How a love of football can help to understand personal finances - Sarah Coles

He makes an excellent point. I decided long ago to stop paying attention to football, and free up the brain space for more useful information. However, football has still found a way in. Somehow, I know about Manchester United’s woes and Plymouth Argyle’s upset, through some sort of football osmosis. God knows how, but I even know how Wayne Rooney’s management career has panned out so far.

So maybe the answer is to harness our interest in the beautiful game, and use it as a way to teach ourselves vital lessons about our finances. There are some useful places we could start.

A strong defence is a key priority

I spent many hours by the touchline watching primary schoolers lose by scores that would be more at home on a rugby pitch. There’s no point scoring 9 goals if the vast majority of your team spend the match in the opposition’s penalty box, leaving your goalie to let in 11.

Likewise with your finances, you need to build strong foundations to defend against the unexpected in life, with enough insurance cover to protect your family and an emergency savings safety net to cover 3-6 months’ worth of essential expenses.

You can get a long way by getting the boring stuff right

Gareth Southgate got an awful lot of grief for failing to get the England men’s team to play exciting football, but his ‘boring’ England side ground out the wins that took them to the finals of the Euros twice and the semi-finals of a World Cup.

You can achieve an awful lot in your finances by getting the boring stuff right too. If you build a budget and free up some cash, then set up direct debits to pay off debt, build savings and contribute to a pension, you’re not going to set the financial world alight, but every day you’ll build real financial strength. If you take advantage of tax efficient allowances like ISAs and pensions too, you might not be the most exciting person in the room, but you could be the one paying the least unnecessary tax.

Have a goal and aim for it

I’ll admit it. This one is inspired by every 0-0 draw I’ve been forced to sit through in the depths of winter. And while it’s not the kind of advice any footballer is going to thank you for, it can make a huge difference to your finances.

Too many people wander through their financial lives, letting their employer decide how much money goes into their pension, leaving any excess cash vulnerable in their current account, and hoping that things just work themselves out. If you want your money to work hard for you, it makes sense to set your goal, assess what you need to do in order to get there, and get cracking.

You need to have one eye on the long term

There are some clubs that have built a huge amount of their success on investing in their youth academies. At Barcelona, all sorts of stars from Lionel Messi to Cesc Fabregas and Pep Guardiola came up through their famed ‘La Masia’ academy.

We all need to be in the business of building our long-term strength. Using a pension calculator is a great way to see where you stand. There are plenty of them available online. You just put in details of what you’ve saved so far, what you’re paying in each month, and when you want to retire. It’ll give you a clear picture of whether you’re on track or if you need to focus more on the future.

Know when you can do it yourself and when you need to pass the ball

There’s a reason why someone like Kevin De Bruyne is considered a complete footballer. He’s known for his tactical awareness, which means he knows where and when to pass the ball for the most rewarding results. Similarly, even great managers know when they need a second opinion. Bill Shankly leaned on the support of his coaching staff in Liverpool’s famous ‘boot room’.

The same goes for our finances. Some of us will be confident in making the right choices throughout our lives. Others will be comfortable making most decisions, but can do with some extra help when it comes to key events, like after an inheritance or when we retire. There’s huge strength in knowing when we need to pass the ball to an expert, either by getting financial advice or turning to a service like Pension Wise, the free government pensions service for people aged 55 and over.

There’s a risk in never taking a risk

Burnley’s season so far has seen some outstanding defending, which means few clubs have been able to get the ball past them. However, they're not top of the Championship because they haven't scored many either. It begs the question of whether they’re taking enough risks.

The same goes for many people, who have an emergency savings safety net, and enough cash for planned expenses over the next five years, but are worried about investing money they don’t need for 5-10 years or more. If you’re tempted to hoard cash, it’s worth knowing you’re paying a price for not taking a risk – because you’re missing out on the potential growth of investments. Over the long term it means your savings risk losing spending power after inflation.

You need a strong core

The best football teams have always had a solid spine from the goalie to the centre back, central midfielder and a striker. They can then add flair with players around that core – like a young up-and-coming winger who could be a risk, but could also do very well.

It’s an approach that works brilliantly for investment too. The idea is to build a solid core of diversified investments, with strong funds offering a broad spread of investments across assets and geographies. From there, you can add flair through smaller holdings around it. You might, for example, hold an emerging markets fund as your young up-and-coming-winger equivalent.

It’s not just a game

Football fans will be livid if you suggest it’s only a game, because for many fans it’s much bigger than that. It’s about loyalty and friendship, commitment through thick and thin, and hope against the odds.

Similarly, you don’t have to be excited about the ins and outs of managing your money or investing. It’s not about the money itself, it’s about what it can do for you. Not having to worry about running out of money tomorrow is liberating, while putting aside money for the future means you’re opening up opportunities and building your financial freedom. If you keep the potential rewards at the front of your mind, you might just be able to free up 90 minutes or so this weekend to spend getting to grips with your finances. If you’re a Man United fan, perhaps you could do it while the game is on.

Wages rise again

Figures out this week show that wages outpaced inflation again – rising 2.5% this year even once you take inflation into account. The HL Savings & Resilience Barometer shows the average household now has £136 left at the end of the month. It’s a far cry from the peak of the cost-of-living crisis when the question was how much month we would have left at the end of the money. And this won’t be the last of it, given the public sector wage rises and minimum wage hikes on the cards in April.

Of course, with inflation back on the rise, there will be plenty of people who are worried higher wages could feed into more price rises, and delay interest rate cuts. However, we’re still a world away from the double-digit inflation we’ve lived through in recent years, so for now it seems we can enjoy the extra space in our budgets without having to worry that the resulting inflation will squeeze the life out of them again in future.

SARAH COLES Head of Personal Finance and Podcast Host for Switch Your Money On Headline Money Press Team of the Year Hargreaves Lansdown

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