Simple Maths & Planning goes a long way
The key to great financial management is simple maths! Those who plan and pay attention with regular checks are the ones who understand how to life a lifestyle that they can afford. The easiest way to do this is via a spreadsheet which notes your net salary every month with a list of all of your bills that will go out in the calendar month.
Once you have done that, you are left with your disposable income. Think about the other essentials you need to budget for – food, fuel, energy bills (!!), train tickets.
After that the rest is your disposable income. What do you want to do with it? Do you want to save some of it for something special (e.g. a deposit for a house?), a holiday, a special purchase, a rainy day? Defining a goal and setting a budget for our savings means we can see the path to achieve it.
What other things will you do with your money? Do you like to eat out, buy clothes, go on lots of holidays/weekends away/travel? Even with what seems like a large sum of “disposable income” it is wise to give yourself a budget to follow in each category to maximise your salary. When you have something to show for it, you are more likely to value your work, your lifestyle and your health.
Regular checks count
Budgeting and having a plan is one thing, but regular checks on where you are is also key to ensure that your plans are both realistic and on track to reach your financial goals.
If you have created a spreadsheet to track your bills, essential outgoings and your budget for disposable income, a weekly check is not a bad idea to check that your budgets were both realistic and also on track to keep you going until the end of the month. If you discover in this process that you were not realistic, you don’t need to panic, you just need to reorganise your budgets so that they are realistic. The more often you check up on how you are doing, the more in control you will feel so that your finances don’t even pop up as a stress factor for you
Don’t let cashflow catch you out!
Being able to budget and complete regular checks is key to good financial management and overall health but cashflow is something that can catch us all out!
It’s a good idea on your monthly spreadsheet to track the regular direct debit days so that in any one week you can see what has gone out and what is due to go out to do a double check on your forecasted end of month balance.
Credit cards can be a major source of stress due to the billing periods not 100% aligning to our pay day schedule or specific budgets that month so be sure when you do your regular checks and financial management that you incorporate your credit card payments into your monthly figures in the correct month. If the payment spills into the next month, then be sure you account for whatever you have spent the money on so that you do not spend it twice.
It is always wise to set your credit card bills to 100% to avoid any unnecessary build up of debt and also to avoid interest payments.
Alternatively, you could also adopt the old school way of working which is not to spend the money until you have earned it!
Make life easy
Most banks and credit card companies now offer online banking via a web browser or an app. If you set yourself up with access to this, it means you have 100% constant visibility of your finances and transactions at the touch of a thumb print or a button.
Burying your head leads to danger - face up to your situation to avoid issues further down the line
Either you need to be accountable to yourself or accountable to someone, just make sure it is either one to avoid burying your head in the sand.
If you need help with understanding your finances, defining your financial goals and most importantly how to achieve them and be kept accountable, spend some time with one of our Financial Experts who can help you with all of it.