Making a long-term financial plan can give people peace of mind
The future is full of opportunity. It offers a chance to fulfil ambitions, learn skills, make friends, spend time with family – to focus on what matters.
I have had the good luck to live in different countries over my career at HSBC and to see diverse cultures and ways of life. But in my experience there are some characteristics shared by people all over the world. Chief among them is a positive outlook: people tend to look forward to what the future has in store for them, and think their life is going to get better.
A new report from HSBC – The Power of Protection Confidence in the future – backs this up. The report is based on a survey of more than 11,000 people in Asia, the Middle East, Europe and North and Latin America, in both developed and emerging markets. Globally, 34 per cent of people say their life is very good today, while 57 per cent think it will be very good 10 years from now.
People who plan most actively are, on average, more optimistic about their future quality of life
Yet despite this positive outlook, people also worry when they think about the future. Some are kept awake at night by the thought of what would happen if they fell ill, ran out of money, or lost their job. They want to make sure that their loved ones would be looked after. They would like to provide for their children and partners. And increasingly, rising life expectancies mean they are concerned about their parents as well.
Expectations differ from country to country of who should be responsible if the worst happens. Some people expect the state to step in if they lose the ability to provide for their close family. It's an attitude seen around the world, but particularly common in France. Other people hope for support from their employer. Some would turn to relatives, especially in the UAE.
In many places there is a strong culture of self-reliance. In the US, for example, more than half of the people in our survey say that they should be responsible for ensuring their family's financial stability. In fact, the most common attitude around the world is to want to take personal responsibility. This is perhaps understandable at a time when many governments around the world are shrinking welfare budgets and employers are offering benefits that are less generous than they were a generation ago.
There are also different national attitudes towards who should pay for healthcare. People in the UK, for example, are the most likely to expect the state to pay for their healthcare if they fall ill, probably because of the country's National Health Service.
It is impossible to plan for every eventuality, but there are many things people can do to help them face the future with greater confidence. Making a long-term plan about your financial affairs can be one way of securing peace of mind. Yet almost half of the people in our survey feel they are unprepared for the future should something unforeseen happen, or have no specific plan in place.
Some are discouraged from taking out insurance because they think it would cost too much. Some are simply too busy to think about it or don't know where to start. And others do not plan because it reflects their broader outlook on life: they would rather live in the moment or believe there is not much they can do to influence the future. But the people who plan most actively are, on average, more optimistic about their future quality of life. Not only that, they are more likely to think their current quality of life is very good, too.
Everyone deserves to feel optimistic about the future. Making a plan means acknowledging the risks we all face, but then getting on and enjoying life. It's never too late to start thinking ahead.