What is more important – Watching TV or your family’s wellbeing?

Almost half of all British households pay for a premium TV package.

By the end of 2014, the three largest pay TV companies were:

  • Sky TV, with 11,245,000 homes.
  • Virgin Media, with 3,780,000 homes.
  • BT, with 1,400,000 homes.

Don’t get me wrong, I think these companies offer excellent packages. Take Sky for example.

The movies bundle of SKY TV offers over 30 entertainment channels, 1,000 on demand movies and 240 free to air channels at £27.75 per month or £333 per year.

It’s clearly considered an affordable expenditure by many and it’s often viewed as a must have. It’s also much better value than the TV Licence, and at least it’s voluntary and not a subtle form of government oppression.

However, whilst it appears a good deal, watching TV is hardly going to have a meaningful impact on your family life (although I suppose it is if you spend all your time watching it – perhaps dropping the verb ‘meaningful’).

Plus, you will not watch over 75% of the shows because you spend more time working or sleeping – so it appears a far better deal than it actually is. If you really think about it, maybe you only truly enjoy one show – so you could be paying £333 a year or so to watch one TV show.

When you dig a little deeper, it doesn’t appear such a great deal after all.

There are two other far more important things us Brits should be directing some money towards on a monthly basis – and these will significantly impact on the quality of your family’s life.

  1. Saving for a rainy day and your retirement.
  2. Protecting your loved ones.

Spending on TV or Saving

We Brits have a truly awful savings rate. Perhaps marketing is so powerful and credit cards are so easy to obtain, that we completely forget the importance of financial responsibility.

Far too many of us aren’t even making it to the first stage of financial security – many don’t even have a rainy day fund, an emergency cash reserve, let alone just having some f*** you money.

A survey recently commissioned by GoCompare™ revealed that more than 25% of all British households have no money set aside for a rainy day. Moreover, about 33% rely on credit cards to pay for emergencies.

There’s no point beating around the bush here. That is completely insane.

Too many appear to still believe in the Tooth Fairy or Father Christmas. Talk about a sheer lack of financial foresight. We should be embarrassed and ashamed about this lack of financial responsibility and common sense.

Whoever taught you that you must live entirely at the top end of your means? Why are so many determined to live completely beyond them?

In light of these sobering statistics it seems apparent that buying a TV package is reflective of our obsession with convenient and conspicuous consumption.

When faced with a choice, most Brits appear more inclined to buy a TV package over simply putting money aside for when things go bump.

Spending on TV or investing

When you decide to spend your money on TV, you miss out on the opportunity to invest that money for your future.

It can be difficult to work and delay your reward, however if you invest sensibly and patiently, in the long run you can receive much greater reward for your efforts than watching TV can provide.

For example, if you give up package TV and save that £27.75 per month into a portfolio of shares, it is reasonable to assume that over a very long period of time, you would receive a return in the region of 7% (lower if you pay too much in fees).

Compounding your returns can work like magic for your future wealth. Compounding a return at the rate of 7% annually, will roughly double your funds every 10 years.

Investing £27.75 per month at a rate of 7% will provide you with a nice tidy sum of £14,301 in 20 years time. I understand that having patience is a challenge, but I would much rather have some capital, security and choices in the years to come, than a TV package over those years.

To help with the motivation to save, you could think about some truly enjoyable experiences, rather than mundane TV. For example, rather than pay for sky sports, you could save the money and then in the future you could go on a Europe wide trip visiting all the top clubs and watching them play. That seems like a much more enjoyable way of being a fan of football than simply sitting at home watching the Tele.

Away from the enjoyable saving motivations, we also have to be prudent and try to spread out our earnings over our whole lives. You won’t be able to work forever, but it’s likely that you will live several decades during retirement.

If you don’t have the funds to support your own retirement, who exactly is going to do it for you?

If you don’t take responsibility, your children will have to support you.

A prosperous society leaves behind wealth for their children; a poor one leaves behind debts, burdens and problems.

Saving and investing is an essential component for ensuring we leave behind a legacy for our children that will make them more economically secure, and that we can all be proud of.

The alternative is to see our prosperity decline, and witness our children struggling to support a giant elderly community, while at the same time attempting to preserve and grow the economy for their own and their children’s future.

Get in touch today for a personal, independent, and comprehensive financial plan.

Mark Underdown | DipPFS IMC CeMap

Financial Planning Consultant


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