Follow the Yellow Brick Road

…without a plan we will drift…

When I write blogs I feel like a scratched record; banging on about the same thing!

And yet, many of the problems we face in life stem from the same problem, not having a plan.

Musicians

When I speak to musicians they all have something in common, that is their love for music and the desire to get it out to as many people as possible. Some of these musicians have a plan as to where they want to be and how they aim to get there. Others reach a point where they need help. But in almost all the cases of the people I have spoken to there is a plan and a desire to achieve.

One band, The Cradles, really struck me about their determination to be the biggest global band. They weren’t arrogant, it was just that that was their goal. For three years they have worked hard to make that happen. In doing this they haven’t compromised their music but they have made sacrifices to get to the point they are at now. The band have tours behind them, they have had radio play and now they are putting together an EP to hopefully secure a record deal.

For some people in the music industry they want to make money from music, others want to do it alongside their day to day job, but to succeed the ones I have spoken know they need to make a plan. In contrast ‘recording’ artists managed by large corporations are really only provided with an instant route to fame which can as quickly disappear, taking any financial security with it because they have no plan in place.

NHS

The NHS is something of which the UK should be proud, but there is little doubt it has suffered from chronic underfunding by successive governments. The solution seems obvious, pour more money into it.

The cracks in the NHS have been plain to see for years, on a simplistic level it was never designed for an aging population nor ever more complex diseases. More money will act as temporary band-aid but it won’t resolve the fundamental issues.

Like anyone with plans, you have to review them and be prepared to change if necessary to reflect changes in life. The NHS hasn’t done this and until it does the problems will remain, and only get a lot worse. Pouring money into it is not the solution, it is much deeper than that.

Benefits

Being out of work, and having no money coming in is a complex issue. I should know because I have been there. In many cases those out of work and looking for employment use benefits as a means of keeping them afloat. It is not meant to be a permanent solution.

However, the system has got out of control which means in some cases it is financially better for people to be out of work than in work. Benefits is about supporting the vulnerable but also encouraging those people to get back into work if possible, it should never been seen as the alternative option.

This goes back to having a plan, without a plan we will drift and getting out of the spiral of unemployment is hard. But the plan has to be to get work at whatever cost.

Retirement

There was a recent tweet which said “to get a retirement income of the living wage, a 20 year old earning £20,000 needs to contribute 12% until they’re 68.”

At a basic level what does this mean? Does it include inflation, does it include the state pension etc?

When the state pension age was set life expectancy was one or two years after that age so it was an affordable benefit. We can now expect to live twenty years so it is no longer affordable. But fundamentally there is much more for us as individuals to consider.

Setting an income target of £x at age x is set for failure because it doesn’t reflect our needs and what we expect. To save for retirement we need to have a plan, just contributing in the hope of getting something will lead to failure.

Housing

The UK faces a shortage in houses, the solution? Build more homes, give people the right to buy etc. But the maths just doesn’t add up. The average house price in the UK is £250,000. This means most people just can’t afford to buy their own home (average wage is £26,000).

This would be fine if they could rent but often they can’t afford to do this either. Also the rental market is so badly managed it introduces uncertainty and insecurity which is not what people want when they are building a stable home environment.

Building homes is fine if it were possible to provide low cost solutions for those who can’t rent or buy but this is not happening. At some point in the future the market will be saturated, and very few will be able to afford the houses or pay the rent. At that point it will crash (again) whether that is in 5, 10 or 20 years, but it will happen unless something changes.

And what about Greece

Looking back to the history of Greece it was doomed from the start. They joined the Eurozone in 2001 and hid the true extent of their deficit. The problems were compounded not only by the cost of the Olympics but also lack of taxes, a complex and expensive pension system and more recently a promised €50 billion from privatisations has yielded only €2 billion!

Even giving them a lifeline doesn’t help. They have no plan, and down the line they will be back at the table. To some extent the best option is for them to drop out of the Eurozone, start from scratch and build a plan for the future. Perhaps this will happen one day.

Having a plan

From the big to the little, things break when there is no plan or the plans are not adjusted to reflect changing circumstances.

If we take the Cradles their goal is to be the biggest global band in the next five years. To achieve that goal their plan is to play in front of as many people as possible, and get their music out to record labels and radio stations with the aim to be signed by a major record label who can ultimately deliver on that goal.

For retirement it might be as simple as wanting £20,000 p.a. in today’s terms at age 70, and knowing that we need to invest £600 a month (for example) to achieve that.

Each of these examples take a very basic approach and every plan is unique to an individual but determining what we want to achieve enables us to consider how we actually achieve it and whether it is realistic.

The NHS and Greece are not excluded from this but the issues are much more complex.

In summary the plan is a template to what we want and how we aim to get there. It is something we always go back to and review to make sure we stay on the right path.

NOTE: This is written in a personal capacity and reflects the view of the author. The post has been checked and approved to ensure that it is both accurate and not misleading. However, this is a blog and the reader should accept that by its very nature many of the points are subjective and opinions of the author. This is not a recommendation to buy any product or service including any share or fund mentioned. Individuals wishing to buy any product or service as a result of this blog must seek advice or carry out their own research before making any decision, the author will not be held liable for decisions made as a result of this blog (particularly where no advice has been sought). Investors should also note that past performance is not a guide to future performance and investments can fall as well as rise.

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