Work out Your Net Worth
In order to do a Financial Health Check we would recommend you start with, writing down where you stand NOW (financially); by this, we mean what your income is and what your outgoings are; working out what your Net-Worth is. In order to work out your Net-Worth take all of your assets and total them up, then take all of your liabilities and take this figure away from your assets – the figure you have left is your Net-Worth. This figure will help you establish your current financial situation.
Once you have these figures, you can set out a financial plan.
We would recommend setting out a budget. Every month you set out all your income and all outgoings in order to know exactly what your financial position is. If you go through your last months’ bank statement you will see what payments come in and out and what date this happens on. It’s an extremely useful exercise and spending some time carefully going through all costs will help you work towards achieving your financial goals. Once you have done this for the first time, we would suggest you go through it monthly.
A monthly budget will help you work towards your financial goals.
When setting goals, it is important to set REALISTIC goals. Everyone has a unique set of circumstances, so everyone’s goals will be different; examples are: paying off debts/ increasing savings/ adding to or setting up pensions/ savings for holidays/ school fee planning/ wedding/ buying a new home/ setting up a business. Once you have analysed your monthly out-goings and in-comings, you will see areas that you can potentially cut back on or increase spending on.
If you feel that you have a grip on your finances and can work towards paying down debt, increasing savings or whatever your financial goals are then hopefully this will lead the way for a positive financial mindset towards your finances for 2020 and going forwards.