I think it’s fair to say that Ireland has a rich tradition of wisdoms and cautionary tales passed down through families and friends. When it comes to how Irish culture deals with finances, a lot of advice has been doled out on barstools and over kitchen tables. There’s always someone who’ll tell you property is a ‘sure thing’ when it comes to investment because a friend of a friend bought big in the 90s and made their fortune. Other well-meaning, self-appointed advisors will tell you a deposit account is your best savings bet for retirement (because that’s where they’ve chosen to put their money) or that they always go to broker X when they need to renew their car insurance.

The thing is, can any of us really afford to take a one-size-fits-all approach to our finances? What might have worked for your friend of a friend could be the last thing you should do to maximise those all-important investible assets.

Meet & Greet | Gary and his neighbour, Michael

Let’s take next door neighbours, Gary and Michael, as our case in point. Both men are married and live in a detached five-bedroom house with similar features and no extensions or major refurbishments. Gary is 39 and Michael is 38. Gary’s two sons are eight and five years old respectively, while Michael’s son is seven and his daughter is four. The children all attend the same school. Coincidentally, Gary and Michael both work for an engineering firm. Although their roles are different, they’re in the same pay band with only €1000 to separate their annual income each year.

On paper, these two men are incredibly similar and it might seem fair to assume they would benefit from the same financial advice. In fact, taking an ‘off the shelf’ approach to their financial planning would be foolish. Let’s look a bit deeper.

Gary and Aileen

Gary and his wife, Aileen, are tired of living in the city and would like to make a move to the countryside before their oldest child starts secondary school. Aileen has elderly parents and her mother’s dementia is gradually worsening; she may not be able to live at home for much longer. Gary’s parents died when Gary was in his 20s. Gary and Aileen are both keen that their children have the opportunity to go to university without being saddled with debts, so they prioritise saving for their sons’ education.

Michael and Lucy

Michael and his wife, Lucy, prioritise their family’s annual holiday and would like to take early retirement with a view to travelling as much as possible before they get too old. They’re happy to stay in the city but would love to move to a bigger house in the next five years as Lucy works from home (currently using the computer in the dining room) and would like more space for a home office. They have made some preliminary enquiries and there would be room to extend their current property. Michael is an only child, born quite late in his parents’ marriage, and his mum and dad are now in their early 80s. Lucy’s parents live nearby and quite often help with childcare.

Doctors Differ…

It’s pretty safe to assume that Gary and Michael have different financial priorities. Gary, for example, may be looking for ways to maximise the equity in his house to fund the move to the country. He knows he can’t rely on a future inheritance and that Aileen’s parents may need to spend much of their personal savings on funding a place in a nursing home for Aileen’s mum.

Michael, on the other hand, knows that he and his children will be the sole heirs of his parents’ estate when the time comes. As the children are settled at their school and there is a good secondary school nearby, Michael and Lucy have decided to prioritise adding an extension to their house. They are also keen to maximise their short-term holiday savings and long-term retirement planning.

It’s the details of a person’s life and goals that have the biggest impact on their financial planning. What Gary and Michael show us is that even two people who share a lot of common ground need tailored financial advice to make the most of their income and assets, and to help them achieve what matters most to them in life.

Always seek advice which is free from conflicts.

Join me on Thursday 17th January at McAuley Place, Naas, for The Fair Deal and Enduring Power of Attorney, an interactive Q&A from 7.30pm to 9pm.

Register here.