Tranquil Topics

Candid Conversations on Financial Wellbeing with Luke Mather

• Stephanie Graham • Season 1 • Episode 22

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Luke Mather is a Chartered Independent Financial Planner at Suttons IFA, a newly chartered firm based in Sale. With a diverse client base, Luke specialises in supporting business owners - helping them stay on top of their financial plans so they can stay focused on growing their businesses.

Money troubles keeping you up at night? You're not alone. That's why this conversation with Luke Mather cuts through the noise to explore the deep connection between financial stress and mental wellbeing.

"We don't get taught anything like that at school," Luke explains, highlighting why so many of us struggle with financial literacy. From creating emergency funds to navigating investments, from understanding credit scores to planning retirement, this episode delivers practical wisdom for every stage of your financial journey.

The discussion tackles uncomfortable truths about our relationship with money. Luke reveals how social media fuels dangerous spending habits, why checking investment values too frequently creates unnecessary anxiety, and how small subscription costs silently drain our accounts. But more importantly, he offers simple, actionable strategies to regain control.

What makes this conversation particularly valuable is Luke's compassionate approach. Rather than judging financial mistakes, he acknowledges they're normal and provides clear steps forward. His six-point action plan gives listeners immediate tools to transform their financial wellness – treating savings like non-negotiable bills, creating annual budgets that include irregular expenses, and opening honest money conversations with loved ones.

Whether you're drowning in debt, confused about investing options, or simply seeking better financial peace of mind, Luke's insights provide a roadmap to both financial stability and improved mental health. Because as he emphasises throughout our conversation, it's never too late to change your money story.

To connect with Luke, please use the links below:

LinkedIn: Luke Mather

Email: lukem@suttonsifa.co.uk

https://www.suttonsifa.co.uk/

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Steph:

Welcome back to Tranquil Topics. I'm your host, Steph, and, as you know, on this podcast we explore many layers of well-being, one conversation at a time. Today, we're delving into a subject that affects nearly all of us at some point in our lives, which is financial stress and how it intertwines with our overall mental and emotional health. Joining me is someone who brings clarity to the often overwhelming world of personal finance, Luke Mather. Luke is a Chartered Financial Planner, an event speaker and a familiar voice on many respected podcasts. He's been in the industry for over 10 years. He's known not just for his financial expertise, but for his compassionate approach to helping people understand how money impacts their peace of mind. And whether you're navigating debt at the moment, planning for the future or simply trying to feel more in control of your finances, Luke is here to bring insights that are both practical and realistic. Welcome to the podcast, Luke.

Luke:

Thank you very much, Steph. What an introduction.

Steph:

Well, I'm really pleased that you're here, because finances are a huge part of life and my experience is they're not spoken about. So I'm in my 30s now and I feel like I still don't know all the little tips and tricks that maybe I should do and maybe other people should do.

Luke:

Yeah, and that's completely normal to feel like that. We don't get taught anything like that at school, so when we come into the big bad adult world, there's a lot of hurdles that we have to tackle without having the tools to deal with those events, and people get themselves into debt, into trouble, and it can be quite hard to dig ourselves out of that hole. And even more, established careers, people have families, which can cause a lot more financial stress and again, when people are getting a little bit older, they still don't know how to deal with those events well and it can impact our overall well-being from a financial perspective as well.

Steph:

Absolutely. So can we start off with you telling the listeners a little bit about yourself and how you got to where you are now?

Luke:

Yeah, of course, I've been in the industry for well I think well over 15 years, but I've been in the financial services sector for 10 years and I think I knew at quite a young age I probably wanted to come into that sector, but I just wanted to help people and that's why I do what I do. So I learned the hard way, graduated in 2011 just after the financial crisis, and it was very hard to come across a training position in the industry. Back then all the major banks stopped taking on staff and I ended up going down the self-study route and first off, got into mortgages. So learned a lot from doing that role, especially about debt and how people sort of get themselves into it and how it can affect their, their sort of chosen path, especially when you tell somebody that actually you can't buy that house because you've got debt problems, and most people are unaware that they've got problems until they look at the credit file or they apply for credit and get rejected. So that can be very difficult to deal with at such a young age.

Steph:

Yeah, and I guess would I be right in saying that habits, financial habits, are what you've witnessed growing up and like what you've been around. So somebody might not know any other way to, I don't want to say behave around money, but do you know what I mean?

Luke:

You know it's the right, it is the right word. I think we all look to our, our parents and loved ones for guidance, and I think money's a generational thing. It's something that our probably parents and grandparents don't often talk about and probably didn't share with us a lot when when we were children. But now I always sort of try if I've got two young children myself and I try to, especially for the eldest one who's six encourage him to understand how money works and the value of it, especially when they constantly ask for things going around the supermarket. Just need to understand the value of those choices and those things that they want and how much things cost.

Luke:

So, just trying to make it more inclusive is a hot topic at the minute.

Steph:

And what does financial health mean to you and why is it important for us to focus on it?

Luke:

Financial health can, it's a really, really broad topic and, in a nutshell, it's just having a good understanding of managing money and having a really good relationship with it, and it's something to focus on, because modern day life is full of things that cause us a lot of stress, and having money worries can affect our well-being significantly and if we can. That is one area of our lives that we have control over or we can gain control over, and that will reduce people's stress levels when it comes to dealing with raising children, for example, or, you know, their career paths being made redundant. There's all sorts of curveballs that life throws at us, but money is one thing that we can control to some extent ourselves by by making great choices.

Steph:

It's so true that, and like moving through life, you move through different phases, don't you? so, like you say, you could have like your single years where you're going on holidays or whatever, and then then you meet somebody, buy a house, marriage, kids, and then it all changes. So it's interesting because, no matter who's listening, they'll all be in a different financial phase of their life, I guess. So how can we assess our current financial health?

Luke:

So several ways to assess that. Sometimes you just have to have a conversation with yourself and just ask a few simple questions. I'd start by asking yourself do you have an emergency fund, a pot of cash that's easily accessible should something happen? Maybe somebody gets made redundant or they have an accident and can't work, and, as a rule of thumb, generally two to three months worth of your outgoing, so your major bills that you have to pay each month is usually a good starting point.

Luke:

And now that's a great place to be in because it gives you peace of mind to look at your bank account and think right, I know I'm not bulletproof, but I'm close. So if life throws one of those curveballs at us, we can deal with it quite quickly and even going a bit further than that, if someone's car breaks down or if they have an accident and they just need access to cash quickly without having to get into debt to access that money, it's a good feeling to know that there's a pot there to cover these rainy days. Yeah, I guess that's where the phrase comes from.

Steph:

Oh yeah, that would make sense. So, as we've mentioned before, with growing up witnessing different habits with money, how can we develop a healthy relationship with money? Like, even if someone's grown up around unhealthy habits, how can someone develop a healthy relationship with money now?

Luke:

So I'm a big believer in talking about money. And you see all those adverts on on tv. There's big, big campaign over the last couple of years about talking to your loved ones about various topics, but money should be included in that and that could be your partner. It could be your parents, your grandparents. You don't need to give everybody the full ins and outs of of your financial history, but just having general conversations and sometimes getting things off your chest if you feel like you're not doing the right thing. Ask a friend, see what, what their experiences are, and there's a good chance that everybody's probably got a similar experience to yourself. So knowing that you're not any different than anybody else can make you feel a little bit better about the situation.

Steph:

And what about if people haven't been speaking about money? so I'm talking like this is maybe a generational theme. How would you go about approaching that? Because I would feel incredibly awkward, um, if I felt like I had to speak to somebody about money, which is a very personal subject really, isn't it that maybe wasn't approachable. Shall I word it that way?

Luke:

Yeah, it's a great, i t's a great example and a great question. I deal with a lot of clients where we talk about their family as a whole. So if they've still got parents and we ask about what their parent situations are like, have they made provisions such as a will or a power of attorney? And quite often is the case that the answer is no. So my duty of care is to my client, so in order to look after them sometimes you need to discuss their parent's situation.

Luke:

Now they might not want to talk to their parents about it, or even if they do want to talk about it, their parents might not want to discuss it. So I always offer the opportunity to have a conversation with the parents separately and they can speak to me direct without having the children there, so then they might not want to divulge certain information yeah and I think hearing how things work from from a professional point of view, in an impartial view, can sometimes make it easy to deal with. So I've had a lot of success there getting grandparents and parents to to do basic provisions such as a will and a power of attorney.

Steph:

That's interesting. I honestly didn't know how you were going to answer that question. I think when it comes to a will, it can be awkward both ways, can't it? Because you don't want to approach someone and say have you made a will?

Luke:

Yeah.

Steph:

And then, equally, parents might think well, I don't want to think about that and I don't want to think about leaving my assets, you know. So there is, there is an awkwardness around it, I feel anyway.

Luke:

Y ou're right, I think there's, t here's a natural human tendency to bury our heads in the sand when we don't fully know everything there is to know about topic and how to deal with it. Yeah, we tend to bury our heads in the sand when we don't fully know everything there is to know about topic and how to deal with it yeah we tend to bury our heads in the sand, and a lot of people do that with wills, because they don't want to think about death and the future.

Luke:

But it will happen at some point. And I would flip it on its head and think, right, well, to force yourself or not force yourself, but consider taking action is think about it a different way, and how would it affect your loved ones if you didn't take action and make that provision because it would. It would be them that that were to suffer just because you didn't take action and make a will and how would it affect the loved ones left behind?

Steph:

I know this is a bit morbid, but we're only just started.

Luke:

No, no, not at all.

Steph:

ut for the listeners, I think have maybe been thinking I need to make a will. I've not got around to it yet. I've been too busy. What impact would it leave on the people that they leave behind if they don't make that will?

Luke:

So everybody's situation is probably slightly different.

Luke:

But as a generic answer to that question, yeah what I would say is the way people think their estate will be divided, w ho will inherit the money might not always be the case, so there's something called the laws of intestacy. So if somebody dies without a will, if they haven't got a spouse or a civil partner, then things can be distributed. It can be a bit of a scattergun approach. It could go to siblings first, it could go back to parents. Families don't get on a lot these days. We always think people fall out with each other. So somebody somewhere could inherit some money from somebody's estate and that person could be the last person on earth that they'd want to benefit so it can behave in strange ways.

Steph:

And who decides how it's split then if if they've not left a will?

Luke:

So there's a set list. It's called the laws of intestacy and you can find that on the government website. So if you Google the laws of intestacy, someone can see what would happen to their estate. There's other things that come into play as well. So marriage, divorce can affect any existing wills. So if somebody has an existing will, it should be reviewed at least every five years. And if somebody does get divorced or gets married, one of the first things they should do is is go and revisit that.

Steph:

Okay.

Steph:

So in terms of personal finance, are there common financial mistakes that people make and how can we avoid them?

Luke:

I think the most common one that I see or used to see, certainly in my days of doing mortgages was people would overextend themselves. I think social media is so powerful these days that we see all the influencers painting a happy life and everybody wants to copy that lifestyle. So people tend to go out and buy cars on finance and spend a lot more on a monthly basis than than they probably should do. The novelty quickly wears off. They want the latest clothes, they want to go out and eat all the time and put things on instagram. It's that society that we now live in. Um is we used to call it Keeping Up with the Joneses, where you'd want to have a better garden than your next door neighbour or a bit a slightly bigger house, but now it's it's all driven by social media so it's very easy to get attached to living that lifestyle and overextending yourself and getting into debt.

Steph:

So is that people seeing stuff online and then just going for it and not really having an awareness of the finances?

Luke:

Exactly that.

Steph:

Interesting.

Luke:

You can access credit cards all too easily, and credit's really easy to come by. If you go into your favourite clothing brand online, they'll offer you the opportunity to pay over a number of months interest-free, and it's very easy to come by credit everywhere we look.

Steph:

It's quite dangerous really, isn't it? I haven't thought about it in that aspect, to be honest. So how can we start budgeting effectively?

Luke:

So I think, in terms of creating a budget, my top tip really is to do an annual one, because if you do a monthly one, you'll look at your banking app and think, right, well, I've got the bills to pay, you know how much the bills are. But what that doesn't always include is annual costs such as servicing your car, an MOT, a new set of tyres, travel insurance, house insurance, even even car insurance can be paid annually. So there's a lot of those things that we do pay each year, that we forget about, Christmas, birthdays, holidays. They're all quite chunky items that we don't pay for on a monthly basis. So creating an annual budget is where I would start and make sure that everything's factored in as much as you can. Just be realistic and add a bit of a contingency in as well.

Steph:

When you mentioned Christmas then, I don't have a separate pot for Christmas and I should, because I start buying in July, so I spread the cost. But then what I notice happens is I spend more because I'm buying over like half a year for people's gifts.

Luke:

You lose track quickly how much you've spent.

Steph:

Yeah. And then I get carried away and I'm like, oh so and so will really like that, I'll buy it. And then when I look back, like don't get me wrong, I'm not one of them like Christmas Eve last-minute shoppers, quite the opposite, but it does add up.

Luke:

So you can change things up. We've got a lot of modern banks now. We call them challenger banks, things like Starling and Chase, and at the touch of a button you can have a bank account and you can then have multiple savings pots underneath that account and you can actually physically name them. So you could have a savings pot within your bank account that just says Christmas, birthdays, car, and you can then start to divvy up your monthly savings into different pots for different purposes.

Luke:

And my father-in-law it's been around, it's It's not a new concept, people have done it for years, b ut But it used to be good in cash, so you'd have like envelopes on the side or in the bread bin that were for different purposes. So I've been together with my wife now for 13 years, but when I first met her, her dad had something called the diddler and he said do you want to pay in? I said do you just want to tell me what it is. So it was a thing that his family have done for many years, where you just whatever you can afford, you just pay a little bit into the pot each month and then on the first of December, whatever you've saved across the year then pays out in cash. There's no interest on it. But it's just a lump sum of cash that then you've got in your pocket that you can go and pay for towards Christmas presents, Christmas christmas dinner, dinner decorations. You don't have to worry about where you're going to find the additional cash flow from just to get through Christmas.

Luke:

So it's not a new concept, but we can modernise it by having access to these bank accounts.

Steph:

Yeah, which brings me on quite nicely to my next question. So we're talking about budgeting, saving money. I know you mentioned then about the different categories for the saving accounts, so have you any tips for saving money, including for those that are on a tight budget?

Luke:

Yeah, I think one of the best things somebody can do with savings is treat it like a bill and an expense and if you've done your annual budget, you should know on a monthly basis there or thereabouts can you afford to put any money to one side. And if the answer is yes, whatever that figure is, do it as soon as you get paid. Treat it like a bill and an expense and do it first, and then you know that towards the end of the month, if you haven't got any money left, you can't go and and get takeaway or spend it on on luxuries. So if you treat it like a bill and get into a regular habit of doing it, it becomes a lot easier to stick to and that pot quickly builds, and it's going back to the well-being element of what we're here to discuss. It's such a great feeling to log into your banking app, to know that you have got pots of savings building up and then you can see it. You can log in each day to see what the latest figures are, and it gives you peace of mind and it helps you sleep and creates a better overall feeling.

Steph:

What do you think of the round-ups? Because I haven't done this, but I've had emails from my bank saying that you can add a round-up in, so if something's like £4.40, it would automatically put that 60p into your savings. What do you think of them?

Luke:

I think again, if somebody's on a tight budget, that can have a bit of an impact. They're not going to know how much is going out on those roundups. So if you are on a tight budget, I would say don't do the roundups. Stick to a preferred method and do it as you get paid. I think if you have got a bit more flexibility with your finances it can be a great option.

Luke:

Another concept which people can look to do is if you want to go out and buy something, a new top, for example, if it's £30, think to yourself right well, I'll buy the top, I'm going to double it. I'm going to save £30 as well. So that's another great way of managing how you spend your money is thinking right, can I afford to go out to eat tonight? And if it's going to cost £50, think right, well, can I afford to put £50 into savings and still go out for the meal? So you're almost doubling your luxuries by placing some of the money into savings.

Steph:

If you asked yourself that and the answer was no, though, what would you say to do?

Luke:

Well then, it comes back to what's more important to you. We're going to talk about goals shortly, I'd imagine, but it comes back to why you're starting to save in the first place, and you have to ask yourself what's more important, the reason that you're looking to save the money, or having that takeaway, or going out for that meal?

Steph:

Okay, and I suppose, if you are, I suppose it's hard, isn't it? Because everyone is so individual and different working lives, different family lives that can impact on finances. So how about, you mentioned goals, so let's go to investing, if that's okay with you. What is investing? Because I've heard of it, I'm not so sure what it entails again, it's a broad concept.

Luke:

The concept of investing is turning money into a bigger pot of money by investing in certain assets. So you're buying things like stocks and shares. You might buy property. There's lots of different things that you can buy that you'll hopefully appreciate in value, meaning that you've increased the sum of money that you started with. That's the easiest way I can explain it. There's a lot more to it than that. But to invest means the ultimate goal is to try and turn the money that you've got at the minute into a bigger sum of money.

Steph:

And what are the factors that we should consider before starting to invest, if you've never done that before?

Luke:

So I think the biggest thing to think about is can you afford to lose? Because with most investments there is a risk. The investment value can go down as well as up over a long period of time. It's proven that things do go up, but in short periods, and we're just coming off the back of Donald Trump and his tariffs. That's caused a bit of a shockwave to the stock market. Things dropped fairly sharply over the last six weeks. They are recovering fairly quickly now if things are settling down.

Luke:

But if somebody, if it's going to cause somebody undue stress and cause them to lose sleep knowing that the value of the money that they've invested is going to go down, then they shouldn't do it in the first place. And it needs to be a time frame. My general rule of thumb is five years. If somebody wants to consider investing some money should be for a minimum of five years, because if it does drop temporarily, it gives it a long time for it then to recover and hopefully do what it's there to do in the first place and increase in value.

Steph:

And would you say it's advisable to not check that on a daily basis. So it's sort of the opposite of the savings, because if you see that going down and down, that's not going to have a great effect.

Luke:

No, it's not, and I have quite a large list of clients and some of them check once every six months. Some of them check it daily and we can see on the system it reports to us when they check, how often they check their their online evaluation right. And by checking it regularly it just creates more emotion and a bit more more anxiety around the situation, especially when markets are falling, and then it almost becomes like an addiction, waiting for it to go back up, checking it every day. Has it gone up today? Has it not? So it can affect your overall well-being.

Luke:

So my advice really is to just check it periodically and not get too hung up on it, because it is a long-term process. It's like if you buy a house, you're not going to check the value of your house on Zoopla every single day of the week. You will probably check it once a year maybe. Or if the neighbour across the road has put their house for sale, you might curiously glance at how much that's gone up for sale for, but you would not check the value of that house on a daily basis. So why should you check your investments?

Steph:

Makes sense.

Luke:

Best way I can explain it.

Steph:

Yeah, no, that's a brilliant explanation, thank you. So, for the beginners who have never invested and are looking to start investing, what are some tips?

Luke:

So to start by setting a goal and just coming up with that reason why why you want to invest, and it's got to be a bit stronger than well, speaking to Dave down the pub, and he's just invested some money you didn't. You shouldn't copy anybody else, you've got to do it for your own purpose. Most of the people that I work with they want to retire at a sensible age with with a nice, healthy income to enjoy their retirement. So that's a lot of what we do as financial planners is we get somebody to achieve their goal, but the the skill is is getting them to set the goal in the first place. So the number one place to start is the goal and the why do you want to invest? It's not necessarily right. I've got £100, I'd quite like to increase the value. That's not a good enough reason.

Steph:

Is there a minimum amount that you would be allowed to invest?

Luke:

With a lot of the platforms, now even the major banks. They'll all offer what we call a DIY do-it-yourself approach via their platforms and typically it's probably not much of a minimum £50, £100 in some cases. I think if you want to work with a professional such as myself, then it is a bit more of an exclusive club, because we can only work with so many clients and we tend to only work with people that have got a certain amount of established wealth, and that might seem a little bit unfair, but we put a lot of work into it and usually people will pay a fee as a percentage of their the money that they want to invest, and so if it's a smaller amount, you're doing the same amount of work but you don't get, as an advisor, you don't get paid as much, and that might sound a little bit crass, but we run a business at the end of the day, we're there to provide a great service and if you give an analogy to another industry, it probably, you know, would work the same.

Luke:

If a car dealership was selling cars at £10,000, they're probably not going to make as much profit margin on the ones that they were selling for £50, 000 but they'll probably be a similar amount of work in and it is very unfair and it's very imbalanced and unfortunately people that probably do need the help might struggle to find a way of working with a professional advisor. But we do offer sometimes a one-off service. So if somebody wants some one-off advice, we can probably charge them a fair fee just to get that one-off piece of advice and not then commit to working with somebody on an ongoing basis. So both parties are usually happy.

Steph:

Okay, and that's why we're doing this podcast. Free advice for everyone!

Luke:

That's it.

Steph:

So you mentioned risk when investing. What are the risks? How would you know what you are going into in terms of risk?

Luke:

So a lot of the platforms offer an inbuilt what we call an attitude to risk questionnaire. So we do them with our clients and we'll have a discussion around the topic of risk. So the questionnaire is designed to work out where you sit on that risk scale. So if you imagine it as a number 1 to 10, 10 being the highest risk cryptocurrency that's probably the highest risk you can get. 1 being cash under the mattress. There's no way it can be taken away from you.

Luke:

So that's the general risk scale. So the questionnaire is designed to work out where you might sit on that scale and it asks you perhaps how you would feel in certain situations.

Steph:

You mentioned crypto, would you mind just explaining what that is? Because I think I know, like in my mind, is it just fake money? Is it just gold coins?

Luke:

It's not fake. Um, I believe it's an intangible asset, although others would argue against that. There's only been so many coins published for Bitcoin, for example, probably the most famous one and there's a limited supply of those coins. It's not like the US dollar or the UK pound, where the government can just print more at any time. I think with cryptocurrency there is a limited supply, so it does create a bigger supply and demand situation, which causes it to be so volatile. So essentially, it's a digital currency, but it can't be spent mainstream. You can't go to Asda and buy your shopping using cryptocurrency, so you can trade it on some of the online platforms. They'll allow you to sort of invest in cryptocurrency. So in other words, you'd buy part of a Bitcoin, for example, and the value of it can go up and go down significantly.

Steph:

I still find the thought of doing that absolutely terrifying. I remember when it just sort of came on the scene and I was like what is this, when I genuinely thought it wasn't really a currency in my mind. I might be completely wrong with this, but I relate crypto to words like gambling.

Luke:

Yeah.

Steph:

So we're saying that's high risk. We're saying avoid it.

Luke:

We we don't invest in cryptocurrency for our clients. I think we do have clients that do invest in it personally, but they keep that separate to to the planning that I do for them and that's just agreed up front. So we do have some clients that might want to get involved in that, but we don't do it on a professional basis purely because of the, the volatility, the lack of regulation, the, the regulator, which is The Financial Conduct Authority, have very little control over that, that part of the world and that industry. So it just doesn't fit the profile for what we do and it's it's difficult to get into. But again, going back to the social media, people posting pictures of their crypto accounts and how they've made absolute fortunes and people want to replicate that and they're willing to risk what little savings they do have in the hope of making quick money.

Luke:

And there was another way to explain cryptocurrency. There was a famous story about a guy who lived in Newport in Wales and he mined Bitcoins years ago, before it become a mainstream thing, and he had several thousand coins that were saved on his hard drive. And because they're not a tangible product, you have to have the physical hard drive in order to prove that you've, that you own those coins, and his ex-partner, um, threw his laptop into landfill and he's been fighting, he's been going through legal action with Newport Council for years to allow him access to the landfill to try and find this hard drive. So those thousands of Bitcoins that he had a long time ago are now worth over half a billion pounds.

Steph:

Oh my god.

Luke:

So that is how volatile and how crazy the concept has become.

Luke:

So if you'd have got involved, a very small amount. If you've invested £10, however, many years ago, that's not much of a risk, whereas now the price of Bitcoin is through the roof. So, investing in that and try to sort of make some money, you'd take a serious amount of money to get involved, but it can go wrong very quickly.

Steph:

Wow, and just touching upon what you said there about social media, at the end of the day, we don't know what's real and what's not on social media, especially now with AI really coming through.

Luke:

Really powerful. A lot of fake news as well.

Steph:

Yes, clickbait.

Luke:

Exactly.

Steph:

I find it terrifying.

Luke:

The phrase used to go don't advice from Dave down the pub, but now it's becoming you don't take your financial advice from from social media. Be careful where you get your information from.

Steph:

Absolutely, just sticking with investment, because we're trying to cover all listeners here, so if someone's listening and they were thinking about it or they were just floating the idea a bit, are there pros and cons of different investment options? I've heard of stocks, I've heard of bonds, real estate, property. Would you mind just touching upon the pros and cons of those?

Luke:

Yes, we call those different things investment classes. So a stock is is a share in a company. Essentially you could go on. You could buy shares in Apple, you buy shares in Amazon, and they're also known as equities. It's where it gets really confusing, stocks and shares and equities are the same thing, so a lot of growth will come from that class. You then got bonds, so bonds are loans to the government, which is one of the safest investments on the planet, and also loans to companies, so companies will borrow money and there'll be a certain rate of return through interest payments. So bonds usually offer a safety net and to have bonds and stocks and shares gives you a little bit of a balance. And then you've got other things. As you mentioned, real estate property. That's become a bit of a hot topic again recently because the returns on property have stagnated due to interest rates becoming quite high.

Luke:

The cost of borrowing has gone up significantly since it was four or five years ago, but we use the word diversification, so I would always suggest having a portfolio that's got more than just one asset class in in there. So typically you would, if you go onto the internet and you find an online platform to go and do it yourself, most people will go straight down the middle. They won't go at the top and they won't go to the bottom and they'll go straight down the middle and that would typically look like 60% of the money would be invested in stocks and shares and 40% would be in bonds and property.

Steph:

And is that safe to do on your own without getting advice beforehand?

Luke:

Yeah, most I'd say most of the online platforms will offer a very basic guidance model. So you you would go on, you'd register on the platform and create an account and they'll take you through a basic process to identify the risk level and then, at the end of that process, there'll be two or three different options, but ultimately you will choose the option. But normally the investments behind the scenes are similar to what you would get with a professional, but they're just available on what we call the free market.

Steph:

And can you take your money out at any time if you've invested it?

Luke:

Depends on the product. So if you've invested into a pension, the minimum age to access your pension is going to go up to 57 from 2028. If you've invested it into a stocks and shares ISA, you should be able to access that fairly quickly. But the the things that you're invested in would need to be sold first. So it's not a you can't have it in 24 hours. It would usually take one to two weeks to get access to the money.

Steph:

Okay, so I'd like to steer the conversation now towards debt management. What strategies can help pay off debt faster?

Luke:

So I think the first thing to do is again, it goes back to that d on't bury your head in the sand conversation that we had earlier. It's just lay on the table what debts you've got. Is it credit card debt? Is it car loans? Is it mobile phones? Well, what is the debt that you need to pay and look at the interest rate that you're paying. So if you've got a credit card and there's a few thousand pounds that you owe and you're just making the minimum payment, there's a good chance that the debt is just going to increase because the rate of interest is astronomical. Most credit cards are 30% plus in interest. So if you're paying the minimum payment, which is usually one percent of the balance, the debt will just spiral out of control, so it'll just get bigger. So you just need to get on top of that and come up with a bit of a plan to paying it off. So you can pay £300 a month off it, if you can afford to. As long as you're paying more than the interest, that will slowly become a smaller figure or hopefully eventually nil. But I think trying to free up that money to pay off debt can be difficult, and you can, y ou can intertwine that with going back to investing as well, to free up some surplus cash.

Luke:

Going back to the budgeting conversation, look at your budget, look at the regular outgoings on your banking app. We live in a world of subscriptions. Are you using that gym membership? Do you need Amazon, Sky, BT sports? There's lots of subscription models that we can have these days and do you need them all? And if you're not using them, cancel them.

Luke:

And I often find that when people go through that exercise, we usually get a bit of feedback saying oh, i've been paying for this for years and I didn't know I was paying for it. So just get on top of your regular outgoings, and usually it's a great place to free up a little bit of cash that can be used to invest or save or to pay off debts. So that's the first place I would start. And then also just get comfortable with your credit score as well, so you can get your credit score free from companies like Credit Karma. You can register for your free credit file and that should have an accurate list of of your credit, the things that you owe, and it will tell you what your score is as well in terms of if you wanted to go out and borrow money, would you? Would it likely be that you would be accepted?

Steph:

I check my credit score on my banking app, so don't do it often, but but that's just one click, isn't it?

Luke:

It is. Most banking apps have got that feature built in now and it will give you a score, but what it won't do is it won't go into detail and go behind the scenes. You'll get an overall score usually out of 999 or maybe 700, and you might think, yeah, that's fine. But if you look behind the scenes, your full credit file will show whether you've made payments on time. It will show if you've got accounts that are still open and again, another great tip is just to close old accounts that you don't use. If you've got a credit card that you don't use anymore that you've paid off, close the account, because having too many, you can have too many. I think the way sometimes lenders look at situations is if you're having a really bad day, how much money could you go out and spend? So if you've got four credit cards that have all got a five thousand pound limit, that can be quite a dangerous position to to be in to access that amount of credit in a short space of time. So credit cards can be great when used wisely, but if you don't need the three or four that you've had for several years, just close some of them.

Steph:

I see, okay, and how does the credit score impact financial health then?

Luke:

So it comes down to being rejected when you want to borrow money. And I used to see this a lot when a young couple would come to see me to try and buy their first house and one of them would go to the toilet and the other one would say in a hushed voice oh god, so I've got something to tell you. I need to talk about my credit. And then all of a sudden it would come to light that there's some bad credit which can severely impact the chances of being accepted for a mortgage. So a lot of people only realize that when they go through that process. So it's really good to get on top of it now rather than wait until it's too late. So sometimes credit files can take years to repair. So if you get rejected for a mortgage, it can seem like the end of the world, which can impact your health and your wellbeing, knowing that you're then stuck in a bit of a rut and you've nothing you can do about it. You can't have another go at that for a few years.

Steph:

I see, I didn't realize, like, obviously I just said that you click a button and I can see my credit score. Yeah, I didn't know that there was a whole file behind it.

Luke:

So when you go to borrow money, whoever you're borrowing the money from will do a credit check, and they'll use online credit referencing agencies to check what state your credit file is in. So it's more than just the score. Do they go off your entire life, then in most cases, they'll go off your recent history.

Steph:

Right.

Luke:

So if you have got into trouble with debt things like CCJs or County Court Judgments or defaults, which is where you've failed to pay something for several months that can impact your credit file significantly and it will stay on your file for up to six years.

Steph:

Is that, when we say recent, is that six years-ish?

Luke:

Yeah, for things like that, for debts, yeah. And then if you've got a loan, let's say you have a car and finance your credit file will show your payment history so that you've paid on time and how long you've had that for. So usually it's only any relevant modern accounts that you'll see on there. Eventually things will start to drop off.

Steph:

So if you have loads of loans, for whatever reason, would that negatively, potentially negatively, impact your credit score and chance of, let's say, buying a second house?

Luke:

Yeah, hugely. I think if you've got a lot of loans, the first thing that the lender will look at is well, you know they can't manage the money they've got at the minute. They've had to rely on significant amounts of borrowing to just to make ends meet. And I think, if you look at it in a certain way, if you look at your credit file and how much debt that that person's in, would you lend money to yourself? It's a great question to ask, because you're asking a bank to give you tens, potentially hundreds, thousands of pounds. The bank wants to know that you're going to be a reliable person to pay that debt back.

Steph:

Does it matter the category of a loan? So, for example, car, new sofa on 0% finance. You know things like that, rather than a lump sum of money loan.

Luke:

I think individually it doesn't tend to make too much of a difference, it's just the collective. So if you've got four buy now, pay later loans and two cars on finances between you and your partner, and then you've got a bank loan and all of a sudden that starts to add up significantly. So the credit file will assess it on a basis of how quickly you can repay things. But a mortgage lender will look at an affordability perspective. So if you're asking them to lend you a significant amount of money but your monthly outgoings are already quite high, paying off those existing loans, there's a good chance that they probably won't lend you the money.

Steph:

Okay. Emergency funds how important are they? How can we build one? I know you mentioned earlier about having three months to be able to tie you over if you were out of work, for that amount of time, but emergency funds in general. How can we build that?

Luke:

So it's quite difficult to come up with three months worth of outgoings in a short space of time and linking back into the investing situation. I think building an emergency fund is usually the first point of call. I think nobody should be considering investing until they've got some sort of accessible cash to cover off those emergencies, but just linking it into the budget. Going back and checking your spending and we've talked about cancelling subscriptions, things like renewing your car insurance. Don't just accept the renewal quote. Shop around, make sure you're getting a better deal. There's a lot of places we can save money just by spending a little bit of time and effort. And don't be loyal to those big companies that they're just they're not loyal to us. They'll happily increase your premium.

Steph:

Very true.

Luke:

So that can free up funds that you can then think right, well, I'll start to put that money towards my emergency fund and then, once you've built that emergency fund, then you can start to to move into considering investing and things like that.

Steph:

One thing that popped into my head then when you were speaking was phone contracts.

Luke:

Yeah.

Steph:

And people stay in phone contracts after like the two-year period and they pay like 25, 30, £30 a month, maybe more, when you could change, you could go SIM only. You could pay like a tenner a month.

Luke:

Or less yeah.

Steph:

Exactly or less yeah.

Luke:

Modern phone contracts are typically split into two elements. Now there's a contract and a loan for the phone itself and then there's also your monthly SIM plan. So once you've paid off the contract for the mobile phone and you own that phone, you then just usually have just the sim only plan. But usually it's quite expensive if you're directed to the provider. So you can easily get a very cheap sim contract now and it can just be on a monthly rolling basis. So if there's nothing wrong with the phone, save yourself 20, 30, 40 pounds a month and just go sim only.

Luke:

And also just modern habits. I think I see a lot of people they buy their lunches every day when they go to work or they'll stop at a famous coffee shop on the way, and there's four pounds a day. Though if you look, if you add that that four pounds a day, that's 20 pounds a week and that's sort of 80 pounds plus per per month, nearly a thousand pounds a year. Just just on a daily coffee habit, that is a lot of money that is a lot of money I'm not saying people should just completely give up these luxuries in life. I think life's there to be enjoyed. But could we cut that down? Could we say, right, well, I'll buy I'll buy lunch on a Friday as a treat and I'll try and take it with me the rest of the week?

Luke:

It's just these little habits that we can get ourselves into to to free up some funds so often. Sometimes people will say to me I can't afford to save or I can't afford to do this. But all you need to do is look at their bank statement and, straight away, you've got to be tough with yourself. You can just see takeaways on a regular basis. You can see the cost of coffees and the multiple subscriptions that we possibly don't need. So people have got to want to make a change to their lifestyles.

Steph:

Yeah, for sure. So let's talk about retirement. How can somebody plan for retirement? So I'm 33 now.

Luke:

Yeah.

Steph:

Like someone might be younger than me. They might be the same age, older, it doesn't matter. How can we plan for retirement?

Luke:

Planning for retirement can be quite a long subject. So we do that for our clients on a regular basis and it goes back to setting a goal. So I think for you, for example, at age 33, you might not know right this minute when you want to retire, but if you think well, I'd quite like the opportunity to retire at age 60 if possible. So it's setting a rough target at a young age. If someone's a bit older, if someone is into their 50s, they should be considering setting a solid age. To think right, well, I'd really love, don't want to work past age 65, or I might work to my state pension age. You can narrow it down a little bit easier when, as you get older.

Luke:

But what you can do is set yourself a spending target. So a great question that I often ask clients is if you were to retire today, imagine if you've got children, that they've flown the nest, they're not reliant anymore, you've paid off all your mortgages and your debts and you've retired. What would you like to do with your time? Do you want to go on holiday? Do you want to travel? Do you want to play bowls, golf, whatever your hobby is?

Luke:

Think about that situation and then you can start to put some costs to that and then you slowly start to paint that picture which you can build up, and then think, right, well, all that on a monthly basis probably going to cost three, four thousand pounds a month. And then, all of a sudden, you've got your monthly spending habits and then you can build that. But you can extrapolate that into a goal.

Steph:

Would you advise opening like an ISA or something specifically for retirement goals?

Luke:

ISAs can be great because they're flexible and you can access them now. But there's always a temptation to access the ISA if things get a bit tough. Whereas with a pension you get tax relief, when you put money into a pension, most people will get tax relief. So if they put, say, £100 into a pension, they might get £125 actually going in because the government will give a little bit of tax back on that. So there's often an incentive to contribute to a pension and it's probably one of the most tax efficient vehicles available. But it is tied in. People can't access them until currently 55, but they're soon to go up to 57.

Steph:

Staying on the subject of pensions, when you move, say like if you've moved jobs quite a few times, you have different pots.

Luke:

Yeah.

Steph:

Is it important now to organize your pensions maybe into one pot, or just to be aware of what pots you've got where?

Luke:

100%. The probably the most popular client that we work with fits that demographic. They'll have worked at multiple companies. Over the years they'll have built up pots of pensions that are scattered everywhere. They don't know how they're doing and what they're invested in, how they're growing.

Luke:

But if you work for a company, the rules are that you'll be in an auto-enrolment pension. It's like an off-the-shelf product, one size fits all, and the government have kind of done the financial planning for us by putting some certain rules in place. So they're investing in what we call lifestyling funds. So the risk levels are chosen for us based on our age. So you at 33, if you have a workplace pension, will probably be in a little bit more of a riskier fund than someone who's maybe 50 or 55, who's approaching their retirement date. The risk will be reduced for them.

Luke:

So it's a one-size-fits-all policy and they don't always perform the best. You can usually get better growth by getting on top of things and making some better choices. So typically we would assess pensions individually and then we'd look to create a plan for somebody. Think right, well, if you do want to retire at that age, let's look at your existing provisions. What growth rate would we need to achieve, to hit that target, or do we need to put some more money into that pot? Do you need to invest some more on a regular basis?

Steph:

I see.

Luke:

So it's a very broad topic and it's not something we can probably cover off in a podcast. But just to get somebody started, don't leave it till it's too late.

Steph:

Okay, financial health in terms of insurance. What role does insurance play? Because you've got life insurance, medical insurance, probably loads of other insurances that I don't know about.

Luke:

Yes.

Steph:

What role do they play?

Luke:

It's, in my opinion, it's a huge underpin to everything that we do. So, as humans, one of our biggest capacities in life is the ability to go out and earn money and earn a living, and it's how we choose to spend that money. That's our own choice. But if we take away that capacity to go out and earn a living, if someone has a serious accident or even death, if there's a husband and wife and they've got young children, unfortunately one of them dies, that person's earnings then then disappear and there's a lot of stress put on on a family. So that's where insurance come comes into the picture. Is it should underpin every other decision that we make. So usually it's a good building block to start with and just to quickly cover off some of the different types you mentioned life insurance. That's the most simplest one to understand. It does what it says on the tin it'll pay out a lump sum if somebody dies. Then you've got critical illness cover, which will pay out a lump sum if somebody suffers a serious illness. Some of the top illnesses that are usually common are cancer, heart attack and stroke so that's usually a lump sum paid out if someone's diagnosed with with one of those illnesses.

Luke:

But a more of a modern product, which is, in my opinion, probably very important, is income protection. So you're much more likely to be off work due to illness or accident than you are to die. So life insurance is quite cheap because there's such a small chance that somebody's going to die during the term of the policy. But income protection is more expensive because there's a likelihood that somebody will claim on it and what it does is it's designed to replace some of your monthly income if you can't work due to accident or sickness. So if you break your leg skiing and you can't work for six months and you're a landscape gardener, that can be a very tough position to be in. So if you've got income protection, it will typically kick in after a month or two months, depending on how the policy is set up, and it will repay a replacement income for that person.

Steph:

So for self-employed people, that's really important, isn't it?

Luke:

Hugely important. Yeah, and it's very underappreciated in the industry, but it's becoming a lot more popular Yeah, and there's budget plans available. So it can be quite expensive and most people are put off by the cost, but they do, there's. There's a lot of budget plans available so, rather than pay out indefinitely, you can have a policy that might only pay out for up to one or two years, so if somebody has a really bad accident, they can't work for two years. There are policies out there that will just pay out for a shorter period of time and they are a lot

Steph:

And would you advise that everybody should look into that, because I know you said life insurance is different. Does it matter if you're 18, 30, 50?

Luke:

You've got to start with what your commitments are. So, if nobody's relying on you, if you're 18 and you've got no debt you don't own a house there's probably no need for you to have life insurance. If you work and you live with your parents, and if you was ill and you couldn't work, would they still expect you to pay rent? Probably not. So you've got to look at the situation that you're in as an individual.

Steph:

I see.

Luke:

If you have a wife and children, or husband and children, and you're the main breadwinner or you contribute significantly to the family finances, if you couldn't go out and work or, severe case, you actually die, that's going to have a huge impact on your family.

Steph:

Yeah.

Luke:

So it's quite disturbing to think like that, but that's how you've got to think and that's how I've done my insurance. If I'm not around, I want to make sure that my wife and two children have got provisions in place to make sure that financially they are taken care of.

Steph:

Yeah, okay, great. So inflation.

Luke:

I know some morbid topics we're talking about today isn't there.

Steph:

I know, but I'm hoping that we're opening the conversation because my experience is like I said people just don't feel comfortable speaking about money.

Luke:

Yeah.

Steph:

And we should be, and we should know more, and what we don't know we can educate ourselves about and get into a better position. So it's a win-win, isn't it?

Luke:

It is, it is.

Steph:

But inflation. This is a topic that I'm not, I don't know much about this either. I know saving rates go down. I know food prices have gone up. I know the housing market has gone up. Is this due to inflation? What should we know about inflation?

Luke:

Yeah, inflation comes from many areas, but the best measure I can give you on inflation is a Freddo bar. I love chocolate and I'm 35, but when I was growing up, Freddo would always be 10p.

Steph:

They were.

Luke:

Yes, for years a Freddo was 10p. You go to the shop now it's 25p for a Freddo bar. It's nearly 300% increase in inflation over a 15 to 20 year period.

Luke:

So that's a significant increase so that's a general example of inflation is the cost of that product has gone up over time. So what most people do is they understand inflation that the cost of living goes up, but what they don't understand is the risk of inflation. So where the best way I can describe it, if you've got £ thousand pounds saved in the bank and you want to buy a new car, if you're not going to buy that new car for three years, but you know the one that you want and it's ten thousand pounds today, in three years time that car is not going to be ten thousand pounds. It might be ten thousand eight hundred pounds. But if you've got cash in under your mattress, you've still only got £10,000, but the cost of the car's gone up. So the risk of the inflation there is, y ou've still only got £10,000, but that car is now £800 more.

Luke:

And where are you going to get that £800 from? So that is where inflation really starts to bite, and we see it in the supermarket, I used to be able to get, I love crisps as well. I'm not turning this into a foodie conversation, but used to get a share bag of crisps for a pound in the supermarket I mean you'll be lucky to get that for less than two pounds now.

Luke:

Yeah so inflation everywhere we turn we see examples of it. So if somebody's got a lot of money saved in cash in the bank, you have to make sure that the interest that you get in is going to give you a better return than the average rate of inflation, and we're just coming off the back of a couple of years of periods of really high inflation. It's not under control yet, but we're getting there. So that's where, when people talk about investing money can often be one of the best ways to stay ahead of inflation.

Steph:

I see okay. And how do we stay informed about changes in the financial market, such as inflation?

Luke:

Yes, without name dropping anything. In particular, I don't have any particular recommendations for newsletters, but you can go online and sign up to some popular newsletters, or BBC News can be quite a good source. I would try to avoid getting your financial information from things like the Daily Mail, because they're trying to sell stories and newspapers at the end of the day. So things will be dressed up in a way that might not be always accurate, but there's plenty of online newsletters. One of the best ones I can give you as one name drop is the Financial Times. You can get a free account on the Financial Times and just access some of the free material.

Steph:

Okay, brilliant, and what resources are available for those seeking financial advice?

Luke:

So it's difficult, without going and consulting a professional, to try and do that yourself. I'd always start with your workplace pension scheme and have a look there. So if it's with one of the big insurers, such as Scottish Widows or Royal London, they've got plenty of material on their website. Even if you don't have a Royal London or Scottish Widows pension, go on the website and have a look at their financial well-being material. It's free to access and there's some really good stuff there in terms of top tips and tricks and budget planners, and there's free, free material that anybody can get their hands on.

Steph:

Brilliant. And then, just to wrap up, from the conversation that we've had today, what is one piece of advice that you hope that the listeners take away?

Luke:

Um, so there's, there's a few. It's hard to say, just on one thing.

Steph:

Okay, name them all.

Luke:

Name them all. Some takeaways from today. It's normal to worry about money. It really is. So for everybody listening that has had money troubles and money worries, it is completely normal. So don't beat yourself up about it. Just flip it around and think how can I deal with it, how can I improve this feeling that I've got, and just search, search for the answers. And after all, we don't get taught about these things in school. So it's not really fair to to blame ourselves for not having the correct knowledge to deal with with these situations. But you can take action. It's not too late. So that that's one thing I would say to take away and and hopefully make yourself feel a little bit better about. But again, it's never too late to start to take action. For anybody that's a bit older listening to this, there's never a better time than the present to start your journey of creating a better relationship with your money.

Luke:

or I'm going to give you six points to go away and think about. The first one is to review the current state of your finances, such as your debts, list them out on a piece of paper and list your savings and start to create that sort of budget plan. And then the second one is going back to that budget plan. Do it annually, we've mentioned it a few times, but do an annual budget plan. You can easily go onto the internet and pull off a basic spreadsheet that will allow you to a starting point, to get, get some things keyed in. And then again we have mentioned it, but I'll cover it off again cancel anything that you don't use. And I'm guilty as the next person I had a gym membership with, with pure gym, and I went once in six months. So I cancelled it. But I should have cancelled it a lot sooner than I did, because I kept telling myself I'm going to go, I'm going to go, but I didn't.

Steph:

Yeah.

Luke:

So it was only £16, £17 a month. It wasn't a huge sum of money, but again, over the course of a year that adds up. And then we've got 5.£5.99 for Disney Plus, we've got £7.99 for Netflix. We've got all these different streaming services. Do we need them all? So that can, that's one great way of making some quick wins.

Luke:

And in terms of goals, we talked about goals. Set some goals. So the goal might be pay off debt, it could be save for a deposit for a house, it could be plan for retirement, it could be put some money aside for grandchildren. There's so many different reasons that somebody may want to take action. But set that goal and it makes it a lot easier to achieve it if you know why you're doing it in the first place. And then the fifth one is look at setting up multiple savings pots. We talked about different banks that offer that service. Create those pots. There's no better feeling than when you get a punctured tire and it's going to cost 200 pounds to replace it. There's no better feeling of knowing that you've already got that money set aside for that particular eventuality, without having to dip into your monthly income and worry about what hole that's going to leave you in at the end of the month.

Steph:

Yeah.

Luke:

And the last one is talk to your loved ones, talk to your partner, talk to your friends, talk to your family. Just get things off your chest when it comes to money and let's not make it a taboo subject.

Steph:

Thank you so much, Luke.

Luke:

You're very welcome.

Steph:

How can people find you? How can people work with you, connect with you?

Luke:

You can connect with me on LinkedIn. I'll give you the link to put in the show notes and you can send me an email. Come and say hi. My email address is luke m@ suttonsifa. co. uk. Or you can visit our website. We are renewing the website very soon, but you can come onto the website and get a little bit of information on there. We do have a a newsletter as well, so people can sign up for the newsletter just by dropping onto the website.

Steph:

Thank you so much.

Luke:

Thank you very much for having me.

Steph:

You're so welcome.

Steph:

I feel like we have opened the conversation, which a lot of people may shy away from, so thank you for sharing all your knowledge. I know it will land with the listeners and for those that are listening and think of somebody else that maybe it will help. Please do share this episode, because we're all here to help each other, aren't we, for wellness and everything.

Luke:

We are, and we're all human at the end of the day, and there's been a lot of topics we've discussed today. It's very difficult to squash into one podcast. It's difficult to help everybody, but hopefully there's a few nuggets of information to go off.

Steph:

Yeah, perfect. Thank you so much, Luke.

Luke:

No problem, thank you.

Steph:

Thank you so much for listening. You can follow me on Instagram at Tranquil Topics and if you have enjoyed this episode, please do leave a rating or review, as it will help me to reach more people and I'll be back in two weeks time with another episode. Bye.