Here comes spreadsheet Santa with gift of prudence - Jim Duffy

These 20-somethings need to be steered when it comes to financial planning, says Duffy. Picture: Contributed
These 20-somethings need to be steered when it comes to financial planning, says Duffy. Picture: Contributed
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Every year at about this time, businesses plan for the next 12 months, setting goals, targets, performance indicators, budgets, forecasts and general business strategies.

It is prudent to engage in such activity as it focuses the mind on priorities and outcomes. It can be a tough exercise setting goals for some. It can seem like pie in the sky or an unrealistic exercise in what could be – if only it all goes to plan. But, as I set my goals for 2020, I’m going to tweak the whole process a little as I involve my ­family. I wonder if, as business people, we should translate some of that vital ­planning into our domestic situation?

Children of all ages can always do with some guidance. But, teenagers and 20-somethings also need to be steered in the right direction when it comes to finances and planning. My two girls would have no idea how to run a spreadsheet on their finances. They are not arithmetically minded that way and they take after me, who has really had to work hard at even understanding spreadsheet programmes. That said, my plan this year is to show them my goals and incorporate my financial planning into that also.

It may go down well, but one thing is for sure – it will make them think hard before they send me the usual texts, telling me they’re skint and could they ­“borrow” some cash. Like my parents who forked out good money after bad for a period, this process will give the girls a flavour of how I account for my dosh and how they impact it.

Variable expenses can kill a budget

Yes, I have a line on my monthly spreadsheet for them, but sometimes it is just not enough as Generations X and Y seem to want everything now. It seems it is all about the “experiences, dad”. For which I counter: “How about the experience of having some savings in the bank?”

Spending time with them this Christmas on how to set a goal and budget for it will be worthwhile, albeit a little painful. They will see that I have breakfast out three times a week. That’s less than half of the week, which means I make my own the other four days. My breakfast budget for the month is £36. If I decide to have organic eggs with free range smoked salmon accompanied by fancy bread and a hipster coffee each day, that line in the spreadsheet will burst. This is the beauty, I hope, of undertaking this exercise. It will highlight that variable expenses can kill a monthly budget.

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By variable expenses for my 20-somethings I mean, large americanos from high street coffee houses accompanied with beige, sugar-laden muffins that purport to be “skinny”. I mean keeping within my data allowances so that the mobile phone provider doesn’t ram me with charges. It means planning some lunches made up on a Sunday so I don’t spend five quid a day on pre-made shop sandwiches and juices. And, of course, it means abstaining from expensive cocktails when I go out and simply having the house wine or a cheap pint.

As you can see, I am going to encounter some static as we jointly set some financial goals. How they live their lives is not how I think they should. My goal is to have them save for a deposit on a house. I know that this will seem way too hard and get kicked into the long grass, but I’m determined to give it a go. The trick will be to relate it to businesses and how they have to make tough decisions as they set goals for the year. With people’s jobs at stake, and, of course, debt to pay down, I hope to make them see the value in it all.

I think the best way to outline the scenario is to approach it as goal setting for dummies and let them see how I’ve made my mistakes and how businesses going bust have done the same. This way I can bring it alive and make the spreadsheet more meaningful. It is a simple process that many of you may already undergo with your kids. Just spare a thought for me this year as it will be my first good go at it. The goal? Well that’s simple: next year I don’t want to be the dummy with my hand constantly in my pocket.

- Jim Duffy MBE, Create Special.