Business

Reinvent your future (but better than Kodak did)

Remember these old Kodak cameras?
Remember these old Kodak cameras? Remember these old Kodak cameras?

HERE’S a salutary tale involving one of the world’s most well-known brand names, which contains a lesson we can all apply to our financial life.

In 1998 Kodak had 170,000 employees, and was selling 85 per cent of all photo paper worldwide.

Many of us will remember how photography used to be in the pre-digital age. You bought your film, took your holiday snaps, and then forked out again to get the film developed. Due to the cost, we hesitated before every shot, to be sure that it would be worthy of the expense; after all, there were only 24 or 36 photos on a roll of film.

Flying in to land home again, you knew that developing your film would take at least 10 days. Your holiday was already a fading memory by the time you shots arrived back in the post.

Then everything changed. Digital photography suddenly became mainstream and the need for photographic film and developing disappeared overnight. Now photographs were free, no need to be frugal with taking pictures any more. We could take as many shots as we liked, because once you had uploaded them to your laptop, you could wipe the memory card clean and start again.

But this meant Kodak’s business model had disappeared. Its sales of photo paper nosedived, and in 2012 Kodak as a film company filed for bankruptcy and refocused on digital imaging.

This shows that you have to keep your eye on the ball, constantly reinventing yourself to keep up in an ever-changing world.

Well, the same applies to your personal finances, particularly in the early years of adult life. You need to take stock and ask what financial products you need in your personal financial portfolio.

Let’s look at your particular situation if you’re thinking of settling down, buying a first house, and perhaps starting a family. Here are a few of the initial products you may wish to consider.

If you are not yet one of the 13.8m UK savers with an ISA, you may wish to open one to have the benefit of tax-advantaged saving.

If you are looking to buy your first home, there is now a special Help to Buy ISA to help you get your deposit together. This not only allows you tax-advantaged saving as above, but also gives you a government top-up on your savings of 25 per cent (up to a certain limit), attracting a £1 bonus for every £4 that you save.

If you are newly married, you may be considering starting a family. At this time of life, those financial products aptly known as ‘family protection’ suddenly become more relevant.

You may buy life insurance to protect your dependants from financial difficulty, if they suddenly lost your income through a tragic event. Over a third of families in the UK have life insurance - but of course that means that nearly two-thirds do not.

Even if you already have life cover, you bring us to that interesting point where your personal finances meet your sock drawer.

Life insurance is seen by many as a once-off investment where your policy documents are shoved to the back of the bottom drawer and forgotten.

However, the cost of cover has plummeted, and is now half what it was 10 years ago. It could be worth checking - there’s a good chance you could get a better deal with a new policy.

Of course, you don’t have to die, your income could be lost by a non-fatal event such as a serious illness. A quarter of men and a fifth of women will have a major health setback during their working life. However, only one family in 10 have critical illness cover and only eight per cent have income protection insurance to cover their salary, should they become ill or injured and unable to work.

These are just a few of the most basic issues and products to think about, as you move toward the opening stages of family life.

However they are crucial to ensure that the wellbeing of you and your family is assured, and that, unlike ‘Big Yellow’ (as Kodak is known on the New York Stock Exchange), you will not be caught out by any sudden new developments moving forward!

:: Michael Kennedy is an independent financial adviser and pensions specialist, and can be contacted on 028 71886005