Robert Burns is widely regarded to be the national poet of Scotland and is nothing short of a cultural icon. His poems and songs – which he often wrote in both Scots and English – explored topics spanning love, nature, and history.
Many of his works are revered beyond the Scottish border to this day, with ‘Auld Lang Syne’ still being sung by people the world over on New Year’s Eve.
And aside from their emotive power to move and inspire the reader, some of Burns’ poems and songs hide perhaps more unexpected lessons, particularly in financial planning.
So, as you’re celebrating Burns Night on 25 January by addressing the haggis and partaking in your favourite dram, read on to discover three fascinating financial lessons hidden within the works of Scotland’s favourite son.
1. ‘A Bard’s Epitaph’ and avoiding impulsive decisions
‘A Bard’s Epitaph’ sees Burns reflect on his future death while thinking about the role of the poet in society.
He figures himself staring at his own grave, considering how his life has gone and what his poems and songs may or may not have accomplished.
One line of the poem in particular holds timeless wisdom and reads: “Prudent, cautious, self-control / Is wisdom’s root.”
This suggests that Burns believes that self-control and prudence are the root of all wisdom, which also holds true in financial planning.
For instance, when you’re investing, market volatility could tempt you to make impulsive decisions, such as selling investments during downturns or chasing trends.
Herd mentality, for example, involves following the actions of others when, in reality, their goals and tolerance for risk could be entirely different from yours.
Moreover, loss aversion refers to the fact that most humans experience the fear of loss twice as strongly as the pleasure of gains. This instinct can tempt you into selling your investments during periods of uncertainty, but doing so could affect the value of your portfolio.
Take the table below, which shows the effects of missing some of the market’s best days based on a hypothetical $10,000 investment in the S&P 500 index between 1 January 2003 and 30 December 2022.
Source: Visual Capitalist
As you can see, your original $10,000 investment would have been worth more than $60,000 if you’d remained invested through this period, despite significant downturns along the way, such as the 2008 financial crisis and the Covid-19 pandemic.
However, if you’d missed just the 10 best days in the market over that period, your returns would be more than $35,000 less.
So, Burns’ reflection on self-control serves as a stark reminder that patience and discipline can be two helpful traits when you’re investing to reach your long-term goals.
2. ‘Tam o’Shanter’ and planning for the future early
Burns’ famous narrative poem, ‘Tam o’Shanter’, tells the story of a farmer heading home after a night at the pub and encountering a group of witches and warlocks partying at a ceilidh – a traditional Scottish dance.
When he calls after one of the witches, they give chase to Tam, and he narrowly escapes with his life.
In the poem, Burns writes, “Nae man can tether tide nor time”, which speaks of the unstoppable march of time and the necessity of planning for the future.
Burns’ wisdom may inspire you to start early with your financial planning, especially when it comes to long-term goals such as your pension, as no one can beat the progress of time.
For instance, imagine you start a pension at the age of 35 instead of 25. A study reported by Insurance Edge reveals that this 10-year delay in contributions could leave you with a pension pot worth £300,000 less.
This is why it’s often a wise idea to start saving into a pension and planning for the future as early as possible.
Just as Tam learned that time waits for no man, planning your finances early could ensure you’re prepared for the “tides” of life.
3. ‘To a Mouse’ and preparing for the unexpected
In ‘To a Mouse’, Burns writes about a farmer who accidentally destroys a mouse’s nest with his plough.
The farmer apologises to the mouse while reflecting on the role of fate in life, which is often cruel, as in this case.
As Burns writes in the poem: “The best laid schemes o’ mice and men gang aft agley”, meaning that even the most careful plans can go wrong.
And, just as the mouse had its home destroyed, poor misfortune can be visited on anyone, which is why it’s prudent to establish an emergency fund.
Setting aside between three and six months’ worth of essential household expenses in an easy access savings account could provide a safety net, protecting you from sudden costs such as car repairs or periods of unemployment without using funds ringfenced for other purposes.
Additionally, you may want to consider financial protection. Income protection and critical illness cover could ensure that if you fall ill and can no longer work, you and your loved ones will be able to maintain your standard of living during this period of hardship.
While it might be true that “The best laid schemes o’ mice and men gang aft agley”, being prepared can help ensure you are supported and protected, whatever life throws your way.
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We could help you take a leaf from Burns’ book and assist you with managing your finances.
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Please note
This article is for general information only and does not constitute advice. The information is aimed at retail clients only.
All information is correct at the time of writing and is subject to change in the future.
A pension is a long-term investment not normally accessible until 55 (57 from April 2028). The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available. Past performance is not a reliable indicator of future performance.
The tax implications of pension withdrawals will be based on your individual circumstances. Thresholds, percentage rates, and tax legislation may change in subsequent Finance Acts.
The value of your investments (and any income from them) can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.
Investments should be considered over the longer term and should fit in with your overall attitude to risk and financial circumstances.
Note that financial protection plans typically have no cash in value at any time and cover will cease at the end of the term. If premiums stop, then cover will lapse.
Cover is subject to terms and conditions and may have exclusions. Definitions of illnesses vary from product provider and will be explained within the policy documentation.
The Financial Conduct Authority does not regulate estate planning or Lasting Powers of Attorney.
