132- When Wealth Stops Being Just About You

Benjamin reflects this week on the subject of when wealth stops being just about you. In early life we focus on saving, investing and insuring primarily for our own benefit. 

But there comes a time in most people's lives when they have enough and the focus suddenly shifts to the needs of others. 

Embracing this change of planning need can help you to remain engaged and invested in your financial plan. 

Join Benjamin Mitchell (themoneyscot), serial hater of financial jargon, as he helps make your finances clearer and ensures you never make another financial mistake.

Getting on top of your personal finances doesn't need to be complicated or scary. Arm yourself with the only knowledge you need to transform yourself from money novice to money nerd! 

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Disclaimer - please note that nothing in this podcast can be relied upon as financial advice and the content is provided purely for information and guidance purposes. Please seek independent, regulated financial advice relevant to your situation.

Transcript

SPEAKER_00 0:12

Hi there and welcome again to Heads Up on Money. Thank you once again for joining me on Personal Finance Friday. So I've got an interesting topic for you in this week's episode. Previously, last week, I believe, we did an episode on the subject of trusts in financial planning and where they may fit into your own financial plans. And what happens when our financial plans start to become financial plans not just for our own needs, our own life goals, our own bucket lists, but for those of our nearest and dearest and our loved ones. It's an interesting dynamic that very much changes the way we approach our financial planning, so I wanted to cover it in this week's episode. Before I do, as always, money nerds, there's links in the show notes if you would like to comment, subscribe, share the podcast with anybody else who may find this drivel interesting, or hopefully not. Hopefully, you just want to pass on the financial education to them. And if it's in your own circumstances, your own needs, as a reminder, there's a link to our retirement assessment questionnaire which I've pulled together, which should only take around five minutes of your time, and it should give you some immediate results on where to focus your own retirement planning. Again, financial advice cannot be given to everybody, so I've tried to pull this together for the money nerd listeners just to give you a starter for ten on where the current gaps are in your financial plan and where perhaps you might want to focus on those in 2026. So there's a link to that retirement assessment in the show notes. But let's get into this episode. The title of When Wealth Stops Being Just About You. So the main purpose of this episode really is to explore a deceptively simple idea that can quietly reshape how exactly we think about our money, our wealth, our ambitions, and our success in our financial plans. And it tests the question of who exactly is your wealth actually for? Because for most of our lives the answer it's pretty obvious. It's for us. We are saving for ourselves, we are investing for ourselves, we are protecting ourselves. But at some point, inevitably, and often without us noticing, that can change. And wealth suddenly is not just for you. Wealth stops being about just you. Becoming financially independent, having our own options in financial life, not being reliant on other people, bank of mum and dad, whatever it might be, and ultimately not worrying about money every time that life throws a curveball. So our financial independence starts to improve. Now it's not selfish to say that we're focusing on ourselves because it's completely necessary at that stage of life. You're building the foundations of your financial plan. But here's where things start to get a little bit interesting, money nurses. So we tend to believe that more money will unlock more happiness and mainly through consumption. Better holidays. We buy bigger homes, we drive bigger cars. Now we've talked about this in other episodes of Heads Up on Money, the concept of lifestyle creep. If you want a deeper dive into that, there are other episodes on that. I will not repeat myself here, money nerds, but the premise, of course, is that as you advance through life and typically your earnings increase, you start to do a bit better financially, while your expenditure patterns tend to rise with that. What once was a decent four-star holiday becomes a five-star holiday. Your voxel corsa used to do the job, whereas now you've got a bit of surplus income, you upgrade to that BMW you've had your eyes on for a long time. Lifestyle creep kicks in. And the most financially empowered and financially literate individuals I've seen are those that are ignorant and ignore the dreaded lifestyle creep and recognise that hey, you know what? We're currently happy. We have been happy at the standard of living we are, we do not need to increase this. Now, going back to the concept I'm framing in this episode is that, as I said, we think more money means more happiness, and that's often not the case. You know, I've done previous episodes of heads up on money where I've got some wonderful guests coming in to talk about the idea of financial happiness and becoming financially in control of our lives and what exactly means in terms of how can we become happy? Does money make us happy? I'm not going to go into that again in this week's episode, but we all know it that over time something happens that we often don't talk about enough is that the novelty wears off. That upgrade that once felt totally life-changing becomes normal. And the experience that you've worked so hard for becomes background noise. It's not as lucrative as it once was. But many people, they keep chasing that next level anyway, and we all get into this vicious cycle of pursuing more and more and more when in reality we may have already passed the invisible enough line. Now, what I mean by the invisible enough line is that there's often a gap between having just enough and realizing you have enough. Many people fail to bridge that gap. The financially astute money nerds out there are those that can fill that gap and recognize when they have enough. For many people, their lifestyle is already funded by past effort, and their future is largely locked in, and additional income doesn't materially make any difference to their day-to-day life, but they still keep working, they're still in this cycle of accumulation mode and in the rat race. And it's not because they need to, but because they actually never pause to reassess where they are and where they're going. Now, the first step, of course, to doing this is to have a solid financial plan, more specifically, a cash flow plan, which I talked about a few episodes ago as to how you can create that, whether that's with your financial planner or if you're doing this yourself, there's great software out there, even simplistic Excel spreadsheets, which can deliver you these answers. But even if they know they have got enough, they're still in that accumulation mindset. And it's not because they need to, but because they are just hardwired to keep doing that. So, money nerds, here's a a useful question that I will put to you. If your income stopped growing tomorrow, would your life actually change? And for a surprising number of high earners, the honest answer is not really. You know, I'm I'm actually I'm okay. And when that becomes true, I think that's when the shift has happened, and that's when I really, really enjoy my job of helping people with their finances. And it's at this point that the new question enters our psyche and the new planning angle enters our financial plans. It's the point when wealth quietly starts to become for others, not just for us. We have reached saturation point in terms of our own happiness. We earn enough, we have enough capital behind us, we're doing okay, and the financial plan then starts to become a financial plan not just for you, but for your loved ones. So to reiterate, once your own needs become met, any new wealth stops becoming wealth for you, and it starts to become wealth for your children, your grandchildren, charities you care about, future generations, it doesn't really matter, it's your own financial plan, money nerds. And Warren Buffett, arguably one of the most successful investors of our time, well, his story is a perfect example of this, then that he hasn't actually earned any money for his personal consumption for decades now. His lifestyle has long been covered. Everything after that is planning he's been doing for other people in his world. And it doesn't mean this is all about scale and you don't need Warren Buffett's billions for this to apply. It always depends upon your standard of living. You know, I've come across very successful people in my career who just live within their means. Look at a previous podcast episode I did on Ronald Reed the Millionaire Janitor. He didn't have an exorbitant amount of income or capital behind him, but he stayed true to his principles and recognised what made him happy, and by virtue of that, he accumulated too much money. He had more than enough, and this is typically what happens for individuals is they have enough to make themselves happy. Now the moment your lifestyle no longer feels dependent upon any incremental wealth, money becomes a bit more symbolic rather than a function. Don't get me wrong, this is a lovely problem to have. I recognise, you know, in the cost of living crisis that we're endlessly in, people are pinched more and more. The recent budget has meant less money take home every month in our pacelits. I get all that, and this is a nice problem to have, but for some people they do have enough, and earning more, any incremental wealth that comes to them is not really for them, it's for the future generations. And if you don't define a good purpose to that wealth at this point, that also starts to feel a bit empty, and you can become disengaged with your financial plan. So this is why it's really important to weave this thread through your financial plan. If this is the current scenario you find yourselves in, if it's a good situation you're in, fortunate situation you're in, I get that, but you start to look at this through a different lens. You put on a new pair of glasses and you say, you know what, this wealth is not really for our lifetime, it's for let's keep this simple, the lifetime of our children, and by extension, our grandchildren. And then this forces the question earlier than most things. So suddenly time matters more than money. Stability may matter more than upside. For instance, people who get to this stage of their financial journey may say that they don't want to take any unnecessary risks with their wealth because they already have enough and anything they want to go to the next generation, they want a bit more stability in that value. Of course, I get that. And the way you view investment risk may feel a little different. I've talked about it in previous episodes, endlessly of the podcast, is that your financial plan should dictate the risk profile you take with your investments. If you've already got enough, then perhaps you do not need to take the level of risk that you're currently taking. You do not need to expose your funds to great equity exposure of the world because you already have enough. Now, this is a subtle conversation to have with clients because I always say to them, look, you should still be affording good levels of growth potential in your funds and giving your future generations as much flexibility that you have got with your own wealth, but there is a trade-off. We start to view things differently when we get to this stage of our financial lives, and we stop considering our wealth as just being our own wealth, but wealth of our loved ones. A common planning angle that I you know took with most clients in my working life was we touched the pension last, and that's for inheritance tax planning reasons, and typically because there was no need to use the pension in their lifetime, clients would typically have you know a fairly punchy level of growth exposure within their pension because the short-term fluctuations in the market were of little relevance because the pension was envisaged to be held for multi-decades into the retirements of children and grandchildren. Whereas now, you know, there's an angle here around the changes that are coming in with pensions and inheritance tax that the growth potential risk exposure may be a discussion point for some clients to have. But the point I want to get across to you in this episode, Money Nerds, is that often when you start to view your wealth perhaps not as your own wealth, but the wealth of future beneficiaries, future grandchildren, children, whoever it might be, it's an interesting dynamic because you suddenly become that trustee of their wealth. Going back to the episode I did on trusts, is that you're not really looking at this through the lens of this being the money that you will need in your lifetime. You start to think about what might your children need in their lifetimes, what might your grandchildren need in their lifetimes. So that is always a bit of an interesting dilemma to have. And of course, as I've said previously, is that often if you have surplus wealth and you don't need it in your life, then if you can afford to do so and you've got inclination to do so, then gift that money now in your lifetime. See the enjoyment of it while you're still alive, rather than it being an anonymous donation in a will when you're no longer here to see the benefit. So the real takeaway from all of this, I hope, if you've taken anything from my ramble this week, is naturally throughout life and the way in which our lives work and the story of us building our wealth over our lifetimes and the life planning needs we have typically throughout life, is that you will focus on yourself primarily at the outset. It will all be about you. But there comes a point when it suddenly is no longer about you, and at that point you can lose real connection and ambition in your financial plan because it all seems to be a case of you know, what is it all for? Who am I doing this for? But if you realign your focus and view your wealth not necessarily just for you, but for future generations, that can bring a whole new perspective into your financial planning. And the real lesson here isn't necessarily about giving everything away or stopping ambition, but it's about recognizing which phase you are in. And you might think of this like this you can be in the build stage where you've got security and independence, the stabilization stage where you've got a bit of lifestyle certainty, you know what's going on, you then start to go to the redirect stage where you think about family, impact planning, legacy planning, but then you want to get to the enjoyment stage, you live intentionally without guilt, and that's really important. As I've always said, find your wealth balance. There's no use delaying joy indefinitely or justifying burnout as a sacrifice for tomorrow. I talk often about the author Oliver Berkman and the idea of finitude and we never know what's around the corner, you can't live in the never ever, you need to enjoy life today, and I think by framing your wealth in this regard really helps you to do that. So closing reflections, money nerds, where where can I leave you with this? Well, just ask yourself, who is your wealth for right now? If your money was to stop growing all of a sudden, would meaning disappear? Are you attaching too much significance on just the treadmill of investing, the treadmill of growing, the treadmill of getting to that arbitrary figure or date or age that you have fixated on? Or are you already there? That's the greatest danger. Are you already at that point? Are you accumulating wealth for wealth's sake? Because wealth is not just about what you have, it's about who it is for, and that is what I'll leave you with for this episode. So, how did you find that, Money Nerds? It's an interesting way to frame things, perhaps a way you haven't necessarily framed your wealth-building journey before. Is you need to think about this. Who exactly am I doing this for? Who is my wealth actually for? And start thinking about what happens when wealth stops being just about you and your needs, which is a fortunate position that many of us find ourselves in. So I'll wrap up there. I hope you've enjoyed it. I hope it's been thought-provoking and made you see things in a different light. I hope as always you're enjoying the podcast. And if you are, please let me know. And if there's anything you want me to cover in future episodes of Heads Up on Money, please just give me a shout. As a reminder, there's no such thing as a stupid question. If you're worrying about something or you've got a query about something, it's a high probability one of the other money nerds out there is having the same concern, is probably reading the same confusing article online at the moment that's prompting you to reach out. So please do reach out to me. There's no such thing as a silly question. Promise I will not judge you. But let's wrap this episode up. Closing Personal Finance Friday once again. Have a great weekend. Hope the sun shines wherever you are or whatever you're up to, and I will see you as always next Friday for the next installment. Goodbye for now.