Posted on: 16-03-2017 in Finance
Love it or loathe it, HBO blockbuster Game of Thrones (GoT) is in the headlines again with two bits of UK news:
Series 7 will be the penultimate season of Game of Thrones and it is coming out on July 16th 2017 on HBO – featuring only 7 episodes rather than the usual 10. Here at Holborn Assets, we can’t give you a gory Game of Thrones series 7 exclusive, but we can pass on a few lessons in personal finance that Game of Thrones characters have generally learnt the hard way …
In plain English, what’s this all about in the world of Game of Thrones? “Winter is Coming” is the motto of the Stark family, one of the Great Houses of Westeros and a key dynasty in the GOT story. Head of the family Ned Stark – played by Brit actor Sean Bean – famously tells his wife Catelyn that “winter is coming” – meaning: we’ve got to be careful. Nerd fact: “Winter is Coming” was the title of the very first episode of GoT, and spawned a whole family of memes on the internet (ie images matched to comic effect with the words “winter are coming”, often with Sean Bean). So what does “Winter is coming” mean for me? Well if you live in Dubai like many Holborn Asset clients, then it probably won’t mean much! But generally: be prepared for the worst, is what it means.
It doesn’t matter how much you are worth – you need a financial plan. Use an independent financial adviser you can trust to help you map out where your personal winter is likely to come from, and how (unlike Ned Stark) you can survive it.
You can do this on your own. You may be making this happen already. Some people manage to stash 5%-10% of what they earn each month into a crisis fund – and some canny consumers even manage not to fritter it away. It’s a big ask, but it is possible. And anything you can do is going to help in the long-run.
Yes, winter is always coming; difficult financial times are always a threat. But don’t forget about the good times too. For your own motivation, you need to treat yourself. So alongside your emergency fund, set up a rainy-day fund. It doesn’t matter if its tiny amounts to start with. Getting the ball rolling is the difficult bit; it gets easier after that.
In plain English, what’s this all about in the world of Game of Thrones? In the fictional language of High Valyrian, “valar morgulis” means “all men must die” (sooner or later). The traditional response to this greeting is “valar doahaeris” which means “all men must serve.” Rogue H’ghar says “valar morgulis” to central character Ayra Stark, and the expression becomes an important part of her life and beliefs (in a fairly twisted way, it has to be said). Nerd fact: “Valar Morgulis” was the title of the final episode of the GoT season II. So what does “valar morgulis” mean for me? They do say that there are only two certainties in life – death and taxes. And the two go hand in hand. Taxation of your estate after you die could leave your family with nothing if you don’t handle it right. So:
People don’t get a Will sorted out because it is never a priority. Preparing for death is never a priority when there’s daily life to contend with. That’s a fact. So it’s understandable that Wills & Estate Planning takes a back seat in many people’s lives until it is too late. But remember – valar morgulis! Everybody dies. Including you. And it’s your family that gets hit hardest if you don’t make plans. So if you are going to commit to the expense of a Will, it is important to do it properly. You need professional advice, whatever your assets (or debts). A Will is nowhere near as expensive to set up as legal trusts. But it is really important, however complicated your financial situation. Getting a decent Will done with professional help is money well spent. Your Last Will & Testament is the centrepiece for your whole legacy strategy – ie a plan for who gets what after you die and how unnecessary taxes can be sidestepped.
In plain English, what’s this all about in the world of Game of Thrones? The Lannisters are a family dynasty that plays a central role in the GoT saga as one of the Great Houses of Westeros. The Lannisters spend series 1 to 6 as the ruling royal family of the Seven Kingdoms, sitting pretty in the capital city of King’s Landing. Key Lannister characters include patriarch Tywin Lannister played by Brit legend Charles Dance; Cersei (Lena Headey), the beautiful queen in an incestuous relationship with her own brother Jamie (Nikolaj Coster-Waldau), once the best swordsman in the land, and their height-challenged brother Tyrion, played to great charismatic effect by actor Peter Dinklage. The Lannisters are famously rich. Their official motto, in line with their lion rampart heraldry, is “hear me roar!” but far better known (amongst characters and fans alike) is their unofficial motto of “a Lannister always pays his debts.” So what does that mean for me?
If you are financially credible, it means that other people and companies believe that – like the Lannisters – you always pay back your debts. Being financially credible puts you in line for good rates and a friendly reception wherever your financial dealings take you. In GOT, the financial credibility of the Lannisters allows them to borrow to invest, which funds armies and ultimately secures their power. And in the real world, financial credibility as a consumer is about power too – the power to secure debt in the first place, and perhaps to do so at decent rates of interest. You can develop financial credibility generally by making a habit of honest communication with every party you deal with financially, and specifically keeping an eye on your Consumer Credit Score (often called a Consumer Credit Rating).
Your personal financial credibility will often be judged by your Consumer Credit Score. Whenever you apply for credit, this score will be looked at. It is a number – in the UK, the range is between 0 and 999. The higher the number, the better the score. In the UK, you can check your score for free with a major credit reference agency like Equifax or Experian. The best strategy to improve your Consumer Credit Score is simply to pay off your debts – but that’s not always possible. Here are three credit commandments that will make a real impact in the meantime:
Don’t get confused between “credit reference agencies” and “credit rating agencies”: A credit rating agency (like Moodys, Standard & Poor’s, Fitch Ratings) gives debt ratings to companies and arrangements in the world of big business. A credit reference agency (UK term) gives debt ratings to consumers. In the US, the same sort of company is called a consumer reporting agency. This sort of company (Experian, Equifax, Transunion) gets its information from – rather confusingly – credit bureaux which handle the data collection.
In plain English, what’s this all about in the world of Game of Thrones? A key character Queen Daenerys (Emilia Clarke) seeks to restore the legacy of her Targaryen dynasty starting with nothing but a crazy brother and three baby dragons. “When my dragons are grown,” Daenerys says, “we will take back what was stolen from me and destroy those who wronged me! We will lay waste to armies and burn cities to the ground!” So what does that mean for me? Leverage what you have. In GoT, Dany’s baby dragons were all she had to start with – and her fire-breathing favourites grew so big and powerful that they soon positioned her as real contender to be ruler of all Seven Kingdoms. #Khaleesi So, in the world of personal finance, let’s not forget that from small beginnings come great things – arriving, eventually, after much hard work, “when the dragons are grown.” This may sound trite, but a positive attitude is the only way to grow your financial plan – and staying positive is easier when you remember that you will definitely get there if you simply keep going. Generally, that means investing in good habits, whatever those habits are. Specifically, that means treating small financial investments (and decisions) with all the care that you might imagine you would take dealing with suitcases full of cash – ie., a lot. Remember, for dragons to grow, you must take care of them.
In plain English, what’s this all about in the world of Game of Thrones? A key character, Jamie Lannister (Nikolaj Coster-Waldau), ironically gets his hand cut off whilst being held a prisoner of rival House Bolton. The irony was that, until losing his sword hand, Jaime Lannister was held to be one of the very best swordsmen in all of Westeros. So what does that mean for me? It means: you might lose your sword hand too, like Jaime Lannister. You might lose, in other words, the means to do your job. And that’s a big deal because your future income is your security. People often think their biggest security comes from their assets. But assets might be partially owned by the bank (mortgage, anyone?). Or assets might plummet in value. Your ability to work in the future is an asset worth protecting above all others. But if you are ill or injured in the future, that security might end as abruptly as Jaime’s hand was lopped off. As a famously-rich Lannister, Jaime doesn’t need income protection insurance. Do you? There are so many varieties of income protection insurance that it can be quite confusing to decide what is right for you. One option is to allow a broker to use their experience to match your situation with the right product. An independent financial adviser will, on balance, probably give you a clearer view than you just having a look online; different companies find it difficult to use terminology that can be easily compared. An experienced eye is useful. Other forms of insurance are often overlooked for silly reasons. In the UAE, for example, home insurance simply isn’t considered a priority by expats – largely because most homes are rented. Home insurance penetration is less than 10%. Which means consumers are missing out on both contents and accidental damage protection. Of the two risks being addressed here, theft might not be such a big threat in the UAE, but accidental damage can happen anywhere, anytime. Dealing with any property issue in your non-native country of residence can be a real hassle and the blow is well-worth softening with robust insurance.
Back in the world of GoT, look at what happened to the Stark family when they trusted even that most sacred of conventions, “Guest Right” (by which no harm is done to guests with whom bread has been broken) – they got massacred by their hosts en masse at the infamous Red Wedding. In the real world, bad decisions in the area of personal finance are usually not punishable by death. But trusting the wrong thing can lead to so much stress. Don’t trust credit cards. Don’t trust introductory deals. And don’t trust inexperience. Having said that, experience didn’t help playmaker patriarch Tywin Lannister much when he was murdered by his own son whilst sitting on the kharzi – but there you go. Shouldn’t have trusted him. Shouldn’t have left the door open either. Had enough of personal finance for the moment? Fancy a fun look at the big economics of Game of Thrones?