The Telegraph’s ‘perfect’ financial plans won’t work. Here’s why.

Earlier this year, the Telegraph published a short series of two articles entitled, ‘In your 40s with ‘peaking’ earnings? Here’s your perfect financial plan’ and, ‘In your late 50s or early 60s? Here’s your perfect financial plan’.

Like a lot of ‘financial planning’ published in the mainstream press, there are some good pointers, tips and highlighting of common issues. ‘Recalibrating your budget so that you can save,’ for example, is a strong recommendation for most people at most stages of life. As a nation, we still typically don’t save enough, especially if we do not have a financial plan in place, so spending a little less and putting a little more away can help individuals to move towards a better retirement.

More specifically, the articles highlight contribution limits and pinpoint the difference small boosts in returns can make. Knowing that you’re taking advantage of all available tax wrappers and that your money is achieving peak returns is again very important to most people.

But, despite those helpful elements, the Telegraph’s plans are far from perfect. The reason is simple. They aren’t personal.

A financial plan – a proper financial plan – is unique to an individual, couple or, at most, family. It takes into account what you want to achieve in life, who you are, what your approach to risk is, what money you have in the bank already, changes that might occur in the next few years and what you want in your retirement.

Let’s take increased returns, for example, which the Telegraph’s plans highlight as ‘perfect.’ It might be taken as a given that everyone wants increased returns, but that’s only the case up to a point. With increased returns typically comes greater risk. If you are typically a cautious investor, or currently have reason to be (you plan to spend some of your savings in the next few years; on your ideal home, for example) then your attitude to risk is likely to favour a more conservative approach.

‘Saving more money’ is, again, a common recommendation but, again, how can that be the case in a ‘perfect’ financial plan if the circumstances of the individual involved aren’t known? Maybe they are saving exactly the right amount. It’s not often mentioned in the press but part of financial planning can be encouraging you to spend money when the time is right. After all: we’re all saving for a reason!

‘Perfect’ financial plans then are rare, and even rarer that they appear in the pages of the national press! The pointers provided though can help… just make sure you talk them through with your personal financial planner!