Cash Flow and Cost Reductions

David Heaton has spent over 41 years in the Financial Services industry and achieved the highest honour our profession body can award to their members, Fellow of The Personal Finance Society. In this month’s main article, David assesses the impact of recent events on both his life and his family’s finances:-

It goes without saying that the last few months have altered the way that many people go about their daily lives

I had just nicely settled into my new role at Chancellor, which focusses entirely on business development and I was busy creating opportunities through organising events and developing relationships with other professionals, however, this became impossible as many of the firms closed down their offices and were working from home, business development opportunities were very much put on the back burner. As a result, I was placed on the Government’s furlough scheme for a couple of months, but now that there is at least some “light at the end of the tunnel”, so to speak, I am now back and picking up the reins of some of the great things that I was working on.

The free time I inherited gave me the opportunity to really focus in getting certain aspects of my life in order from an organisational and financial planning point of view, which has been both rewarding and satisfying.

So, what have I achieved? As with many people who are working full time with family commitments, it is often the case that after a hard day’s work we don’t want to start looking at finances in any detail in the evenings or weekends, but just chill out with a nice gin & tonic, glass of wine or a beer (or two).

The first port of call was “decluttering”. Judging by the number of books that have been written on the subject, by such decluttering gurus as the bestselling author, Marie Kondo – it is not just me that had accumulated many years of paperwork and “things”. So, the shredder was working overtime and the local councils recycling bin was filled several times over.

Sadly, one of my parents died back in April and I was able to use some of the time to get all the paperwork prepared for the lawyers to apply for the Grant of Representation. It is not something that I have had to do before, but it was interesting to get to grips with the process and the various forms that need to be completed. At Chancellor we do have many professional connections in the fields of law and accountancy who may be able to help if you are faced with a similar situation in the future. In the past twelve months or so we have posted a few articles on social media and in our monthly ENewsletter about the importance of someone leaving detailed records for their family and executors as to where to find various bank accounts and investments in the event of them passing away. Having been through this exercise myself recently I can only reiterate how important this is.

Now this bit is quite embarrassing for a (former) financial adviser to admit, but as I alluded to earlier in this article, I was one of those people who wanted to spend time with my family after a hard day at work – and not dealing with even more financial things. Like many people, I have not tended to shop around at insurance renewal time or look at the utility bills on a regular basis. My recent plan was not just to get the bills down – but wherever possible to get something “better” at the same time. Probably the best example of this was on the home broadband where the signal used to give us speeds of…wait for it…1.5MBS. It was so poor that we also had to pay for a separate 4G mobile router for when things got really bad. So not only did we reduce the overall cost, but we now get speeds of 140MBS as Superfast Fibre Broadband has been introduced to the locality. With three of us working from home because of COVID it is unthinkable how we could have managed. This is significantly cheaper than we were paying for the combined cost of the line rental, phone charges, Broadband provider and 4G box

The biggest saving of the lot was when I decided to get a Hybrid car. The monthly payments came down massively, the fuel consumption went up by 30% and because of all the safety features built in, the insurance costs reduced by a huge 66%. And I am doing a bit more for the environment moving from diesel to petrol.

Other things that came under scrutiny were a plethora of insurance products – some of which I did not need at all any longer, but which had just slipped under the radar. The ones that I DID need such as buildings and contents – and boiler cover – were reduced by shopping around and building in call out charges and higher excesses. Until recently I had not used a switching / comparison web site, but I am pleased to confirm that everything happened smoothly and without any hitches.

All of these items were being paid for out of net income and when the last saving had been made, it transpires that I was having to earn just under £11,000 each year before tax and National Insurance to pay for things and services that I could easily do without or pay less for.

What this exercise and the last few months have taught me is that whilst we all put off the things which we don’t enjoy or don’t feel are important, it can be quite rewarding and satisfying to get these things dealt with. Many of us do not regularly analyse where we spend our money and whether we are on track financially. If you want to consider this further, it would be worthwhile asking one of Chancellor’s Chartered Financial Planners about our Cash Flow Modelling service, to investigate and analyse whether things such as retirement plans are still on track and, if not, what can be done to aim to rectify the situation.

If you have any questions whatsoever about any of the areas covered in the article then please do not hesitate to get in touch with your usual Chancellor adviser on 01204 526 846