Full Transcript
Dr James:
And in the house on the Denysian Invest Facebook group. Good to see everybody this Tuesday, even this fine Tuesday, even the second live of the year. These are gonna be a recurring feature on the Denysian Invest Facebook group because they’re a ton of fun and they also give a ton of value, which is super duper cool, as ever. We’d be really interested to know how many people are live watching this Facebook live tonight, on this Tuesday, this Tuesday, the 16th of March. If you’re live and you’re in the house, feel free to throw live in the comment section so that we can have a really good idea of how many people are live with us this evening. If you’re watching it in catch up also curious to know how many people are joining us on catch up feel free to go ahead and throw replay in the comment section so that we can get a really good idea of how many people watch this content both currently and in the future, and then we can tailor it towards the audience, which is super, duper, duper cool. Joining us this evening we have independent financial advisor John Doyle. We’re gonna talk about creating a financial plan in 2024. John, how are you?
Jon:
I’m very well. Thanks, mate. Yeah, very well. I’m conscious. I’ve been at the gym for the last hour and I haven’t properly looked in the mirror since I got back from the gym.
Dr James:
So you haven’t been. You’ve been in the gym in the last hour and that’s why your chest is looking swollen. Yeah, I was thinking that.
Jon:
No, no, I was on the bike. It’s a bike session today and I was meant to be outside.
Dr James:
Crashing is covered in snow, so it’s normally like that. Got your mate nice one. Yeah, yeah, yeah. Cool John. How was your Christmas? Before we kick in the things.
Jon:
Christmas was great. It was hectic, but that’s because I come from a big family, irish heritage. Just lots of siblings, lots of grandchildren are flying around. So we took all the kids down to my parents, met all their cousins. It was great fun, but it wasn’t restful, but it was good fun.
Dr James:
Science, good top stuff. What is your plan for 2024? What are you looking forward to?
Jon:
Well, I mean, there are plenty going on in the business in life, but I think the big thing for me, which is the scary thing, is my oldest daughter’s doing her GCSEs and starting college in 2024, which I find terrifying. So that is consuming my thought, partly because I’m getting older, all of that stuff. But yeah, that’s what’s going on in 2024. Life’s good, life’s good couldn’t be happier. What?
Dr James:
about yourself, mate. What about?
Jon:
yourself.
Dr James:
Just busy as ever, bro. Well, I’m out here in Dubai at the minute and I’m testing out how a lot of things work out here meeting people, having fun, enjoying the weather. I heard it’s been snowing in England.
Jon:
I don’t want to rub that in for anybody who’s on the wrong side of that.
Dr James:
But yeah, I know it’s nobody out here, it’s just it’s fun to get stuff done and then also enjoy the sun and enjoy the weather, enjoy the lifestyle. What it does mean, though is, everything is four hours later than it normally is in the UK, so it’s actually flipping coming up to. Yeah, it’s 25 to 11 right now, but it’s fine. I’m still full of beans because I’ve been looking forward to this, but anyway, we like to keep these things short and sweet. We like to keep these lives to about the 20, 25 minute mark, something along those lines. Guys, for anybody who’s watching this live also know, and also it is worth hanging around to the very end of this podcast, or the very end of this Facebook Live, rather, and the reason why is that we’re going to be sharing something special for everybody to benefit from, for the people who hang around to the very, very, very end of this live. There’ll also be the opportunity to ask a few questions to John as well, which will be super, super, super fun, super beneficial, because John’s knowledge is certainly something to avail of. John, the title of this live, as we both know, is creating a financial plan in 2024. And that’s why I wanted to get yourself one. Is who better to go to than somebody sees this stuff day in, day out?
Jon:
Indeed, indeed, first place, we’ve got to start and find out. We’re at a plan in 2024,. James is having some idea of where you want to end up. We start with the end in mind. Warner Steven Kobe. Seven habits of highly effectual people. You can tell it’s late in the evening today. My brain has been working on overtime. Seven habits of highly effectual people Start with the end in mind. So we need some form of idea of where we’re starting and where we want to end up at the end of 2024. And really, if we’re talking about a financial plan, we also want to start thinking about some goals that are maybe longer term than that as well. You know three, five, and then even I talk with clients about 40, 50 year goals as well, but we keep those very big picture not too granular.
Dr James:
Love it, okay, and let’s keep it high-level, because I like that, because what we want to talk in general terms, we want to talk in general terms, of course. So on that, very note how can a dentist go about having more structure to their financial affairs?
Jon:
Yeah, well, structure is probably the most important thing. So what I tend to do, you know there’s two sides of this. I can talk about what we would tend to do with clients, but I’ll also share a little bit what I do for myself personally bit of a busman’s holiday. You know I am a financial advisor. I don’t necessarily use a financial advisor, so we got two sides of this. But I think the most important thing is to have time set aside in your diary, whether that’s monthly, quarterly, six-monthly, annually, free from distraction, free from you know, all the complications of life, where your mind is in a good place to really think about and review what you’re wanting to get out of your finances. So, whether that’s sitting down and thinking about goals and projecting forward as to where you want to be, whether that’s sitting down and looking and reflecting on where your money’s going, your budget. And I like to frame budgeting more as an awareness exercise than telling our money where it’s going. Because, let’s face it, most dentists their income is, you know, is good, you know whether that’s a, you know, 60,000 or 600,000, their income is a well above average. And it’s more about reflecting on okay, where is it going? Am I aware of where my money is going, and that’s a really interesting exercise for people to do.
Dr James:
I’m a really big fan. Can I jump in? Only because there was just one thing I just wanted to add to that. I’ve heard budgeting referred to not as the B word, because that kind of sounds a bit austere, but more of a spending review.
Jon:
Yeah, yeah, yeah, absolutely.
Dr James:
I like that and I was like ah, I like that, it’s the same thing, but the term is so much more palatable, right.
Jon:
Completely. I call it a reflective budget. You know it’s something that you just look at where your money’s going and reflecting on it, and then the one question that I try and have above everything is do I value this? All right, so you know classic example, you know marry, two teenage kids streaming services. You know you sit down one day you’re doing a new review and you go hang on a minute. We’ve got like eight TV subscriptions that we’ve got going on.
Dr James:
I didn’t even know there was it. I thought it was like Netflix and Amazon Prime.
Jon:
You forget Disney, forget Apple. And then you know you’ve got now TV and then you’ve got to remember Amazon has all these little extras that they catch you with. You know they’ll have something on Paramount Plus and on you know, and then you sign up for the old thing and one of the kids does it to watch a series and then all of a sudden you’re paying $5.99 a month for you know for however long till you catch it. So you review these things on a structured basis and you don’t get caught out for months at a time. You just ask yourself this is something I still value, because really money is just the way we value life. It’s you know. We look at spending on a Starbucks coffee versus having an instant coffee, versus having a barista coffee from some independent Hockey corner place. It’s a value judgment and you’ll either spend 20p on it on an instant or you’ll spend like seven quid on the mutt nuts corner coffee. No judgments. All we need to do when we’re doing budgeting is going. Am I happy with where my money’s going and am I putting enough into the various pots and places that I wanted to go to end that pit in my long-term goals as well as the short-term wants that I have day to day.
Dr James:
Okay, cool. So let’s put ourselves in the position of someone who’s done a thorough assessment of where their money is going, the legals and buckets, so to speak. What’s the next tier above that? And actually, oh, can I just add one thing If anybody has done this cacobo, have you ever heard of a cacobo, john?
Jon:
That was new to me.
Dr James:
Japanese art of budgeting. It’s an eight quid book, really cool. I thought that there was no leaky holes in my bucket when it came to the financial stuff, because I’m quite restrictive with buying things that are subscription services because I genuinely see that as me being someone else’s passive income, which I detest. I thought that that wasn’t happening to me. It 100% was when I used the systemized protocol that this book will give you to review your spending. Very cool.
Jon:
I like it. I might check that out. I’m a big fan of structuring all of these things. The way we set up our finances is we’ve got one account that everything that’s on a committed spend a direct debit, a standing order, whatever comes out of one account, our day-to-day spending comes out of somewhere else. So, again, all I have to do is look at one bank to review everything that’s a committed direct debit and a subscription that we signed up for, and another one to keep an eye on what’s being spent at Wagamama’s or whatever else that the kids are off to and those sort of things. So structures I think it’s really important. We’re probably going to come back here to our goals and think about where we want to be, because this is where we’ve reflected on our outgoings. Now we’ll look at about what we want our life to look like, both end of the year, but also five, 10, 20, 50 years time. And then it’s this question of are the two in alignment with each other? Right? Because I’m a big fan of philosophy, I’m going to drip some little philosophy in here. Aristotle has this thing called the golden mean, and that’s the perfect midpoint between two extremes, and I find often, naturally, we veer into one side or the other. We veer into that I’m living all for tomorrow and I’ve got clients who you know we’ve had to really work on getting them to spend a bit of money, because otherwise their grandchildren are going to be flying first class and their great-great-grandchildren they’re living a bit tight maybe. And then the other extreme is those who you know, earn in six figures but spend in seven, exactly Money, money, money, and it’s finding this golden mean between the two. Okay, so this is where this question of is what’s going out, reflective of what I actually want in life? And I, you know, when we come to goals you have to dig deeper than just I want a Ferrari or I want this or I want that. I always ask the question what’s the purpose of money in our lives? Like, what is it really? What are we driving at? Why is this really important to us? Because then we’re going to get to goals that really mean something to us. You know, little things like I don’t want my kids to grow up the way I grew up. Now I’m a child of a dentist, so that’s not one of my goals. I had a good upbringing. But you know, you get into those, those sort of secrets.
Dr James:
I’m safe.
Jon:
I’m safe that was one of my dads, though, was that I don’t want to. I don’t want my kids growing up the way I grew up. But you know, dentistry is a great vehicle for achieving that sort of financial security. And when we come to that point we then start to ask ourselves, well, what are we putting away for the future? And we start to think about how much we need to be saving. One of the things I like here especially and it can be hard when you’re a self-employed person you know most dentists either self-employed or running a limited company it can be hard to kind of discipline the budget every month to say I’m going to commit to saving x, y, l, z per month. I’d rather wait till I’ve paid my tax bill and work out what’s left at the end. The danger with that is often the spending happens and we haven’t got anything at the end. You know the story. I know the story. Those early days of being self-employed lived like a king, you think all the money’s yours right, all of it. Yeah, yeah, that’s it, that’s it. It’s very much. You know, finance, reddit and all this. Have this phrase pay yourself first. Okay, I just mean with this, set up direct debit every month, the money into the various savings account that we’re wanting at a level that we know is going to be comfortable. Okay, we know this is going to be within our means and able to move us forward. Good target about 10% of income is a good target. That’s what I’m at. On those monthly savings, if we’re looking at rules of thumb, I’ve got clients saving 15, 20, 25% and more of their income. So the more you’re going to save them, the quicker you might get to some of those goals. But really, part of that budgeting thing, part of that awareness, what am I putting into the savings vehicles that I’m wanting?
Dr James:
Love it, man, thank you. And thank you for really succinctly explaining that, because you know what always amazes me about this stuff. It seems really amorphous, until someone just breaks it down and says actually, there’s a protocol to this.
Jon:
Because Dennis love protocols, let me tell you, when it comes to treaties, I’ll tell you this as well when it comes to how you budget, like how your actual personal finances is, I’m a really big fan of trying to draw it and actually say, right, this is where my income comes in, this is where my spending comes out of, this is where my you know, if you can draw a diagram of how you manage your money, then you know you’ve got structure. Love it. Have you ever tried to draw yours?
Dr James:
I haven’t done with that specific thing but I’m very conscious of the power of writing stuff down and making big spider diagrams. I actually did it on Sunday with the entirety of Dennis and Vest and I was like, right, here’s what we can improve, here’s what we can make better. Very powerful.
Jon:
And it particularly then. Right, you know I find a lot, of, a lot of the challenges come when we move from being single to in a couple, because this is a transitional period for people’s finances. You know it. Gone are the days for many people where you’re kind of living at home and single and then the next day you married, like it was in the 1950s. You know that’s kind of gone and we’re in this sort of world now where there’s a slowly, slowly, gently, gently merging of our finances into some form. And there was a really great discussion back before Christmas about this where I had some clients who were sort of disagreeing about how they managed their budgets together. And there was a great thread on on Dennis of people commenting and giving thoughts and ideas on that, which I found really interesting. But again, as a couple it could be a really interesting idea to sit down and both draw how you manage your finances and see if you can find the way you’re going to do it together, going forward. You know, this is the bit where we share, this is the bit where we don’t. This is the bit where I’m saving for my future, this is the bit where I’m saving for a rainy day, etc. Etc.
Dr James:
Love that man. Okay, cool, so we’ve got all of that in order. Is there a level of that next?
Jon:
Well then we can come into things like tax planning and income planning. Okay, so again, depending on where you’re at as a dentist, you have varying degrees of control over your income. So, brand new associate, you know, done VT, they’re now out in the world, self-employed. Most likely. You have very little control over your gross income. You just got to work your ass off in the chair. But you can start to think about how you structure and manage your income. Think of yourself as a business. That’s early day of the associate’s. You want to be having a business account even it’s a personal account, but a separate account for your income and paying yourself a monthly salary from that, from as a net income, having somewhere to put your tax Again. This is all part of drawing, how you know, sketching out the structure of your finances. As you come on, you know, maybe you start doing more private work or you into owning a practice. You’ve suddenly got limited company. You might have other investment income and really this is where you start to go to. How am I going to structure my income To maximize the UK tax system? Because we have a bit of a crazy tax system. It’s very easy to sort of fall into a thinking that our tax system has, you know, a non-tax pair, basic rate tax pair, higher rate tax pair, additional rate tax pair, unless you’re in Scotland where they’ve got like six different tax thresholds now but we also have a few like tax traps. I’m going to put off slide and hopefully this will work if we get the tech working right On some tax policy associates. And it’s the UK marginal tax rate for a single earner family with three kids. Okay, so you’ve got child benefit coming in. Right this is pretty, pretty shocking. Hopefully this is going to work and people can see it.
Dr James:
Yeah, yeah, we’ve got you.
Jon:
Amazing. So we’ve got this first band here when people are earning, you know, up to 12, 15,000 pounds, depending on the savings rates, where you can be a non-tax pair, and it’s all pretty casual until you get a 50,000 worth of income. But look at that, yikes, yikes. That doesn’t even include your student loan payments, if you got student loans. So this is this ban between 50 and sort of 60,000 where you start losing child benefit. So if you’ve got three kids, you’re losing a couple of 100 pounds a month.
Dr James:
So what’s the reason the left is?
Jon:
it’s the effective rate right, it’s the effective rate of tax. It’s so useful, right. It then drops down to the 40 plus a bit of national insurance, 5%.
Dr James:
And John, sorry to barge in, there’ll be some people listening to this on podcast or follow up. So what John has in front of me, I’m going to describe these bans just briefly zero to a buy. I’m going to guess that’s 12 and a half K, Is it?
Jon:
It’s actually marginally more because of savings allowances, but, yes, go for it. It’s about 12,000 for most people.
Dr James:
Gotcha Okay cool. So got personal allowance and that tax rate around about there is zero. Then it jumps up for everything beyond 12 and a half K roughly to the basic tax rate, which is about 50 K 30% it is. And then effective tax rate. If you’ve got three kids, that’s 70% for that. First let me see 10,000 or so between 1560, then it goes right back down to 40, which is kind of what we knew anyway. And then it’s the 100 K thing where things get a little bit wild and you lose your personal allowance and all of that, and then right back down to 45%.
Jon:
I think that’s a couple of percent in there for national insurance as well. It includes that and this will all be on employees as well, rather than self employed. The other thing you get here with this 100 K is the loss of tax free childcare and childcare places and all sorts of horrific tax traps. So there’s so much value to be gained. If you’re someone who has an element of control about their profit okay, and we can be thinking about how your pensions fit into this, how you know dividends, that you do courses that dentists might do on implants or other kind of CPD type courses all sorts of things that can go into your allow expenses to manage your income. Of course we want to make sure that if we are doing that, it’s stuff we actually need and want and will value. I’ve seen people spend money on stuff just because they want to need to spend money and it doesn’t not how we want to do it. But we can really think carefully. Then you know, if you’re a limited company, extra dividends to really go past that pain point of the tax threshold, maybe taking less dividends so we don’t actually step into it. Worst place you could be earning is 55,000 because that 5000 is getting plummeted. So a bit of tax structuring, tax thinking, is really important and joined up thinking with your accountant, your financial advisor I have great meetings with you know Mike Bryan of this parish and Bilal you know guys who are great accountants that we’ve got lots of shared clients and there’s a few others as well and we talk about our clients planning, income planning, long term planning and how all this fits together and works together really effectively.
Dr James:
That’s cool, and you know what? That graph that you had just then was flipping crazy. I actually didn’t know the impact of all those things that you mentioned around about that 50K mark. So, for anybody who’s listening to some podcast, I did my best there to explain what was going on, as did John. However, it might be worth checking out this live on the Dennis University Facebook group. So feel free to pop on the group. It’s not going to be too far from the top. Today it’s Tuesday, the 16th of January 2024. So you’ll be able to find it around about then. Depending on the post cadence, you’ll be able to find it on that date. John is being amazing to have you on Dennis University podcast. Do you know what I actually think? That’s a beautiful place to end this live on. The reason is that’s everything structurally and then beyond that. Yeah, there’s structure to it, but we’ll also get into the investment side of things. What we’re talking about is putting all of our ducks in a row, right? Yeah, exactly.
Jon:
Exactly. Get your ducks in a row, get start in the right place. No way you want to end up in the end. And then everything else is the journey. That’s the exciting bit.
Dr James:
John. Beautifully put, beautifully said Guys, thank you for joining us so much on this live this evening. If you want a game plan and a strategy whenever it comes to this stuff, we can totally help you out With that, either John or myself. Feel free to throw game plan in the chat and we can get back to each and every person who does that you feel like that will be beneficial as well as that. I did make a promise at the start, and I always like to come through my promises. So we got to do that, and the promise was that we gave something special to everybody who watched this live from start to finish or even joined at any stage. Feel free to put ebook in the comment section. I can send you an ebook that we created from the Dennis Hoon Best platform. It’s about getting our infers in order to putting everything in place so that we can have an effective investment strategy a little bit further down the line, getting our reduction in row, so to speak. So, like I said, throw ebook in the comment section. We can reach out to you about that, john. Thank you so much for giving up some of your valuable time this Tuesday evening. John, is it any words of wisdom that you’d like to part on?
Jon:
Not massively, to be honest with you. I think a lot of dentists are doing a really good job and it’s about just taking things into that next level of what they need to do and having that plan in place, but no massive words of wisdom. If you want to have a chat with us, I’m on the group, we’d also. You can find us at wwwgeneablewealthcouk and we’d love to have a chat with you.
Dr James:
One thousand percent. Feel free to reach out to John as well, john Doyle, on the Denysian Best Facebook group or on all of the portals that John just mentioned. John, once more, thank you so much for your time. We’ll see each other again very soon. See you soon, mate.