Friday 13th December 2019
In the digital age, it’s impossible to escape the media. But you might not realise the influence it’s having on your financial decisions. Often, it’s subconscious, but being aware of the impact it could be having mean you’re in a position to better understand the decisions you’re making and ensure they’re right for you.
The news and media aim to sell. And, as a result, it often sensationalises headlines and content to catch your attention and draw you in. When reading the financial section of a newspaper, how many times have you seen the words ‘dive’, ‘crash’ or ‘plummet’ to describe a fall in share price that is relatively short-lived? It’s the same story for shares that have performed well.
It’s not just the financial sections of media that may have an impact on how you view financial decisions either. Headlines on the state of the economy, which industries are fast growing, or challenges on the high street, for example, could affect your decisions. Whether you read the news in the paper or use social media to keep up to date, it can be challenging to filter out the sensational news and understand what matters to you.
Does it really have an impact? You might feel as though you’re rarely influenced by the media when making decisions, but it has probably happened at various points throughout your life, for instance:
So, what can you do about the media influence on your financial decisions? Financial planning can offer a solution for five key reasons.
1. Bring the focus back to you: Often in the media, stories will be conflicting. Differing opinions and outlooks means that people will have very different views on the best financial steps to take. This is because which route is best for you will depend on a whole range of personal circumstances. Financial planning helps bring financial decisions back to you and what you want to achieve.
2. Ensuring regular reviews: Aspirations, opportunities and risks all change over time, and this should be reflected in your plans and decisions. Engaging with a financial planner on an ongoing basis means you can take advantage of regular reviews to ensure you remain on track and bring up concerns. So, if you’re worried about how the economy is performing and the impact on investments, for example, a review can either ease your concerns or lead to adjustments where necessary.
3. Visualise the long-term impact of decisions: When making a financial decision, it can be difficult to comprehend the impact beyond the immediate. For example, reducing the amount you put into your pension may free up some extra cash now, but what impact will it have had in 30- or 40-years’ time? Through using cashflow planning tools, financial planning can give you a visual representation and put decisions into context with long-term aspirations.
4. Offering an outside perspective: Media influences can be hard to recognise in ourselves. You may make a subconscious decision, believing it’s right for you, when an alternative would be better suited. Working with a professional financial planner means someone else takes a look at your plans. Another pair of eyes and a different perspective can be hugely valuable when weighing up what you should do.
5. Confidence: It’s important to have confidence in your overall financial plan and the decisions you make. This is what financial planning should aim to achieve. With a plan that’s tailored to your short, medium and long-term aspirations, it can help block out some of the noise and influence from the media, which may not be right for you.
If you’d like to discuss your financial plan or concerns you may have with a professional, please get in touch.
Please note: The value of your investment can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.