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How to Afford a Midlife Crisis

28th March 2017

Midlife crises affect nearly 30% of the population. We are not talking about red Ferraris and 20-year-old model girlfriends, more about reaching a time of your life when you’re reflecting on your achievements and what you want to do with the rest of your life. This type of contemplation can lead to frivolous splurges, but with the right amount of foresight and financial planning you can factor this into a projected plan, leaving you to enjoy your treat, guilt-free.

According to research by Towergate Insurance people spend £17,420 on average in feel-good purchases in later life. These purchases range from the quintessential midlife crisis buy of a sports car to gadgets and expensive holidays.

Predict Your Future
The term midlife crisis was first coined in 1965 where early analysis suggested that it could happen anywhere between the ages of 40 and 60, but it is now shown to start much earlier.
Now midlife crises are said to typically strike men at 43, whilst the most common age for it to hit women is 44. With this information, you can forecast when you are likely to suffer a midlife crisis. This, in turn, allows you to plan financially for the crisis, allowing you to enjoy this new stage of life financially secure and guilt-free.

Think Ahead
Whatever the reasons and causes for a midlife crisis, it’s wise to start planning for the associated big purchases that may come should you suffer one. With your estimated time of crisis, you can gauge when you might want to make that extravagant buy. The sort of person you are can dictate what sort of midlife crisis purchase you’re likely to make. If you’ve always had an appreciation of good design and fast cars, then it stands to reason that a sports car would be your most likely buy. If you’re a keen traveller, then perhaps a second home abroad will be your splurge. Or perhaps you are an art aficionado then maybe an investment in a modern art piece is more your thing.

Treat Yourself
Leading up to crisis time people have generally spent time investing in their careers and families and then often want to renew their enthusiasm for life. Setting up road blocks for this can mean that these emotions don’t translate into expensive spending splurges later in life. Allowing regular smaller indulgences like an extra special holiday to tie in with a milestone like a birthday or anniversary. This means that like dieting, allowing yourself an occasional dessert means you don’t feel so hard done by and react by binge spending on an extravagant purchase.

Set A Goal
If you price up the average sports car of your choice, cruise ship trip or French summer home then you can use this figure as a rough estimate as a guide to work towards in terms of your savings pot. If you’re undecided as to the sort of purchase you’re likely to buy, it could be a wise idea to save the average £17,000. It would be sensible to factor in the rate of inflation for your savings too, depending on how far off your projected midlife crisis is.

Assess Your Current Portfolio
If you have been managing your money sensible as of late, then it might be that you already have a pot of money, which can be utilised to fund your crisis. If you have a property portfolio it may be worth considering re-mortgaging in order to free up some cash to start your fund. Likewise, if you have been an avid retirement saver and looking at this a little later in life then it may be worth considering unlocking a small portion of your pension.

The Earlier The Better
While a midlife crisis may seem like a long way off, by the time the daunting reality hits, it may be harder to comfortably save this money pot without feeling the effects to your lifestyle. The sooner you start saving the better as if put off till too late it may be unachievable without having to make dramatic changes to your lifestyle.

Stick To Savings
Although it might be tempting to pour money into risky investments trying to make up for lost time, late in life is the wrong time to lose money.

Speak To A Financial Advisor
It may seem difficult or even laborious to start a savings pot but with a little planning you’ll be able to reap the rewards at a time when you need it most. Talking to an IMC financial advisor can help you chart a great savings and investments plan for your potential midlife crisis. And if you’re lucky enough to avoid one, you’ll have a significant pot of money to carry on through to your retirement and pension.

To explore ways to afford a midlife crisis with a clear and manageable financial plan, speak to a member of our team today, we would love to hear from you:

Tel: 020 3761 6942
Fax: 020 8392 6112
Email: info@imcfs.co.uk

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