S Ep3 What is Financial Planning?

In this episode of ‘Where Your Treasure Is...’, Season 1 (Foundations of Faith & Finance), Simon and Bex discuss Financial Planning and its potential benefits for anyone wanting to manage their money wisely and effectively. They comment that a key point to note is that it is important to establish personal priorities at the outset so that finances can then be used to achieve relevant and desirable goals.

Points that may be of particular interest in this episode include the following:

• In response to a question from Simon, Bex provides two examples from the Bible of references to planning involving finances: (1) Jesus’ illustration of the need to calculate the overall costs before starting to build a tower, Luke 14.28-30; (2) the Parable of the Rich Fool, Luke 12.16-21 [01:36]
• Simon explains that although the passages seem to be at odds with each other, they make sense when interpreted in context: one is highlighting the need to count the cost before undertaking a venture; the other is warning of the dangers of greed and placing trust in wealth and possessions. In a broad sense, they each deal with financial planning issues but, in each instance, they do so in a distinctive, specific manner which needs to be understood in its own right. [03:13]
• Simon provides an overview of what financial planning is, going on to comment that it can enable us to use today’s money to meet not only today’s needs but also the needs that we (and possibly others linked to us) may have in the future. [04:59]
• Simon comments that financial planning does not start with money! Instead, it begins with a clear understanding of what we consider our purpose in life to be and what our priorities are. [06:37]
• Simon talks about a common purpose that he thinks that all Christians share: to worship and glorify God. He then goes on to outline specific purposes to which he feels that God has called him, such as devoting himself to his marriage, family and relationships, and also using his financial skills to create wealth so that it can be passed on to others. [08:19]
• It is recognised that not everyone will be absolutely clear about all aspects of their purpose and priorities in life; financial planning is, nevertheless, relevant and important for all of us because it can help us to explore the relationship between our faith and our possessions, prompting us to consider how we can become the best possible stewards of what we have. [10:03]
• Simon observes that the type of financial planning that we do depends on our stage in life. Whatever our circumstances, though, Simon would encourage us to have open and natural conversations about money. [12:26]
• Simon explains the difference between financial planning and financial advice. The former continually bears in mind the overview of an individual’s finances, taking into account their values, principles and priorities; the latter adopts a more ‘technical’ approach, concentrating on the practicalities of how to set up effective financial processes, where to invest etc. [17:05]
• Simon goes on to comment that it is generally better to get some kind of assistance and external input when dealing with matters relating to financial planning and advice but stresses that, much of the time, this does not need to come from experts. Conversations with others and reference materials (including podcasts!) can be very helpful in this area. This topic will be developed in future episodes but, as an example of the way in which financial matters can be simplified, Simon mentions that a work pension and an ISA can meet the core needs of most people in the UK. [18:18]
• When asked who should use a financial planner, Simon comments that large and complex financial arrangements may require that kind of input and that it can also be very helpful when planning for retirement. [20:09]
• However, everyone can undertake basic and important financial planning that will give them a good foundation for managing their money. The earlier that people can start doing this the better [21:11]
• How often should a financial plan be updated? [22:11]
• And how do we make a plan resilient so that it can cope with unforeseen circumstances? [23:47]
• For anyone who is in the category that Simon mentions of looking for assistance in response to finding themselves in financial difficulties [26:25], Simon would highly recommend seeking advice from Christians Against Poverty (https://capuk.org/), who also run a very practical CAP Money Course, which could be relevant and helpful for anyone.

Links

Christians Against Poverty: https://capuk.org/

CAP Money Course: https://capuk.org/i-want-help/courses/cap-money-course/introduction