Putting things off is a well established human tendency and never more so when it comes to dealing with your finances.

Some of the key reasons why people put off making financial decisions are as follows:

  1. It’s complicated.
  2. It’s time consuming.
  3. People don’t think it’s worth the effort.

But it is worth the effort, support is out there and it doesn’t take as much time as you think. It just requires a little planning every now and then. 

This is the first article in a series that will help you understand what you need to do to get your finances in order so you can spend the majority of your time focusing on doing the things you love because we only have one life, you don’t get another chance!

Don’t think this article is only for people with lots of money, the principles are the same whether you earn lots of money or not much at all. I have worked with clients who have never earned more than £30,000 a year and yet were millionaires by the time they were 50!

Step 1

The first step to taking control of your money actually has nothing to do with money. It’s much more important than that. It’s about finding your ‘why’. Why do you want to take control of your money? What would you like to do if you had more money?

Life is so busy these days and there is always another social media account to check but if you just stopped for a few moments and really thought about what makes you happy and what doesn’t make you happy it can be such a rewarding experience.

Get a piece of paper and draw a line down the middle. On the left hand side write down all the things that make you happy and that you would love to do. On the right hand side write down all the things that make you unhappy. The aim of these series of articles is to make sure you spend more time doing things in the first column and eliminating the things in the second column.

Step 2

You need to know where you stand financially. You may be really lucky and actually have more money than you think and could actually spend the time doing more of the things you love but just didn’t realise. But for most of us it is going to take a bit more planning.

The first thing to do is the easy part, make a list of all the income you earn in a month. This could be salary, child benefit, child maintenance, savings and investment income. Next the harder part. Make a list of all your monthly spending. Start with essential spending such as mortgage, council tax, electricity bills, food etc. Total this up, hopefully it is less than the income total otherwise we have a serious problem that needs fixing.

Now you need to work out what’s called your discretionary spending e.g. things you like to spend your money on each month but don’t necessarily have to.

At this stage you may be thinking this is already too much effort. Well good news!! There are some great apps/websites that will do all this for you automatically! They plug into your bank accounts and pull through all your income and spending and will even attempt to categorise it for you.

I have personal use of MoneyHub which costs around £10 per year and Money Dashboard which is free. Both work really well and are great for people that spend a lot of time on their phone or like to visualise things rather than look at numbers.

You’re getting there

Once you have completed step 1 and 2 you are well on your way to taking control of your money. You know where you want to be and you know where you stand. Next time we will look at how to make your savings work harder.

If you are really interested in reading more on taking control of your money I highly recommend a book called ‘The One-Page Financial Plan’ by Carl Richards.

Risk warning:

Stock market linked investments and any income from them, can fall as well as rise and is not guaranteed. Any figures quoted are for illustrative purposes and should not be taken as a forecast or guarantee. Past performance should not be seen as an indication of future returns and clients may get back less than they have invested.