how much is in longer term investments and therefore not liquid. I think you should keep these three figures in your mind.

Not good at remembering figures? If you have or are building, personal wealth, however modest, you need to be a little numerately agile. The way you achieve this is by attaching pictures to numbers and associating those pictures with some routine you do every day – like going to work or setting up your list of zooms and webinars. Any sequence of activity that you know in detail and can recall at a second’s notice will do. Some simple exercises can get you used to this.

Another way is to jot down in a small spreadsheet the essential investments and bigger routine payments you make. Some of you will shy away at the mention of a spreadsheet, I know. Please don’t. A spreadsheet is only a Word document with columns. Even in a Word document you are almost certainly creating columns by indenting, so you are already handling a spreadsheet of sorts. Anyway, who wants to be defeated by a template?

You may have a stockbroker or bank who handles your investments for you. If you are wealthy, you will have someone experienced looking after them. Don’t let either of these resources fool you into a false sense of confidence that ‘someone is looking after it for me’. Nobody really looks after your money except you. If you don’t look after it, it may well be stolen. Of course, if you are very old or in some way disadvantaged, a parent, child or very long-term and close friend, who can really be trusted, may do so. There are, sadly, too many examples of people who, for want of a personal monthly check up,  lose their money to one sharpie or another.

The move to digitisation by the banks is economically sound and should result in lower costs for providing the service. From the customer’s point of view it has advantages like ATM machines on 24 hour duty to give you cash. There are potential disadvantages too. If you make a mistake, say in the account number of someone you are paying by bank transfer, it will probably take months to recover it – and you may not recover it at all. So banks’ automation requires ever more careful consumer behaviour, not always easy for the very old.

The essential information you need to be able to access at a moment’s notice, in addition to how much is there now, is what return did I get on my investments both recently and over a year and more. If you are in a stock market, the movements of the market will be beyond any advisor working for you. They will reflect the current affairs of the world. So it’s a good idea to read the news headlines regularly and think for yourself ‘how does that affect investments generally?’ Some people play the stock market and a few win handsomely. The price is a life in front of the computer, which is not conducive to good family connectivity or healthy eating.

The need to be more aware of your money will be increased as we approach the cashless society. Useful for avoiding street robbers, the sad fact is that the robbers have simply moved out of sight. Hacking accounts is now a highly sophisticated operation and your credit card and online banking are no strangers to this sort of theft. If you Know Your Money on a systematic and regular basis you will reduce the impact of these modern pirates.

You can, of course, learn about money and how investments work. There are plenty of good courses to help you. But the best course of all is a numerate and financially savvy friend who you trust and who can help you keep an eye on your money while teaching you a little about it.

In the end what matters is trust. That’s another reason why you must read people well.

Know Your Money and it will serve you well.