I’m an investment manager and here’s how I spend my money

During the cost of living crisis, many of us have become experts in how best to cut back and save to make ends meet.

When it comes to making the most of your salary and savings, you might think that people in the financial industry are more knowledgeable.

David Henry, investment manager at Quilter, recently told us how he invests money, but what about what he actually spends it on?

He talks to This Is Money about his biggest vices, whether canceling Netflix is ​​a smart move and how useful budgeting really is.

My vices are football and good food

Henry’s biggest fixed monthly expense is, unsurprisingly, his mortgage, followed by contributions to his Isa and savings accounts.

While he may prioritize his financial health and saving for retirement, Henry is no stranger to spending his money on things he enjoys.

‘I like to eat out, on vacation. I love my football… I’ve been to strange and wonderful parts of Eastern Europe to see Northern Ireland play. I have a season ticket from my local football club.

“I’m not a big car guy, I’m not a big watch guy, I’m not a big clothes guy. It’s just experiences and being able to get out and do things. That would be my priority.’

Henry, who says he’s “sticking to the fact that he’s a millennial,” thinks spending on experiences is more of a personal preference than a generation gap.

The “nice to haves” are inherently personal, says Henry, and the fact that he’s an asset manager has little to do with his way of spending money.

“I think there’s an idea that maybe people in finance are robots and have really worked these things out. That’s just clearly not the case. We’re all human…none of us is 100 percent aware of it.’

“Ultimately, I think not only is it useless to feel bad about spending money, it’s actually kind of pointless.”

Good versus bad spending

While Henry may think it won’t help, he admits he’s been feeling guilty about some recent purchases lately.

“In the past few weeks, I have spent quite a lot of money for me. I thought about it and kind of beat myself up but then I went ahead and categorized what I spent it on and there were two major expenses.

‘I’m redecorating the spare room… and I’m doing a new qualification, so that’s what I bought the course for. [But] I would categorize that as good spending – with the first you invest in an asset, and with the second you invest in yourself, and hopefully your future earning potential.

‘I think there should be a division between good and bad expenses. Many of us also spend money in a bad way now and then, but as long as you keep an eye on it, don’t beat yourself up too much.”

A helpful reminder for Henry is that he sees a lot of people disciplined with their spending, “but accumulation for the sake of it is a pretty miserable way to live.”

“Sometimes you see someone who has done all the hard stuff — saved, invested, has come to retirement and doesn’t necessarily know what they want to spend their money on, or who doesn’t feel comfortable going out and spending money. ‘

Some are taking this to a new extreme by subscribing to the Financial Independence, Retire Early (FIRE) movement.

Those who want to achieve FIRE will maximize their savings as much as possible by reducing their expenses as much as possible in addition to investing aggressively.

“That’s fine and that’s good for them, but for most people in the real world that’s not going to be feasible,” says Henry. “Living a life where you only spend frugal amounts all the time is a pretty miserable existence.”

How useful is budgeting?

Henry admits he’s “a bit of a spender,” so he’s taking steps to mitigate the worst of this by budgeting weekly.

He admits his budget isn’t particularly sophisticated, and he’s created a basic spreadsheet that shows what’s coming in, his expenses, and breaks it down into a weekly budget.

“I spend everything I can on an Amex card to get points, and at the end of the week I pay it off. You can do it every month, but I like to take things from week to week to see where I stand.

“I can assure you it’s not a complicated spreadsheet. It’s embarrassingly simple. And I don’t split expenses, like I spent x amount on food. I just try to keep an eye on that from above.

“There are plenty of really good budgeting tools that categorize your expenses and can be helpful, but I personally don’t right now.”

Don’t cancel your Netflix – it won’t make any difference

More than ever, we are counting our pennies and looking at our expenses through a microscopic lens.

Maybe you’ve changed your phone plan to a cheaper rate, or maybe you’ve slimmed down the number of plans you have.

However, Henry thinks there’s little point in canceling your Netflix or forgoing the avocados in your grocery store.

“If you look at many people’s financial situation, it has improved significantly during Covid. It was the first recession in which the amount people saved went up. In that situation, I would conclude that Netflix is ​​not the problem. The problem is going out and spending money.’

Henry says you should snatch his Netflix subscription “out of his cold dead hands,” not just because he loves a night on the couch, but because it’s of little use.

“When you look at what has a big impact on your financial position, it’s not necessarily the spending unless you have a huge spending problem…

“Basically, the way to materially improve your financial position is to make more money, whether it’s through passive income generation, whether it’s through investing in yourself and your skills, and being able to earn more through an income.’