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Financial Planning

Shut out the noise for better money choices

25 November 2019

Money & Life team

Money & Life contributors draw on their diverse range of experience to present you with insights and guidance that will help you manage your financial wellbeing, achieve your lifestyle goals and plan for your financial future.

From friendly advice to Instagram posts, we take in many influences when making up our mind on money matters. Get tips from an expert on making financial choices guided by your own needs and goals.

Whether it’s the new car you’re thinking of buying or picking the best super fund for your retirement savings, making choices about what do with our money can feel overwhelming. Between social media advertising and well-meaning friends, we end up being exposed to so many options that making the right choice can seem impossible. This is something Gianna Thomson CFP® experiences in her own life, and in conversations with clients about important financial decisions.

According to Gianna, there are three key influences that can impact your money choices and affect your financial decision making. Read on to learn more about each of these and discover what you can do to filter out the noise and focus on what’s important.

1. The influence of friends and family                                              

Being swayed by what peers and family would do in our shoes can often be an issue when it comes to money choices. “Group think can definitely play a part in suggesting lifestyle goals that you might not come up with on your own,” says Gianna. “Last year I engaged quite a few retiree clients after a retirement seminar. Someone started talking about caravans and travelling around Australia. Suddenly most of them wanted it included in their retirement plans too!”

While your family may have more insight into your needs and values than your peers, their words of wisdom may not be the right ones to guide you towards your goals. “Be mindful of advice from family and friends too, because what worked well for them, may not work well for you,” says Gianna. “My Nonna loves property and if you talk to her about money, she will probably say term deposits and property are the safest way to invest – because that is what has worked well for her. If you speak to my Dad, he will probably say share investing, farms and John Deere tractors are where your money should go – because that is how he built his wealth and green tractors are his toys!”

2. Beware the influence of social media

Gianna is also very aware of the impact social media can have on her younger clients and their expectations of what a wealthy lifestyle looks like. “What we don’t see behind the fancy cars and travel destinations posted on social media is whether these people are financially fit,” says Gianna. “They may not actually own the assets, or if they do, they might be drowning in debt. Or they don’t show us the blood, sweat and tears they endured to achieve the wealth and lifestyle they are enjoying right now.”

In fact, in Gianna’s experience, the people who feel the most secure in their financial situation are the ones who don’t feel the need to put their good fortune on display by posting photos of their latest luxury purchase. “What most people don’t realise is that some of my wealthiest clients don’t look wealthy, until you look at their balance sheets,” says Gianna. “They are comfortable in themselves and who they are — they are able to manage their stress and emotions and don’t feel the need to show off their wealth to others via social media.”

3. The influence of online forums and experts

Another trend that’s becoming more common thanks to the rise of social media is people turning to online forums and groups for advice on their finances. “I take part in some Facebook groups and sometimes people post questions about money and investing” says Gianna. “Unfortunately, the people who respond are giving financial advice without knowing it and they’re not qualified to do so. The other day someone asked which superannuation fund to go with and the majority of people responded with Hostplus, because of the Barefoot Investor. They, nor the Barefoot Investor, know anything about that person’s situation, retirement goals, including their investment risk appetite, insurance, superannuation balances, age and which superannuation funds they already have.”

Take emotion out of your decision

So what can you do to manage all the different types of information and opinions that can come your way when contemplating a big purchase or exploring financial products and services? Gianna suggests you keep emotion out of the whole process by reminding yourself of your fundamental goals and plans for the future. “Most of the time we buy with emotion first, and then try to justify the purchase with logic,” says Gianna “It can be hard to think with your head and not your heart but by doing so, you can start making mindful, smart financial decisions.”

Gianna knows well how hard it can be to disrupt emotional triggers and stick to your goals instead. “When my husband and I were looking for a new car, I was using my professional image as an excuse to ‘go all out’ and buy our dream car,” she says. “Car shopping and test driving cars can really get the heart pumping and we were really close to purchasing one! And don’t get me started with the social media car advertisements popping up on my news feed! But then Greg and I had an honest discussion about our financial plans, needs and wants. As a financial planner, when I’m advising a client it’s easy for me to keep the emotion out of financial decisions. So I said to myself, we just had a baby and will build a house next year so if I was advising a client, what would I recommend? The answer was to not spend so much money on a car!”

Seek professional advice and make a plan

Being a CFP® professional herself, Gianna has the advantage of acting as her own professional expert on money choices. If you’re finding yourself confused by your options or feeling that cues from social media or family are clouding your judgement, it can really help to have an expert to help you explore your reasons and motives financial decisions. They can also help you develop a plan that you can keep in mind as you navigate money choices, large and small.

“If you have clear financial goals, which are motivating and purposeful, you’ll find it easier to make smart financial choices and become financially well organised,” says Gianna. “In my initial appointments with clients, we spend 90 minutes discussing goals before we talk about financial strategies. Writing these goals down can help you make them your priority and it helps you make the connection between your own financial strategy and what you really want to achieve. My husband and I have our financial goals framed and kept in our lounge room where we can see them every day. This reminds us of what we are trying to achieve, and why, both individually and as a couple.

To support you in making money choices in your best interests, a CERTIFIED FINANCIAL PLANNING® professional can help. They can work in partnership with you to understand your goals and recommend a plan to give you the confidence that your financial future is secure.

 Looking to reach out to a CERTIFIED FINANCIAL PLANNER® professional for support with your finances? Discover how to connect with a CFP® professional near you.